After the first week of the 2021-22 Legislative Session, it seems that both Republicans and Democrats agree on the need for a major bonding program, but not on exactly how big it should be.
There are dueling proposals for a bonding program that would use money from the state’s Legacy Fund to pay for infrastructure projects, among other things. On Wednesday, Jan. 6, State Senate Majority Leader Rick Wardner, R-Dickinson, announced a $1.1 billion plan.
The program, which would be funded by Legacy Fund earnings and managed by the Bank of North Dakota, includes funding for water projects, a carbon capture project, an ag development center, and the State Hospital, in addition to infrastructure dollars for counties and cities.
“These are projects the state has committed to funding. Interest rates for bonding are at an all-time low while construction inflation is high, so these projects will cost more in the future if we delay them,” Wardner said. “Using Legacy Fund earnings now to move these projects toward completion will help jump start the economy and keep jobs in North Dakota while saving money in the long run.”
A consistent stream of funds from the Legacy Fund would flow into the Bank of North Dakota for designated projects. BND will hold the bonds, which will then be available to various agencies to access for approved projects. The proposal includes a $170.9 million “gap” bond to cover city and county infrastructure projects that would have been funded by oil and gas tax revenue, but due to the downturn in the oil industry will not have sufficient funds.
“This is one-time funding that invests Legacy Fund earnings right here in North Dakota. It creates jobs now and in the future through career and technical training while also taking pressure off of property taxes, which is crucial to helping our communities through this pandemic and economic downturn,“ said the bill’s prime sponsor Representative Todd Porter, R-Mandan. “There is no burden on the taxpayer with this proposal. The bonds are wholly funded by Legacy Fund earnings, which are taken as a percent of market value. The principal will not be touched.”
Wardner said the money would be used to make the state more prosperous.
“There are needs throughout the state for roads, bridges, flood, and water infrastructure. The carbon capture and ag research projects support our largest industries and will support continued development that will in turn bring revenue back to the state,” he said.
Meanwhile, a plan from Democratic-NPL lawmakers was announced Thursday, Jan. 7 and would set aside $2 billion for bonds.
Sen. Tim Mathern, D-Fargo, and Democratic Leaders Sen. Joan Heckaman, D-New Rockford, and Rep. Josh Boschee, D-Fargo, have introduced legislation to create an infrastructure bonding program during the 2021-2023 biennium.
Senate Bill 2040 authorizes the Public Financing Agency to issue up to $2 billion in infrastructure bonds.
The bonds have a term of 25 years and would be issued at market rates. Bonds would be repaid using Legacy Fund dollars or Bank of North Dakota proceeds transferred to the general fund at the end of each biennium. Approximately $209 million would be needed each biennium to service the debt on the bonds. The bill is also sponsored by Senator Erin Oban, D-Bismarck, Reps. Gretchen Dobervich, D-Fargo, and Alisa Mitskog, D-Wahpeton.
“Infrastructure needs in North Dakota are growing,” says lead sponsor Sen. Tim Mathern (D-Fargo). “The Legislature took a first step in adopting the Prairie Dog bill last session, more needs to be done. Oil and gas revenues meant to support these projects have dropped considerably due to COVID-19, meaning no funds will be available during the current biennium.”
SB 2040 allocates proceeds from the bonds to four distinct project areas: municipal, county and township infrastructure school construction, affordable housing and road and bridge construction.
“We aren’t reinventing the wheel with this bill,” said Sen. Mathern. “It is specifically designed to take advantage of existing programs and authorities. This bill will provide good paying jobs in communities across the state. It will ensure we invest Legacy Fund earnings in North Dakota where it belongs. And it will alleviate pressure on appropriators so we can invest in North Dakota for North Dakotans by funding childcare, public health, and education.”