Roscoe Streyle: The Law Is Not Ambiguous, Lawmakers Must Make the State’s Constitutional Funds Whole

State Treasurer Kelly Schmidt testifies on a bill clarifying North Dakota oil extraction tax allocations Wednesday, March 13, 2019. John Hageman / Forum News Service

This guest post was submitted by Minot resident Roscoe Streyle, a former member of the state House of Representatives.

In 1889 the State of North Dakota, through an act of Congress called The Enabling Act, received a gift of over 3 million acres of land from the Federal Government for the purpose of funding public education in the State to perpetuity. Typically, that transfer included Sections 16 and 36 in every North Dakota township.  The Board of University and School Lands or the Land Board was setup to manage the assets.

The Land Board is one of the most important boards in all of state government.  The primary responsibility of the Department of Trust Lands is to manage the permanent educational trust funds and assets under the Board of University and School Lands’ control as outlined in the ND Constitution.  The North Dakota Constitution is crystal clear when it comes to Constitutional funds as you will learn.

The Common Schools Trust Fund is a Constitutional fund and has around $5.2 billion in the fund, thanks to the Oil & Gas Industry.  It must receive 10% of the Oil Extraction Tax.  This fund has grown rapidly in the past ten years, it contributes around $365 million of the state’s share of education funding per budget cycle.

The Foundation Aid Stabilization Funds must receive 10% of the Oil Extraction Tax.  The funds principal balance is capped at 15% of the general fund for state aid to school districts.  The remainder may be used for education-related purposes, as provided by law.

The Water Resources Trust Fund, which isn’t managed by the Land Board receives 20% of the Oil Extraction Tax.  This fund is used to fund all kinds of flood protection and water supply projects throughout North Dakota.  For prospective, about $350 million goes into the fund per budget cycle.

The State Treasurer and some Legislative leaders are proposing to only “fix” this “error” going forward and not retroactively making the Constitutional funds whole. That’s not how things work. 

So why are we talking about these funds?

There was a delayed bill introduced recently in the ND Senate, SB 2362.  This bill was introduced because the ND State Treasurer has NOT been depositing the correct amount of oil extraction tax revenue from oil produced on the Fort Berthold Reservation into the three previous mentioned funds for the past ten years.  This amounts to $256 million dollars!

There nothing “ambiguous” about the Constitution!  The comments that this will “fix” or “clarify” is misleading at best.  This was an error, which is fine, everyone makes mistakes.  Simply fix it, make it the funds whole and move on is what must be done.

So what’s the problem you might ask?

The State Treasurer and some Legislative leaders are proposing to only “fix” this “error” going forward and not retroactively making the Constitutional funds whole. That’s not how things work.  One doesn’t get to make an error, admit it was an error (the delayed bill), brush it under the table and move on like nothing happened.

The Common Schools Trust Fund was shorted $62.8 million + $12 million in earnings.

The Foundation Aid Stabilization Fund was shorted $62.8 million.

The Water Resources Trust Fund was shorted about $125 million.

Think about the communities that badly need this funding for flood protection, water supply, rural water supply, municipal water projects and K-12 education funding. They were all shorted because of this error, this simply cannot be simply ignored.

On one side you have the Governor’s Office, Attorney General, Land Board, Land Commissioner, Secretary of State, Superintendent of Public Instruction, education community, and the water community, all supporting making these funds whole.  They’re standing up for the Constitution.

On the other side you have the State Treasurer and some Legislative leaders against making the funds whole.  Why?

Let’s review the North Dakota State Constitution and you make up your own mind on who’s right and who’s wrong.

Article X “Finance and Public Debt – Section 24”:

  1. Ten percent of the revenue from oil extraction taxes from taxable oil produced in this state must be deposited in the common school trust fund.
  2. Ten percent of the revenue from oil extraction taxes from taxable oil produced in this state must be deposited in the foundation aid stabilization fund in the state treasury, the interest of which must be transferred to the state general fund on July first of each year….

Where does it say that Fort Berthold Reservation land tax revenue is not to be deposited into these funds?  It doesn’t, “in this state” is plain and simple – clear and concise. Not debatable.

Article X “Finance and Public Debt – Section 22”:

The legislative assembly may provide by law for a percent of revenue from taxes imposed on the extraction or production of oil to be allocated and credit to a special trust fund, to be known as the resource trust fund….

The Water Resources Trust Fund is defined in the Constitution, but doesn’t say that 20% must be deposited into the fund, that was done through century code (law). There has been NO bill passed to change the 20% requirement or any law saying tribal land tax revenue shouldn’t be deposited into the Constitutional funds.  This fund has been shorted, again this is not even debatable.

I’m speaking directly and bluntly to every member of the Legislature.  You must inform yourself on this issue.  You have not been given good information by some key colleagues.  Also, the State of North Dakota has plenty of resources available to cover the “cost” making these funds whole, to suggest otherwise would be untrue.

You are the last line of defense, hold the line and defend the Constitution, the people of North Dakota are counting on you.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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