When the price of oil dropped by half, North Dakota cut its budget in half. But even that grim forecast might be off by $1 billion.
On Wednesday, the state Office of Management and Budget issued a revised revenue forecast that concluded that North Dakota will likely lose an additional $1 billion in oil tax revenue over the next two years.
Oil prices have dropped 60 percent over the past seven months, shuttering dozens of oil rigs and cooling North Dakota’s white-hot oil boom and cutting off billions in oil tax revenue that the state had expected to collect.
In January, state lawmakers downsized the budget plans they made when oil was selling for $100 a barrel to reflect the reality that the same barrel of oil was then selling for $42. Instead of $8.3 billion in oil tax revenue, lawmakers revised the 2015-17 budget to expect $4.2 billion in revenue, reflecting oil prices that had also been cut in half. At the time, the state budget office dropped that estimate to $3.3 billion, with an additional loss of $419 million from the general fund revenue as cuts in the oil industry rippled across the state economy.
That means less money for workers and companies that relied on the oil industry. And it means less tax revenue down the road for infrastructure projects, county governments and schools.
But a slowdown is far from a crash, and North Dakota is still humming with new construction, infrastructure projects the state funded well in advance. As of Tuesday, the U.S. Labor Department still ranked North Dakota as the state with the lowest unemployment rate in the nation.
“While $419 million is a significant amount of money, and the drop in anticipated oil revenue is significant, it certainly is not doom and gloom in North Dakota,” said Pam Sharp, director of the Office of Management and Budget, whose staff worked with Moody’s Analytics on the revised revenue numbers.
North Dakota oil companies responded to the drop in prices at the pump by closing dozens of oil rigs in counties on the outskirts of the oil-rich Bakken shale formation on the west side of the state. Right now, there are 110 rigs in production, according to the North Dakota Petroleum Council, down from 188 that were operating last year before the downturn.
“Prices continue to drop and we’ve made the decision to be conservative about our production numbers,” Sharp said. The revenue forecast expects oil prices – which was selling for $100 a barrel last year – will hover around $42 to $53 per barrel through 2017.
Despite the downturn, North Dakota continues to produce 1.2 million barrels of oil a day. The forecast expects that number to dip to about 1.1 million barrels, then hold steady for the next two years.
North Dakota still stands to collect $3.3 billion in oil tax revenue over the next two years -- down from the $4.2 billion the legislature had expected. Only $300 million of that would have gone into the state's general fund, making it easier for lawmakers to budget around any shortfall. The rest goes to separate funds the state uses for things like infrastructure, schools, county governments and legacy projects.
“They’re going to have to deal with less money as well,” Sharp said.
Dozens of Somali teens have walked out of Tech High School in St. Cloud and are protesting on the lawns and sidewalk out front, while administrators are keeping the rest of the students on lockdown in classrooms.
The crowd of about 60 Somali students are upset about offensive postings on social media that followed an earlier dispute at school, according to Tami DeLand, the district’s director of community engagement and communications.
She couldn’t specify what they were, though someone close to the matter said the protests were triggered by a posting on the social media network Snapchat that mocked a disabled Somali student for being in ISIS, the Islamic terrorist group.
Pictures on Twitter show a student in the protests waving a sign that complains of oppression and another holding up a poster saying, “The people united will never be divided.”
DeLand said students are safe and that police aren’t on the site. The administration wanted people in their classrooms to prevent further disturbances; school officials are trying to work with the protesters to bring them back inside.
“They’re working to problem solve to get them to come back in the high school and talk with administrators in a small group setting,” said DeLand. “There’s no threat whatsoever, but it becomes a safety issue if you’ve got the entire population trying to run out of the building to see what’s going on.”
Tech high school junior Marlene McMullen said she was in the lunchroom when more than 100 Somali students walked out at noon, prompting everyone else to rush to the windows to watch what was happening.
McMullen, who said she was friends with an organizer of the protest, said other students at school bully them every day “so they decided they’re not going to take it anymore … everybody just disrespects them and they stood up for themselves.”
Photo posted on Twitter by Sam Louwagie of the St. Cloud Times
Cook County commissioners sided with the embattled Lake View Natural Dairy on Tuesday, approving a letter of support for the Grand Marais farmer who is refusing to allow state agricultural inspectors on the property.
