Hotels performance in major oil and gas markets has slowed due to a decline in U.S. oil prices, according to analysis by STR Analytics. Hotel development in oil and gas market tracts have accounted for 25 percent of new supply that has entered the industry since 2010, and have also accounted for 47 percent of Midscale properties and 44.5 percent of Economy hotels developed in the U.S. during that time. The U.S. oil and gas industry has been a boon to the hotel industry for the past half decade, especially in remote locations. The STR analysis found that among prominent oil submarkets, the North Dakota area has reported the largest supply increase since 2010, up 73.4 percent. Midland/Odessa, Texas (+44.4 percent) ranks second followed by the Texas South Area (+37.7 percent) and Bismarck, North Dakota (+36.9 percent). More supply also is reported in the pipeline with nearly 11,000 rooms in construction in the top 20 oil and gas tracts as well as another 24,000 rooms in planning stages.
In April, both Missouri (Senate Bill 149) and North Dakota (House Bill 1089) enacted legislation creating sales and use tax exemptions for new and expanding data storage centers. According to CPA Practice Advisor, Missouri S.B. 149 provides several state and local sales and use tax exemption for machinery, equipment, computers, electrical energy, gas, water, and other utilities, including telecommunication and Internet services, for new or expanding data centers. Purchases of tangible personal property for the construction of a new data storage center facility are also exempt. North Dakota HB 1089 provides a sales and use tax exemption for enterprise information technology equipment and computer software purchased for use by a qualifying business in a qualified data center. The exemption is also available to existing data centers that have undergone substantial refurbishment, with at least 16,000 square feet improved through methods including energy efficiency improvements, building improvements, and the installation of enterprise information technology equipment, environmental controls, and computer software.
North Dakota Gov. Jack Darymple formed a 14-member task force to study permanent property tax reform. According to Minot Daily News, the oil-rich state boasts a near $1 billion budget surplus and the lowest unemployment rate in the nation. North Dakota has had about $1.5 billion in local property tax reductions since 2009, and while speaking at the state Capitol, the governor said it's been a period of historic tax relief but now is the time for "lasting property tax reform." Darymple said there is a lot of room from improvement and simplification in North Dakota's property tax system, which will yield greater results for taxpayers.
The North Dakota House has approved a bill that will require voter approval before tax exemptions can be granted to retail sector businesses. According to The Bismarck Tribune, the original state law was intended to allow exemptions for primary businesses, but over the years many smaller cities have approved exemptions for retail sector businesses. The approved bill will only apply to cities with a population under 40,000.
Businesses in California paid just under $90 billion in taxes last year, with property taxes by far being the largest contributor. According to The Orange County Register, California businesses pad $29.8 billion in property taxes, followed by $17.7 billion in sales taxes, $9.6 billion in corporate taxes, and $8 billion in income taxes passed through to owners. The $89.9 billion in taxes paid by businesses accounted for 48% of all state and local tax collections in California.
An upcoming vote on whether or not to abolish property taxes in North Dakota could ultimately end up greatly benefiting businesses in the state of Minnesota. According to the StarTribune, while unlikely to pass, the banning of property taxes in North Dakota would cost the state $812 million in annual revenue, an amount that would have to be made up by raising sales taxes. This would lead many North Dakota consumers near the Minnesota border to do their shopping across state lines.