North Dakota GOP leaders’ proposal clarifies oil tax distributions

Wednesday, March 6, 2019

BISMARCK, N.D. (AP) — Top Republicans in the GOP-controlled Legislature are crafting a proposal that clarifies oil tax distributions but doesn’t reimburse a pair of school funds that some lawmakers say were shortchanged.

Land Commissioner Jodi Smith, who has been on the job since late 2017, believes that more than $120 million in state revenue from the oil-rich Fort Berthold reservation should have been deposited over the past decade in two constitutional funds that benefit schools. Instead, the money was spent elsewhere, she said.

Senate Majority Leader Rich Wardner and House counterpart Chet Pollert, along with state Treasurer Kelly Schmidt, believe the state’s share of taxes from the reservation were correctly distributed based on guidance from the attorney general’s office in 2012.

Wardner and Pollert said North Dakota’s schools were not shorted money in the past, and blamed any problems with “ambiguous” language in the law that distributes the state’s share of taxes from oil production on the reservation

“There is no boogeyman here,” said Wardner, a retired teacher. “It doesn’t matter where the money has come from, we have always taken care of K-12 and we always will. Period.”

Republican Sen. Dwight Cook of Mandan, the chairman of the Senate’s Finance and Taxation Committee, was drafting an amendment to the law Tuesday that could be considered later this week by legislators.

A formal audit of the distributions to the common schools trust fund and the foundation aid stabilization fund has not been done. The common schools trust fund has a balance of more than $4.2 billion, while the foundation aid stabilization fund, which serves as a financial backstop if tax collections fall short, holds nearly $375 million.

Senate Minority Leader Joan Heckaman said she had not seen the GOP amendment and would not comment on it.

House Minority Leader Josh Boschee said he believes Smith’s account that the funds were shortchanged and should be restored.

“We need to recognize an error was made and take responsibility to make right for the education system,” Boschee said.

Failure to do so “invites litigation,” he said.

Smith manages the state Land Department, which leases rights for grazing and rights to produce oil, coal and gravel from state lands. The Land Department manages several state trust funds, including the common schools trust fund that benefits public schools.

The state Board of University and School Lands oversees the Land Department. Gov. Doug Burgum is chairman of the board that also includes the state treasurer and Attorney General Wayne Stenehjem.

Burgum spokesman Mike Nowatzki has said the governor is hoping for resolution.

“If it’s determined that dollars should have been allocated to those constitutional funds, he would support restoring the affected constitutional funds as soon as possible,” Nowatzki said.

The Land Board itself could make that determination later this month.

North Dakota United President Nick Archuleta, whose union represents public employees and teachers, said if it’s determined the school funds were shortchanged, “we would expect it to be paid back.”

Archuleta said the Legislature and the governor have provided “adequate funding” to education in recent years.

“Overall, we can’t dispute their commitment to K-12 education,” he said.