North Dakota Republicans unveil $1.1 billion bonding plan

January 6, 2021 GMT

BISMARCK, N.D. (AP) — North Dakota’s Republican legislative leaders on Wednesday unveiled a $1.1 billion bonding package aimed largely at financing infrastructure projects across the state and using earnings from the state’s oil tax piggy bank to pay for the borrowed money.

The proposal is similar to a $1.25 bonding proposal presented by GOP Gov. Doug Burgum last month, with one huge exception: The governor’s proposal includes $700 million in low-interest loans for political subdivision for roads, bridges and other construction projects. The legislative leaders’ plan would offer those funds as grants.


Both proposals aim to pay off the bonds in 20 years or less using earnings from the state’s oil tax savings account known as the Legacy Fund, which voters enacted in 2010. The fund’s value is currently $7.8 billion and it’s expected to earn about $500 million in the next two-year budget cycle.

Burgum and legislative leaders tout bonding as a way to quickly finance infrastructure projects without using other revenue sources or increasing taxes. Earnings from the fund are expected to be higher than the interest charged for the bonds, they say.

“The beauty of our $1.25 billion bonding proposal is that it doesn’t raise taxes one single dollar or even rely on tax revenue for repayment of the bonds,” Burgum said in his State of the State address Tuesday. “We can save tens if not hundreds of millions of dollars for the state and our political subdivisions over time versus waiting for years and years to pay cash for infrastructure.”

Republican Sen. Majority Leader Rich Wardner said approving a bonding package is a top priority with the Legislature this year.

“It sets the table for the future and if we get this it will be a great asset for the state,” Wardner said in an interview. “Every year we delay it’s going to cost more.”

Democrats, who are badly outnumbered in the Legislature, have offered a sweeping $2 billion bonding package that includes a revolving loan fund of $750 million for school construction.

While the Democrats’ proposal will be seen as pie-in-the-sky in GOP-led Legislature, Wardner said he would work with them — and the governor — to find common ground.

The bonding proposals come after the Legislature last session endorsed a major spending plan aimed at rebuilding infrastructure projects outside of the state’s oil patch. The goal of the legislation signed by Burgum was to provide $250 million in every two-year budget cycle for counties, cities and airports in non-oil-producing areas.


It came after grumbling by lawmakers representing those areas that the western part of the state was getting too large a share of the money from oil produced there. They wanted a bigger share of oil tax revenues for their projects back home.

The so-called Prairie Dog legislation, named for the industrious burrowing animal, assumed that that oil production and prices would hold at the levels two years ago. They haven’t, and only $30 million has gone out from the program.

For several years, the state rode a wave of unprecedented growth — and spending — due to generally healthy commodity prices and rapid oil development in western North Dakota as the state became the No. 2 oil producer in the U.S. behind Texas. The state budget has more than doubled in the past decade, and lawmakers generally have funded projects with money on hand, instead of borrowing for them.

Wardner said a bonding package will likely sail through the Senate but will meet resistance in the more conservative House.

Republican state Rep. Rick Becker, an ultraconservative former gubernatorial candidate, said bonding is a bad idea that’s being used to “salvage” the Prairie Dog legislation and to keep “our spending levels up.”

“It’s unacceptable,” Becker said of borrowing money for projects. “There is no emergency here, not even close.”