BISMARCK, N.D. — A North Dakota legislative committee on Wednesday began evaluating most of the state’s economic development tax incentives to determine their effectiveness in creating businesses, jobs and revenue for the state.
It’s the first formal legislative review of tax incentive programs, some of which have been on the books for decades, and comes amid shrinking oil tax revenue due to a prolonged slump in crude prices.
Twenty-one of the state’s 34 tax incentives are under scrutiny by the Legislature’s interim Political Subdivision Taxation Committee, which will cut or modify the programs over the next six years if they fail to provide worth, said Bismarck Republican Rep. Jason Dockter, who chairs the 21-member panel.
“We want to make sure taxpayers are getting their bang for their buck, especially with our budget shrinking,” Dockter said in an interview. “We are just doing our due diligence.”
Incentive programs under review include everything from agricultural processing facilities and renaissance zones to tax credits for developers of wind, solar geothermal and other energy projects.
Historic funding information on most of the programs was not available to the committee on Wednesday though data on the state’s so-called Angel Funds literally raised eyebrows among several lawmakers. The funds are designed to provide investment dollars for fledgling companies. But lawmakers learned that 54 of the 116 companies that received $41 million in investment dollars since 2011 were listed as being from out of state.
“I thought the purpose of these tax credits was to benefit North Dakota more directly somehow,” said Rep. Lawrence Klemin, R-Bismarck.
More than 20 lobbyists and industry officials packed the hearing Wednesday, and Dockter said he expected much justification from those wanting keep the incentives in place.
“The whole point to this is to find out if these put a burden on us as taxpayers,” he said.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.