WASHINGTON, Feb. 4 (UPI) -- The budget proposal put forward by the White House puts fiscal sustainability at risk with more taxes, a senator from oil-rich North Dakota said.
President Barack Obama sent a $4 trillion budget request to the Republican-led Congress that would repeal some of the tax breaks for the oil and gas industry. Some of the revenue from oil and gas operations in the Gulf of Mexico may be diverted to conservation efforts under the proposal.
Sen. John Hoeven, R-N.D., said in a Tuesday statement the White House is moving in the wrong direction.
"The right path to fiscal sustainability is not by taxing and spending, but by saving and investing," he said. "We need to find thoughtful reductions in overall spending and build a pro-growth legal, tax and regulatory business climate to attract investment."
North Dakota generates revenue from oil and gas production by taxing production at 5 percent and extraction by 6.5 percent. With oil prices falling by half from their June values, policymakers in North Dakota are reviewing their budget plans.
The industry in 2010, when oil prices were around $90 per barrel on average, paid nearly $750 million in taxes to North Dakota. Prices have fallen to the point where energy companies working in the exploration and production sector are scaling back their operations.
The state government reports 142 drilling rigs in active service as of Wednesday, down 48 from the same date in 2014 and 60 fewer than the recent peak in 2012.
