WATFORD CITY, N.D. — North Dakotans living in the heart of the Bakken Oil Patch asked lawmakers to consider funding school construction, transportation infrastructure and more with the state's oil tax piggybank.
The state Legislature's interim Legacy Fund Earnings Committee heard from more than 25 speakers Wednesday, Feb. 19, and Thursday, Feb. 20, in Watford City.
In 2010, voters in the state overwhelmingly approved the creation of the Legacy Fund, which currently contains about $6.75 billion. Since then, 30% of the state's oil and gas tax revenue go to the savings fund, which lawmakers couldn't touch until 2017. During the last budget cycle, some of the earnings were used to balance the state's books, replenish an education fund and boost a rainy day fund.
The special 11-member committee, which was approved by the 2019 Legislature, is made up of leaders from both major parties. Senate Majority Leader Rich Wardner said the goal of the committee is to prioritize the funding ideas presented by the public and come close to an agreement on how North Dakotans are looking to spend the fund.
Ideas from the oil patch
A succession of school administrators from districts in the western North Dakota pleaded with the committee Wednesday to consider using some of the fund to build schools. The administrators from Watford City, Williston, Dickinson and Kenmare said their districts have experienced severe overcrowding since the oil boom began about a decade ago.
Beth Zietz, the interim superintendent of Williams County School District No. 8, said her district has resorted to teaching students in trailers because of the lack of space. Zietz said the district would soon be closing open enrollment, meaning it will no longer accept students attending schools in other districts.
"Before I turn kids away, I'd rather teach them in my office," Zietz said. "It's not fair that the kids in the western part of the state don't have school choice because none of us have room."
Scott Decker, mayor of Dickinson, said many western North Dakotans don't have any appetite for raising their own property taxes by passing school bond issues at the local level. Decker said the state should help bear more of the costs of improving the area's educational and transportation infrastructure.
"I agree that some of the earnings should be spent, if not all of them," Decker said. "The right thing to do now is to invest in the very communities that continue to provide for growth of the Legacy Fund."
Wardner said "there's no question" that school construction is significant challenge in the oil patch because the districts "are busting at the seams." The Dickinson Republican said the Legislature continues to look at boosting funding for K-12 education, but he did not explicitly say where the additional funding might originate.
State Sen. Dale Patten, R-Watford City, spoke to the committee about improving quality of life in the oil patch by making roads safer. Patten touched on a popular proposal among speakers that would use Legacy dollars to widen U.S. Highway 85 from two lanes to four. In November, projects to expand a notoriously dangerous 30-mile stretch of the highway in northwest North Dakota were once again denied federal funding, according to the Williston Herald.
"For those of us who live here, it's not if we had a close call on Highway 85, it's when our most recent close call was," Patten said.
Steve Stenehjem, the CEO of First International Bank, said some of the funds should go toward improving roads in rural parts of the state's oil-producing counties.
"The vast majority of our roads in (McKenzie County) are gravel," Stenehjem said. "It's ridiculous that we don't have more paved roads, and if you ever drive on our roads after a rain or a snowstorm, you see why we need a vast improvement in our infrastructure in western North Dakota."
North Dakota University System Chancellor Mark Hagerott said the Legislature would do well to make long-term Legacy Fund investments in higher education, including technical training programs in the western part of the state. Hagerott also requested lawmakers carve out some money to stabilize the state's colleges and universities during funding "dips" like the system saw during the 2017-2019 budget cycle.
Michelle Stephens, who runs the Steel Horse Cafe in Cartwright, said the state should use Legacy dollars to give residents a small cut of the oil tax money every year in a similar fashion to Alaska's Permanent Fund. Stephens suggested that the Legislature should leave the fund alone otherwise and find money for education and infrastructure elsewhere. Wardner said the committee has found there is very little interest in using the funds this way.
Looking backward and forward
State lawmakers rejected several ideas for using the money from the fund during last year's session, including bills that would have reduced state income taxes and funded paid family medical leave.
Gov. Doug Burgum pitched $300 million worth of Legacy Fund projects, including the Theodore Roosevelt Presidential Library, which received conditional funding from other sources. Burgum said in his recent State of the State address that about half of the money in the fund should be reinvested, while the remaining funds should be used judiciously to have "lasting impacts beyond our current generation."
House Majority Leader and Committee Chairman Chet Pollert, R-Carrington, said he and Wardner can agree with some of Burgum's vision for the fund.
"How much to invest is still up in the air, but I think we all agree that we need to reinvest some of the earnings into the principal," Wardner said.
Near the end of the meeting, Rep. Jeff Delzer, R-Underwood, floated the idea of establishing a metric that would find a "rolling five-year average" of earnings going into the fund. The metric would give lawmakers a sense of how much it can spend or reinvest without overestimating the amount due to booms in oil tax revenue.
Wardner and Pollert said the idea would likely be the subject of a rough bill draft for the committee's consideration at its next meeting. Wardner said until the Legislature establishes this metric for average earnings, it won't know how much it can spend.
House Minority Leader Josh Boschee, D-Fargo, put forward a proposal from the state's Democratic-NPL Caucus on how to spend money in the fund. The proposal, which is not yet a formal bill draft, includes funding for road infrastructure, research, health and human services, workforce development and other "buckets." Under the proposal, 45% of the earnings would go back into the fund over time, Boschee said.
There was also talk of a legislative meeting last week in which state Mineral Resources Director Lynn Helms told lawmakers that North Dakota oil production could plateau within the next two to five years and begin declining about a decade later. Delzer and several speakers repeated a sentiment that the state should plan for the not-so-distant future when oil and gas tax revenues do not provide such a major boon to the state's coffers.
Pollert said getting outside of Bismarck and Fargo to hear ideas has paid off since residents of the oil patch face different challenges. Despite the differences, Wardner said that major themes, like infrastructure for roads and schools, have emerged during public commentary periods.
The committee will likely meet two more times before the next legislative session begins in 2021, Pollert said. The lawmaker noted that he expects lawmakers to put forth "a pile of proposals" leading up to the session.