A Tale of Two Counties: Energy Development Helps Counties Go from Bust to Boom

By Stateside Associates

What are the biggest issues facing local governments in the Western United States? That was my question when I attended the National Association of Counties (NACo) Western Interstate Region conference in Santa Fe, New Mexico. This annual meeting brings together county officials from Midwestern and Western states to discuss common issues and identify key policy priorities—with a particular focus on agriculture, rural affairs and public lands issues. Attended by approximately 200 officials, this year’s meeting covered these issues, as well as local health care and economic development, but it was energy production (or a lack thereof) that really struck me as the hot topic for local governments throughout the West today.

A look out of a plane window over Western states shows signs of this new energy frontier—drill sites and wind turbines are becoming standard scenery in many areas. In particular, technology advances in oil and gas production have brought new energy projects online and helped drive significant economic growth in many western communities. Highlighting this trend was the news that North Dakota has become the nation’s #2 oil producer, surpassing Alaska nearly a year earlier than anticipated. North Dakota also features the lowest unemployment rate in the country.

Finding the right policies to promote energy development and reap its economic benefits are key issues at the county level. In particular, having both the right zoning and tax policies is critical. Zoning requirements that allow for development but preserve aesthetic and other quality of life factors can be instrumental in creating communities that will be successful in the long-term. Similarly, local sales and real estate transfer taxes that balance revenue generation and economic development can be the difference between energy creating a boom or bringing with it a bust. Adding to this equation are state and federal regulatory issues—in particular an emerging patchwork of environmental requirements—that could slow the development of future projects.

Officials at the meeting also warned of logistical challenges for counties with developing energy industries. Most discussed was the need for infrastructure improvements to support the massive influx of energy sector workers. Citing years of population decline in many rural areas coupled with scarce state and federal funds, county officials noted that roads, schools and sewer systems frequently are inadequate to handle the hundreds of workers that arrive to develop new energy projects. And, many of these individuals are only in the county temporarily—meaning that the infrastructure improvements may not be needed down the road. These difficult governance challenges aside, most that commented saw the benefits of energy development as outweighing the negatives.

Overall, the meeting highlighted the reality that counties are where the “rubber hits the road”—literally in the case of energy development—and that local officials faced with a potential energy rush in their counties can learn from their counterparts across the West about what works and what doesn’t, to ensure their communities maximize the benefit of this economy-driving energy boom.

For those interested in this issue, NACo’s annual meeting July 13-17 in Pittsburgh will take a closer look, with a session dedicated to where the natural gas jobs are today. If you plan to attend, drop me a line. I would love to hear from you about these and other issues you will be closely monitoring.

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