- Associated Press - Sunday, July 5, 2015

WILLISTON, N.D. (AP) - Mayor Howard Klug’s excitement two weeks ago over opening two lanes of the Williston Northwest Truck Reliever Route was meant to reassure. The partial completion of the $162 million state-funded project was years in the making and meant the mayor had followed through on promises to create a permanent solution to traffic congestion.

The North Dakota Department of Transportation boasted that opening the route would help redirect some of the 29,000 vehicles traveling daily on West Dakota Parkway.

“I’m so excited,” Klug said. “Once we get this permanent truck reliever route completed it will open the door to so many possibilities.”

Although pleased with the progress, the mayor has since spoken about the need to open the remaining two lanes to utilize the entire route, the Williston Herald (https://bit.ly/1gbKYU8 ) reported. That announcement isn’t expected until October, but, one step at a time. Meanwhile, he plans to move forward to lead the city commission to complete numerous other infrastructure projects to catch up with the oil boom that has eased, but by no means ceased, in Williston.

In his first year in office, Klug has tried keeping a steady hand when approaching his job. His back-to-basics agenda - purported to make City Hall more efficient and less swayed by the hyperbole of highs and lows in the oil market - won him a heated campaign race and 75 percent of votes last year in his landslide victory against two newcomers in the largest mayoral race in city history. His opponents wanted to change the so-called “good ol’ boys” political system and create the “Emerald City” in the heart of the oil patch. But the longtime resident and city commissioner thought the fastest-growing micropolitan in the nation and its social-economic struggles could be better managed by sticking with former mayor Ward Koeser’s vision of making “Williston the best little city in America.”



Klug said he’s building a foundation to stabilize the city’s economy and improve its quality of life. But his approach has also raised questions from the public of whether the city has been aggressive enough to meet the demands of today.

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Gov. Jack Dalrymple said Klug’s administration has done “very well” at a time when adjustments needed to be made during the oilfield slowdown. Still, the growth remains rapid and efforts like strengthening fire and police services, relocating the airport and completing the reliever route while “making upfront investments to secure a future tax base” should bring in revenue for a “long, long time.”

“The challenges are built in,” Dalrymple said. “But I don’t think Williston is over-extended by any means. They’ve done things in a prudent way.”

During Klug’s freshman year, the city contemplated a shortfall in oil and gas tax revenue compared with a December forecast by the governor to craft his executive budget. But the city survived the Legislative session, garnering $220 million from legislation meant to relieve communities impacted by energy development: Namely the reduced $1.1 billion oil patch “surge” funding bill and a somewhat depleted formula used to distribute tax revenue from oil and gas production to communities.

Currently, about 80 percent of the annual production tax revenue above $5 million is divided between the state and local governments. The Legislature amended the formula to give 70 percent to the state and 30 percent to local governments. The governor and regional leaders had pushed for a 60-40 split in favor of local governments.

State Sen. Brad Bekkedahl, R-Williston, said the legislation and formula rewrite were improvements for the city. Bekkedahl, who replaced the retired GOP senator Stan Lyson last year, served also as a city commissioner during the legislative session, appearing at weekly meetings via telephone conferences.

“Things change a lot daily here and we try to say how difficult it is to predict more than two years from now,” Bekkedahl said. “We have an oil play here that has a 30 to 40 year window of life. We tell people don’t think of short-term segments of time. We tell them to think of 30 to 40 year development plans and how you fund it and live with it through that time frame.”

Bekkedahl said he saw good come from the recent, slight increase of oil prices that effectively stopped the triggering of a tax exemption for drillers. If the tax cut had been triggered it would have cost the state an estimated $863 million in lost revenue between June through April 2016.

Bekkedahl also found compromise in the state’s approval of a new oil tax framework that cut the state’s overall oil tax rate from 11.5 percent to 10 percent, while abolishing the trigger for drillers Dec. 1.

Klug said he preferred the oil tax rate remain at 11.5 percent, but that he has come to see Bekkedahl’s point of compromise, especially since the Senate had to increase the rate to 10 percent during negotiations after the House sought to lower the rate to 9 percent following the cut in exemptions.

“It was probably a fair exchange. We don’t have to worry about the trigger, or slightly dropping our revenue stream,” Dalrymple said. “It was too late to make adjustments in the Legislature, so everyone just had their fingers crossed.”

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In an interview in his City Hall, Klug and Bekkedahl cited the need to stabilize the city’s fluctuating budget, now at about $280 million, including funding from the “surge” funding bill and the change in the GPT rate.

The state funding helps, but city leaders said they must remain focused, since overall debt is expected to rise from $131 million today to $286 million within 18 months.

A breakdown of the current debt: $32 million for special assessments tied to property tax levies, $34 million for sewer and water bonds and $65 million for revenue debt funded by the GPT rate or the city’s 1-cent sales tax.

Expected debt includes $125.6 million for the new wastewater treatment plant tied to the GPT rate ($16.6 million has been included in the revenue debt mentioned above) and $46.5 million in public safety bond issues for the new city fire department substation and improvements tied to the newly formed city-county public sales tax.

“We still need to move forward with major infrastructure projects as aggressive as we can since we have probably seen less than a slowdown here than anywhere else in the state,” Bekkedahl said.

For the first time in recent history, the city has seen construction bids at a lower price than the estimates of its engineering department. The lowered bids and continued relationships with the state and county could improve the city’s need to complete ongoing infrastructure projects worth $100 million.

Some projects nearing completion include beautification and signage issues, opening the 18th Street underpass Thursday and completing phase one of 11th Street by October. Others in the planning stages include the build-out of the former Hess Corp. building on 4th Street to house several city departments by the fall season.

“The supply is finally seeing the demand,” Bekkedahl said.

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Williston’s department heads are expected to submit budget requests in July, with hearings set for August and approvals in December.

One line-item guaranteed to be seen during the process includes a city manager position, an addition contemplated by the mayor during his election campaign. One year into his job, Klug said the city has been working with Advanced Engineering and Environmental Services, Inc. to create the position to work “collaboratively and cooperatively” with department heads to make recommendations.

“I didn’t pursue a city manager as aggressively as people thought I should,” Klug said. “But I wanted to get a handle on things and now I do.”

The drop in oil prices and the slowdown in oil production have weighed heavy on the minds of city commissioners, but the mayor thinks the city is in good hands, moving forward and adjusting to “short segments of time.” The state echoed those remarks and the governor has little fear of the hyperbole of highs and lows, of any mention of an oil bust.

“It is different from five years ago, when the consciousness of keeping the oil actively going here, but now the Bakken is such an established and large investment that I think we can worry less that there will be a sudden exodus of oil producers out of the area,” Dalrymple said. “It’s not like we’re going to be uneconomic and the whole thing will disappear.”

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Information from: Williston Herald, https://www.willistonherald.com

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