Word comes this week that the organizing committee for a group of North Dakotans who want to raise North Dakota’s Oil Extraction Tax back to the level it was at before the Legislature cut it in 2015 has decided to postpone its initiated measure campaign. Postpone but not abandon. A wise choice, I’d say.
Although the group already has its petition language approved by the Secretary of State, signature-gathering time is short, and the task becomes even more difficult without the institutional support of organizations that were instrumental in the initial passage of the tax in 1980.
To review: We have an Oil Extraction Tax because of an initiated measure passed by the people of the state by a wide margin nearly 40 years ago. It came during our state’s first short-lived oil boom and was set at 6.5 percent of the price of a barrel of oil, which was added to an existing Oil Production Tax of 5 percent, giving us a total tax on oil of 11.5 percent. One of the highest, if not THE highest in the country.
The measure passed at a time when oil was gushing from the ground in western North Dakota and red ink was gushing from state coffers and agricultural balance sheets after the devastating hard times in agriculture in the 1970s.
The 11.5 percent tax stuck in the craw of the oil industry and Republican politicians for more than 30 years, although Republicans, who generally have governed the state since 1993, enjoyed the fruits of the income from the tax and the budgets it balanced for them.
But finally, in 2015, at the peak of the last oil boom when the state was flush with cash from the oil tax and a humming economy, Republicans mustered the courage to tackle the citizen-initiated tax and cut it from 6.5 percent to 5 percent. It was a devastating miscalculation. Within weeks of the governor signing the bill, oil prices began a death spiral, dropping from more than $60 per barrel to less than $30 (I don’t think there was any relationship between our tax cut and the price of oil, but still … ), and state budgets began bleeding red ink again.
It’s taken until now, more than two years later, for the price of oil to reach above $60 again. That combination of low oil prices and a lower oil tax means legislators have been forced to cut budgets, including some popular programs most North Dakotans like, such as property tax subsidies.
So sponsors of the current proposed initiated measure figured the time was right to go back to the people and ask them to raise the tax back to 6.5 percent. And they’re probably right. But there’s a difference between now and 1980. It’s the players.
Among political observers my age, we speak with reverence and awe of the “Measure 6 Coalition” — and those who organized it. It was probably the most powerful political coalition ever put together in North Dakota. It was the group that passed Measure 6, which created the 6.5 percent Oil Extraction Tax.
It was four organizations, led by four extraordinary men:
- The North Dakota Farmers Union and its president, Stanley Moore.
- The North Dakota Association of Rural Electric Cooperatives and its executive director, Chub Ulmer.
- The North Dakota Education Association and its executive director, Adrian Dunn.
- The North Dakota AFL-CIO and its president, Jim Gerl.
Those four organizations probably represented a third of North Dakota’s population. And their members were activists, willing to rally behind their leaders because of the enormous respect for those four men, longtime leaders, giants of their era. I knew each of them personally and treasured any time they would share with me, sitting at their feet, as I was just entering the world of liberal political activism.
The four were brought together by then-Tax Commissioner Byron Dorgan and two of his chief lieutenants, Kent Conrad and Jim Lange. Dorgan, who had led the successful fight in the 1970s for implementation of a severance tax on coal, was the face of the movement. Conrad was the strategist. Lange was the number cruncher who figured out how and where to get the votes to pass it.
Those were halcyon days for populist activism in North Dakota, but they were nearing their end. 1980 was the year of the Reagan landslide. It was a wave election for Republicans, nationwide and in North Dakota. Republicans won every statewide election here but two in 1980, including the governor’s race, which saw the defeat of incumbent Gov. Art Link by Attorney General Allen Olson.
The only two Democrats to survive that election were the two men who went out on the stump and tirelessly, relentlessly, advocated for the passage of Measure 6, the Oil Extraction Tax: Byron Dorgan and Kent Conrad. Dorgan was leaving his post to run for the U.S. Congress, a seat vacated by Mark Andrews, who was running for the U.S. Senate seat being vacated by the retiring Milton Young. Conrad was running for tax commissioner, to replace Dorgan in that office. Both won by wide margins.
The two were the only Democratic-NPL candidates to campaign on a tax increase in a year when the country was headed inevitably to the right behind Reagan — the rest of the Democratic-NPL ticket shied away. But Dorgan and Conrad had set the stage earlier, with their successful coal tax effort in the mid-1970s. Dorgan had even held a series of debates around the state with then-Republican House Majority Leader Earl Strinden, the two arguing both sides of a coal severance tax. It was classic North Dakota politics, the kind we don’t see any more. And Conrad was Dorgan’s chief strategist, behind the scenes then.
The pair, Dorgan and Concrad, were classic populists, leading the charge first against Big Coal and then Big Oil — and the people embraced them.
But in the end, it was Gerl, Ulmer, Moore and Dunn, the four coalition leaders, and their members, who swept the new oil tax into state law. And that’s what’s missing today. Those organizations, and their leaders.
To be fair, I can’t say whether the four leaders of those organizations today have the leadership capabilities to undertake such an effort, but what is obvious from the words of today’s organizing committee for the new initiated measure, is they are not yet all on board. Nor is there a Byron Dorgan or a Kent Conrad at the ready to lead them.
In the words of the organizing committee’s leaders, which I received in an e-mail today, “What we lack is endorsement from groups and organizations and their communication channels and infrastructure, all of which we need to get our message out to voters.”
Well. That could not be more clear. So they’ve made a timely, wise decision.
The strategy shifts now to the introduction of a measure in the 2019 Legislature to raise the Oil Extraction Tax back to 6.5 percent — an effort not likely to succeed, given the makeup of the Legislature. That’s what the Measure 6 Coalition understood back in 1980, and why they went directly to the people. Still, a concerted effort in the Legislature could attract a lot of attention and set the stage for an initiated measure in 2020.
But the Measure 6 Coalition does not exist today. A new coalition, with new leaders, must be assembled. Of the four leaders from 1980, only Jim Gerl is still alive. I think he’s approaching 80 and spends much time in Florida. But maybe we could get him back here to consult a bit.
I hope that the organizing committee for this effort can succeed in putting a new-old coalition back together. For in that effort lies success.