During this spring's legislative session, state lawmakers doubled the state's rainy-day fund from $100 million to about $200 million, thanks to strong oil tax revenues. Now state residents will get a chance to vote on whether to stuff future oil tax surpluses into a trust fund.
The November ballot will have a proposed constitutional amendment for the creation of a permanent oil tax trust fund. Trust principal would be untouchable—save for a three-fourths vote by the Senate and House—but the trust's earned interest would be added to the state's biennial budget. Spending of rainy-day funds—officially, the budget stabilization fund—requires only a majority vote and would remain intact.
The trust fund plan would dedicate the first $100 million in oil tax revenue to the state budget, and the remainder would go to the trust fund. That level was unimaginable 10 years ago, when oil tax revenues were $43 million. It has been steadily rising and is projected to hit almost $280 million for the 2007-09 biennium.
In hopes of spurring continued exploration and production (and thus, tax revenue) in the state, a measure was also approved in the last legislative session to decrease the tax rate on the first 75,000 barrels of production from new horizontal wells from 11.5 percent to 7 percent.
—Ronald A. Wirtz
