Posted 11/03/15 (Tue)
By Kevin Killough
Tioga and Ray got some attention from the state legislature Thursday.
The Energy Development and Transmission Committee gave several towns, counties, and school districts the opportunity to discuss their challenges and impacts from the oil industry during a meeting in Stanley.
They also wanted a report from the political subdivisions on how far the “surge funding” went to address needs.
“We’re here for one reason -- input. We’re here to listen,” said committee chairperson Rich Wardner (R-Dickinson).
Wardner went on to explain the committee will be looking at the state formula for the gross production tax, which gives roughly 30 percent of a portion of the total revenue back to the communities where the oil is produced.
He said the debate over how much political subdivisions should get has been going on since the 1980s. The state prohibits local entities from taxing the oil industry, and the formula is supposed to supply a revenue stream in lieu of local taxes on the industry.
“The state has always taken more than they probably should have,” Wardner said.
At one time, the split sent only 10 percent back to the oil patch. In the last biennium, that share was increased from 25 percent.
“So we’re working it up, and we like to get it established above 30 and leave it for a while,” Wardner said.
Tioga Auditor Abby Salinas reported on the town’s summer construction bonanza.
“We’re still very heavy into construction,” she said. “And we’re feeling the pressure to finish.”
Tioga was awarded just under $11.3 million in surge funding. Tioga used the funds to fund or partially fund a Main Street reconstruction, waste water treatment plant, and a new water tower. The Main Street project also included a face lift for downtown, complete with sidewalks and decorative lighting, as well as replacement of water and sewer lines.
Salinas said the northern portion of the Main Street reconstruction by the hospital is estimated to cost about $717,000. The downtown portion of the project will come in at about $2.4 million. The new water tower and 12-inch water main it required will cost the city about $1.4 million. A new wastewater treatment plant, which is just starting construction, is expected to cost $6.7 million in surge funding.
Salinas discussed how the town rushed to meet growth demands, only to find a slowdown meaning actual population could fall far beneath projections.
The unpredictability of the industry makes it difficult for city leaders to plan, she said.
Salinas said demands on the city police and emergency volunteers continue to be high, and recruiting efforts, while somewhat easier, are still a challenge. She pointed to the city building inspector position, which remains vacant.
Once the water treatment facility comes online, Tioga will need a Class 3 operator to oversee its operation. The prospects for filling the position will require a search well beyond the area, Salinas said.
She said the city is consulting with R&T for options to train existing personnel to get the required certification to run the plant.
While the surge funding improved large sections of the city’s utility infrastructure, a lot remains to be replaced. She said much of it was built in the 1950s.
“We had eight water main breaks on Welo (Street) one winter,” she said.
And all these challenges come, Salinas said, as sales tax revenue is trending downward.
Lonni Fleck, Ray’s engineer, presented for Ray, detailing its surge fund spending and challenges.
Like Tioga, Ray’s utility infrastructure dates to the 1950s.
Fleck showed the committee pictures to illustrate the town’s needs, which included a resident’s tub filled with water brown with rust, and a badly corroded water main.
Ray develop an estimated cost for all of its improvement needs, which came to $15.8 million. The list focused on streets and water main renovation.
Ray received $5.4 million in surge funding, of which 57 percent was spent this year.
The projects included repaving Main Street and Score Street from U.S. 2. The town also replaced water, sewer, and storm drain along five blocks of the eastern portion of Fourth Avenue. That road was also repaved.
While the surge funding only met a portion of the town’s funding needs, Fleck said it went a long way to help the town.
“The city appreciates that influx of cash to help prevent that street deterioration,” she said.
Fleck provided figures for the town’s use of State Revolving Funds to cover $3.3 million in water and sewer projects. This came to about $5,816 per resident in Ray, Fleck said.
That is the maximum of debt the town is willing to take on to still be considered affordable to its residents, Fleck explained.
In illustrating the town’s dependence on oil production, Fleck said nearly 52 percent of Ray’s operating expenses come from the tax.
“To say Ray needs the production tax is an understatement,” Fleck said.
Fleck said in 2016, the remainder of the surge funding is slated to fulfil about $1.3 million of a total of $6.6 million in planned projects.
Wardner complimented the town in its management of its financing and the funding the state has provided.
“It sounds like the community of Ray is doing a good job of managing what they have,” Wardner said.
Wardner went on to compliment all the towns that presented at the meeting, which included New Town, Stanley, and Parshall. He said their presenters reflected a commitment to meet challenges on limited resources.
“You’re not whining and complaining. You’re rolling up your sleeves,” Wardner said.
Tioga High School Principal Brodie Odegaard presented for the Tioga School District.
He told about how at one point, the district was considering consolidating its entire student population to one school. In 2006, they had 233 students between Tioga High School and Central Elementary.
Today it stands at 474 total students. This has led to increased demands on facilities, staffing, and busing, Odegaard explained.
“Those are the main issues, the main challenges we’ve faced,” the principal said.
Odegaard detailed the two construction projects to expand the elementary school and renovate the high school cafeteria, which just recently opened. Prior to that, the high school students were being bused down to the new elementary cafeteria for lunch.
With the new high school cafeteria open, Odegaard said he could see all the students together at lunch.
“We just kind of stand back and watch them and say, ‘Isn’t this nice?’” he said.
The projects are finishing up and facing some trouble with the new electrical systems integrating with some of the 1950s technologies, but the entire project is on its home stretch.
As a result, the schools are safer and better able to accommodate the larger student population, Odegaard said.
Odegaard also discussed staffing challenges the district faces. To meet the growth in students, the district increased its teacher staff from 29 to 41. And with the recruitment efforts comes the housing challenges.
“We don’t want to be landlords, but we’ve been forced into that situation,” Odegaard said.
The school maintains a number of trailers and rents apartments to house its increased staff.
Many of the new teachers are specialists to meet specific needs within the student population. A full-time English Language Learner teacher was hired to help students who are still learning to read, write, and speak the English language.
“I would have never imagined that we would have hired a full-time ELL teacher in Tioga when I started,” Odegaard said.
The district also hired an elementary science teacher.
“Our community, our kids have really taken to this idea of having a specialized science teacher,” Odegaard said.
Odegaard concluded his presentation by crediting state support for helping the district meet its challenges.
“We are very appreciative of all the support we’ve received through the state,” he said. “It’s all been wonderful.”
The presentations showed the surge funding went a long ways to help communities meet their challenges, but it’s unlikely to happen again.
For the future, the formula restructuring will be the primary mechanism to keep up support for communities impacted by oil production.
Sen. David Rust (R-Tioga) said the presentations were informative. Rust is not on the committee but was invited to come and listen to the hearing.
In the last session, the surge bill and a bill to restructure the formula were originally introduced with much more generous amounts going to subdivisions. As the bills were being debated, oil prices fell. The initial largesse eventually came out much slimmer than legislators in the oil patch had hoped.
“I know a lot of us feel the 70/30 should have given more to the subdivisions,” Rust said.
He said the committee going to the trouble to learn more about the challenges is a good sign for the next session, but he also expressed some uncertainty with respect to how oil prices will continue to influence hesitation on the part of the state to let go of more funding.
“I think there will be bills introduced, and hopefully we’ll get something more than 30 percent,” he said.