Gov. Doug Burgum’s Thursday’s budget speech, proposing an ambitious $1.25 billion state bonding package to fund infrastructure projects, puts a little bit more possibility behind Grand Forks’ wish list of big local projects.
Besides kicking more money through North Dakota’s lagging, COVID-era economy, Bismarck’s big talk on infrastructure is making local leaders hopeful that at least one of those plans — perhaps including projects like an underpass at the intersection of 42nd Street and DeMers Avenue — could soon win state funding.
Burgum, during a meeting with the Herald Friday, spoke broadly about crumbling bridges, expanding and fixing roads, and the like — even allowing for big water supply work. But following Burgum’s Thursday speech to the Legislature, Grand Forks City Administrator Todd Feland said he hopes it could help with other projects as well.
“We’ve talked about these for so long,” Feland said. “It’s really exciting that we could have a reasonable chance within the next biennium.”
Grand Forks leaders have eyed that big list of projects for years. Besides questions of logistics, there has been an elusive question of how to pay for the projects. In recent years, that’s put those big, expensive improvements in the background, often behind more near-term debates about the local library or funding local roads.
But now, with the coronavirus pandemic roiling the economy, interest rates are historically low, and state leaders see an opportunity to borrow big sums of money, then offer North Dakota communities their own low-interest loans and grants. Burgum’s pitch to the Legislature is $1.25 billion in borrowed money — acquired by selling bonds to investors — that will be repaid with earnings from the Legacy Fund, which is the state’s oil tax investment fund.
Burgum’s plan is the latest to spend big on infrastructure, but it isn’t the first. In 2018, legislators were already hungrily eyeing the Legacy Fund’s principal for a potential infrastructure loan fund. Operation Prairie Dog, though it’s been interrupted by the pandemic, created state funds for infrastructure to be filled by oil tax revenue. Democrats suggested a $1 billion infrastructure bonding package this summer to boost the economy.
There are caveats, of course. Even if money does become available for more local capital projects, there’s not much that state money can do to move projects along, for example, if they’re still mired in a planning process.
“Personal opinion, I don't think the idea of a bridge across the Red River is ready to come out of the oven,” said state Sen. Ray Holmberg, R-Grand Forks. “I think that there is much more work having been done on a 42nd Street underpass, or even a 47th (Avenue South) interchange.”
And state leaders haven’t even passed their plans yet, something Burgum himself pointed out in a meeting with Herald news staff on Friday. There’s an entire season of debate still to come before Bismarck sets its spending. But even without the fine details worked out, bonding schemes are favored in principle by Burgum and a bipartisan swath of the Legislature — even as some advise caution.
“(It’s) just making sure that, whatever we do, we're doing it in a way that addresses our needs today and is sustainable for the long term,” said Corey Mock, D-Grand Forks. “The last thing we want to be is shackled by debt.”
The bonding package was pitched as Burgum outlined a proposed $15 billion budget for the 2021-23 biennium — but that proposal comes in the depths of a national crisis. Oil and gas tax revenues have plummeted since the beginning of the pandemic, which has dramatically reduced travel and fossil fuel consumption. Burgum’s proposed spending leans into low interest rates, but it also relies on state savings accounts to provide funding for K-12 education and it whittles away at funding for higher education.
In Grand Forks — where UND is a cornerstone of the local economy — that’s a notable shift. The economic shock from COVID hasn’t rocked Grand Forks as badly as some feared, with the city maintaining its high bond rating and sales tax revenues staying relatively strong through the summer. But local observers have warned that state budget decisions could have a huge impact on the Grand Forks region — notably with any changes at UND.
Holmberg, for the moment, said concerns would be premature. There’s plenty of debate before final budgets get a vote.
"It's not time to grab the smelling salts, or as they say, clutch your pearls," he said.