HB 1358 Oil & Gas Production Tax Distribution Office of State Treasurer

TWO TAXES Gross Production Tax (GPT) - 5% Extraction Tax (ET) – 6.5% Total Tax = 11.5% HB1358 relates to Gross Production only

FISCAL YEAR Fiscal Year 2014 (FY2014) – began July 1, 2013 – ends June 30, 2014 Oil Produced in July Taxes Collected in August Revenue Distributed in September to Counties/Cities/ Schools HB 1358 formula applies to distributions you received beginning September 2013

CURRENT FORMULA (HB1358) 2 tiers for split between county & state First $5 Million – 0/100 All $$ Over $5 Million - 75/25

CURRENT FORMULA (HB1358) Two distribution formulas: Counties less than $5 Million Counties over $5 Million State Treasurer does ALL allocations to cities and schools FY 2014 and later Counties responsible for handling prior year adjustments in the proper manner

CURRENT FORMULA (HB1358) 8 Counties Less than $5 Million FY 2013 Bottineau* Golden Valley McHenry Renville Slope Ward Mercer McLean * Bottineau County is on pace to receive over $5M in FY 2014 so will most likely move into the Greater than $5M portion of the formula for FY 2015

CURRENT FORMULA (HB1358) Counties Less than $5 Million 45% General Fund 35% Schools 20% Cities

CURRENT FORMULA (HB1358) Billings Bowman Burke Divide Dunn McKenzie Mountrail Stark Williams 9 Counties Over $5 Million FY 2013 County list is subject to change in 2 nd year of biennium (Bottineau County will most likely move into this group)

CURRENT FORMULA (HB1358) Counties Over $5 Million 60% General Fund 5% Schools 20% Cities 3% Townships (allocated by miles) 3% Townships (pooled & shared equally) 9% Hub Cities (pooled & split)

CURRENT FORMULA (HB1358) Counties Over $5 Million 9% to Hub Cities: Williston – 60% Dickinson – 30% Minot – 10%

PROJECTED DISTRIBUTIONS FOR FY2014* County Total (excl. Hub) County GF Cities (excl. Hub) Schools (excl. Hub) Townships Billings $7,640,000$4,770,000$1,590,000$400,000$880,000 Bowman $10,120,000$6,410,000$2,140,000$530,000$1,040,000 Burke $8,190,000$5,080,000$1,690,000$420,000$1,000,000 Divide $14,710,000$9,410,000$3,140,000$780,000$1,380,000 Dunn $38,730,000$25,600,000$8,530,000$2,130,000$2,470,000 McKenzie $76,580,000$51,110,000$17,040,000$4,260,000$4,170,000 Mountrail $63,490,000$42,540,000$14,180,000$3,550,000$3,220,000 Stark $8,890,000$5,550,000$1,850,000$460,000$1,030,000 Williams $42,960,000$28,420,000$9,470,000$2,370,000$2,700,000 *PROJECTIONS BASED ON ACTUAL DISTRIBUTIONS THROUGH FIRST FIVE MONTHS OF FY2014, THEN USING THE NOVEMBER PRODUCTION NUMBERS FOR THE REMAINING SEVEN MONTHS.

PROJECTED DISTRIBUTIONS FOR FY2014* - HUB CITIES City From 1/5 GPT From 4/5 GPT (9%) Williston $16,125,000$16,100,000 Dickinson $7,875,000$8,050,000 Minot $2,250,000$2,680,000 *PROJECTIONS BASED ON ACTUAL DISTRIBUTIONS THROUGH FIRST FIVE MONTHS OF FY2014, THEN USING THE NOVEMBER PRODUCTION NUMBERS FOR THE REMAINING SEVEN MONTHS.

POTENTIAL FORMULA CHANGES Changing the County/State Percentage for amounts over $5 million (Currently 25%/75% County/State) Potential Changes: 50/50 60/40 County/State

POTENTIAL FORMULA CHANGES Effects of changing the allocation percentage: Counties that receive less than $5 million wouldnt see any changes Counties receiving over $5 million would see a potentially substantial increase in distributions It would take considerably longer to fill State Share buckets (ie. GF, PTRF, Disaster Relief, SIIF) As final bucket, the Strategic Investments & Improvements Fund (SIIF) would see a potentially significantly reduced total contribution

PROJECTED % INCREASES IF FORMULA ADJUSTED TO 50/50 County Total (excl. Hub) County GF Cities (excl. Hub) Schools (excl. Hub) Townships Billings 41%37% 72% Bowman 55%53% 75% Burke 45%41% 74% Divide 69%68% 79% Dunn 88% 87% McKenzie 94% 91% Mountrail 93% 90% Stark 49%46% 74% Williams 89% 87%

PROJECTED % INCREASES IF FORMULA ADJUSTED TO 60/40 County Total (excl. Hub) County GF Cities (excl. Hub) Schools (excl. Hub) Townships Billings 58%52% 101% Bowman 78%75% 105% Burke 63%57% 103% Divide 97%95% 111% Dunn 123%124% 121% McKenzie 132% 127% Mountrail 130% 126% Stark 69%64% 104% Williams 125% 122%

PROJECTED % INCREASES - HUB CITIES City Change to 50/50 Change to 60/40 Williston 85%119% Dickinson 85%119% Minot 85%119% *PROJECTIONS BASED ON ACTUAL DISTRIBUTIONS THROUGH FIRST FIVE MONTHS OF FY2014, THEN USING THE NOVEMBER PRODUCTION NUMBERS FOR THE REMAINING SEVEN MONTHS. Portion received from 1/5 GPT remains the same. Portion received from 4/5 GPT (9%) increases:

HUB CITY SCHOOL DISTRICTS Would not see any increase in oil & gas distributions under this change. Currently receive: Williston - $5.375 Million/year Dickinson - $2.625 Million/year Minot - $750,000/year

DISTRIBUTION INFORMATION The formula flow chart and distribution amounts for Oil/Gas producing Counties, Cities and Schools can be found on the State Treasurers website at Various search options are available. Note: Oil/Gas was originally a quarterly distribution. Treasurer Schmidt changed this distribution to monthly in December 2007.

QUESTIONS ? CONTACT State Treasurer Kelly Schmidt Deputy Treasurer Jeb Oehlke Accounting Manager Ryan Skor