The commissioners backed the Berglund family’s right to sell products from the farm, citing lines from the Minnesota constitution that protect the farm “from governmental intrusions, when [it] is privately associating with private men and women to sell and peddle the products of their farm at their farm location.”
The move comes a week after Judge Michael Cuzzo denied a motion from the Department of Agriculture to hold David Berglund in contempt for not allowing inspectors on his farm. The state initially sought to have him fined $500 a day. Cuzzo stayed the department’s order for inspection until he could address the constitutional issues in the case, a ruling that will come in the next 90 days.
Lake View sells milk from its cows without processing it in sanitized containers, according to court records. Some of the milk is turned into cream and butter for customers. The Agriculture Department initially tried to visit the farm two years ago to discuss how Lake View could voluntarily comply with rules governing the manufacturing and sale of unpasteurized dairy products.
Regulators disagreed with Berglund’s assertion that he was constitutionally exempt — by the “No license required to peddle” clause — from a requirement that he have a license to sell goods from the farm. They argued that the farm was still subject to inspections and food-safety requirements and that it needed a dairy-producer permit.
“He’s a local farmer, the family’s been here for generations, and so we support economic development and people that are trying to make a living here,” said Heidi Doo-Kirk, who chairs the Cook County Board of Commissioners.
Like many others in town, Doo-Kirk and her family have gone to the farm to buy milk. Lake View even has an honor system, she said: customers can grab milk from a cooler, write their purchase on a sign-in sheet and leave money in a box.
“They’re out working the field,” she said. “They’ve got a lot of cattle and a lot of work to do, so they’ve got to keep up with everything … they’re a great family.”
The city of Rochester want to buy an historic downtown theater, pegging the purchase of the Chateau to a long-term remake of the city centered around the Mayo Clinic.
The $6 million buy, announced Monday at a 12 noon press conference, needs City Council approval. The city would borrow $5.5 million and use a $500,000 Mayo gift to pay for it.
"This is a tremendous opportunity for us to preserve this iconic element of Rochester's history and invest in our future," said Rochester Mayor Ardell Brede in a statement. Supporters of the idea characterized the purchase and preservation of the theater as a jumpstart to the Destination Medical Center initiative, a long-term plan to make Rochester a world leader for medical research and health care.
No designated purpose exists for the theater; a 60-day public comment period would follow city council approval to purchase it.
Built in 1927 for $400,000, the Art Deco-designed theater first hosted plays, opera and vaudeville acts before becoming a movie house. It was listed on the National Register of Historic Places in 1980, closing three years later. It sat vacant for 11 years before Barnes & Noble moved in.
The bookstore closed at the end of last year.
The Lake Superior Ice Project came tumbling down again this week, this time on purpose, and this time for good.
A Minnesota sculptor has worked for months to erect the world's tallest ice sculpture Lake Superior's Wisconsin shore, doggedly starting again from scratch when the whole thing collapsed in a heap of ice cubes in February.
The sculpture's rise and fall and rise and fall captivated onlookers in two states.
"Iceman" Roger Hanson, an engineer and self-taught sculptor from Big Lake, spent months painstakingly spraying lake water into fanciful shapes to create an abstract tower that would anchor upcoming winter festivities in Superior, Wis. By Feb. 3, the ice was over 60 feet tall and heading toward his final goal of 70 feet when it abruptly collapsed, following a winter thaw.
Undaunted, Hanson vowed to rebuild, and Superior went ahead with three weekends' worth of festivals, cheerfully firing off fireworks around the rising sculpture and bouncing laser light shows off its slick surface.
Hanson rebuilt a little too well, as it turned out. Ice Project 2.0 topped out as a 5 million pound hulk of abstract ice, 50 feet high and 49 feet wide -- three feet short of the world record.
The structure was so sturdy, Hanson had a hard time delivering on his promise to have it safely dismantled by this weekend. The fire department blasted it with hoses, trucks tugged on it with chains, the temperature soared toward 60 degrees, but the ice held firm.
The sculpture finally collapsed on Thursday and video captured a delighted Hanson dancing in celebration. “Now I can go home and annoy my wife for the next 8 months,” he wrote on Facebook. “But ‘I’ll Be Back.’”
Superior residents presented Hanson with a certificate of appreciation: “You are OUR Iceman," it said. "And we are YOUR people.”
“It means a lot to me, it kinda melted the Iceman,” Hanson wrote on Facebook, noting that he plans to return next year to try another