Change in Oil Funding Priorities Concerns Western Legislators

Change in Oil Funding Priorities Concerns Western Legislators

Thursday, April 28, 2011
The Bismarck Tribune, Bismarck, North Dakota
by Rebecca Beitsch, The Bismarck Tribune, N.D.

Lawmakers have passed a bill that changes the way oil money will be allocated amid cries from some western legislators that it will short the oil producing counties.

House Bill 1451, which now goes to the governor for signature, eliminates the Permanent Oil Trust Fund, where most oil revenue goes now, and disperses it into other funds --mainly the state's general fund -- while all setting the stage for locking more of it away in the Legacy Fund down the road.

Some legislators' problem with the Permanent Oil Trust Fund was one of semantics -- they complained there was nothing permanent about it and the fund should be dissolved and dispersed into more project-specific funds.

The bill does just that, putting more money from oil revenue into the general fund to cover projects that would've likely been funded by oil money anyway. The rest of the money funnels into funds, hitting an upper limit before moving into the next one like a line of dominoes.

After the first $200 million goes into the general fund, the next $341 million would fund property tax relief. Then comes more money into the general fund, allotments into the newly-created Strategic Investment and Improvements Fund, then into disaster relief, and then back to the Strategic Investment and Improvements Fund before 25 percent of whatever is left over goes into the Legacy Fund. Created by voter referendum in 2010, the Legacy Fund locks some of the oil revenue away, untouchable by the Legislature until 2017.

As the bill came to a final vote Tuesday in the Senate, some expressed concern about putting even more money in the Legacy Fund, though money is not projected to reach that fund this biennium.

Sen. John Andrist, R-Crosby, said investing in infrastructure, particularly in the western part of the state, should be a No. 1 priority.

"I'm afraid we're going to get short changed because we'll be trying to save money rather than invest it in infrastructure in the oil producing counties that supplied those funds," Andrist said, adding that the infrastructure money from this session had been scattered through the state rather than targeted at the west.

Other discussion surrounded eliminating the Permanent Oil Trust Fund.

Sen. Dwight Cook, R-Mandan, said centralizing spending from one source would be more transparent. Others argued the opposite, saying it made it unclear to what extent oil was funding state projects.

"I think it's always good to know when the state is spending oil money," said Sen. Jim Dotzenrod, D-Wyndmere.

Sen. John Warner, R-Ryder, said much of the state's spending is due to oil, but he's concerned transferring more to the general fund will tempt legislators to spend.

"We can only put so much in the general fund or we'll overspend," Warner said.