Wading Through More Outdoor Heritage Fund Questions

Okay, I’m going to take another whack at the Outdoor Heritage Fund after getting off on too many tangents in yesterday’s article. Plus, there’s new information coming out daily in light of the sharp drop in oil prices, leading to a sharp drop in state tax revenues.

Here’s what we know for sure:

The Outdoor Heritage fund was created by the 2013 Legislature and received its revenue from a small percentage of oil and gas tax revenues. The fund was to receive “up to” $30 million if the total oil and gas taxes collected were sufficient to provide that much under the percentage allocated to the Fund. This week the North Dakota Legislative Council released income projections for the remainder of the biennium which revealed that the Outdoor Heritage fund is likely to collect only $18.7 million (about $700,000 more than I estimated in yesterday’s article, but, hey, I was pretty close).

As of January 9, the date of the last North Dakota Industrial Commission meeting, the Fund had spent $19.3 million. That’s about $600,000 more than anticipated revenues. And they have announced another round of grants, with a deadline for applications of April 1.

The Industrial Commission awards the grants upon recommendations from its Outdoor Heritage Advisory Council, a citizens board appointed by the Governor to screen grant applications and make recommendations to the Industrial Commission. The Advisory Council has no authority to spend money, only to recommend to the Governor, the Attorney General and the Agriculture Commissioner how to spend it.

That $600,000 glitch is going to have to be dealt with somehow, because they can’t spend money they don’t have. And unless they solve their revenue problem, the next round of grants is likely going to have to be canceled.

There are two bills in the Legislature which would seemingly fix the problem, at least for the next biennium. The Governor announced last summer, and then included in his executive budget bills submitted to the Legislature, an increase in the fund to $50 million per biennium. Not “up to” $50 million, but 50 million real dollars. There are, in fact, two bills in the Legislature using the $50 million figure.

HB 1013 is ostensibly the budget bill submitted by the Governor for the Board of University and School Lands, but it has some additional budgets tacked onto it, including the budget for the Outdoor Heritage Fund. The paragraph dealing with the OHF amends the language in the current law as follows:

d. Credit four percent of the amount available under this subsection revenues to the North Dakota outdoor heritage fund, but not in an amount exceeding fifteen twenty – five million dollars in a state fiscal year and not in an amount exceeding thirty fifty million dollars per biennium;

Words with a strike-through is language from the current law that is being removed, and words underlined are what is being proposed to replace them. So, as you can see, the new language removes the reference to a percentage of the Oil and Gas Tax and replaces it with just the word “revenues,” and increasing the amounts to $25 million per year and $50 million per biennium.

It’s seemingly a bit confusing, because you can see it doesn’t specifically say exactly how much will be allocated, just how much it cannot exceed, but my friends who know this stuff say that is standard legislative language which would mean the fund gets $50 million per biennium. This is, after all, the Governor’s bill, and that is certainly what the Governor intended when he first broached this last summer. He did not say he wanted to simply raise the cap on the existing program—he said he was going to include $50 million in his budget for the Outdoor Heritage Fund. So despite the seemingly cumbersome language, we have to assume that’s what it means.

There is a second bill, HB 1409, introduced by the Governor’s nemesis in all this wrangling over all matters outdoors, Rep. Todd Porter, who wants to be “Mr. Outdoors” in the Legislature, in his capacity as chairman of the House Natural Resources Committee, and therefore wants to take credit for these kinds of things instead of acquiescing to the Governor.

Porter’s bill does a couple of things the Governor’s bill does not—it starts to solve the problem of too much money for swing sets on public and school playgrounds, and tries to direct the funds more to natural resource and conservation projects. Tries to. Public pressure will likely keep it from deleting those kinds of things from the fund’s approved activities.

But the revenue part of the bill is goofy. Current law, the bill passed last session, has two parts, with pretty much identical language, except the first part deals with allocating funds during the current biennium, and the second part makes some changes in how things are to be handled in the next biennium. The Governor’s bill simply gets rid of one section, and makes the other section permanent, so it doesn’t change from biennium to biennium. It simplifies the law. The language I quoted above is from that bill.

Porter’s bill has the same language, but leaves both sections in–dealing with the current biennium and the next biennium–so it seems to change the allocation amount to $50 million in the current biennium, as well as in the next biennium. Except, if it passes, the law doesn’t take effect until July 1—it says that specifically at the end of the bill—so the effect would be back-dating checks, which I don’t think is legal, or was anticipated by the Governor. It would be, in effect, the deficiency appropriation I mentioned yesterday, but it seems to me it would need an emergency clause at the end of the bill making it law as soon as it was passed for the funds to become available this biennium. Otherwise, the new law, taking effect on July 1, would send funds back to the former biennium, to cover overspending by the Industrial Commission. Maybe some lawyers can tell me if that is legal. It doesn’t look like it to me.

See, the law as it is written now is the law the Industrial Commission has to go by. And under that law, the fund only gets a percentage of the oil and gas tax, which  the Legislature’s own research arm estimates is going to be just $18.7 million.  As I mentioned at the top of this article, the Industrial Commission has probably already overspent the fund for this biennium. That’s something they’re going to have to deal with. Maybe one of these bills can do that, by attaching that emergency clause, giving them an additional direct appropriation–in Porter’s bill, that would be $50 million–for this biennium, as I read it.

We’ll keep an eye out for an amendment with an emergency clause as the bills emerge from committees. Obviously, because the bills both deal with the same subject, one of them is going to have to be killed or changed.

Meanwhile, we’ll be waiting to see if the Industrial Commission proceeds with another round of grants giving out more money they don’t have.