Legislation would reimburse school funds in future

March 7, 2019

BISMARCK, N.D. (AP) — Top Republican lawmakers introduced legislation Thursday that would begin steering some oil tax money into constitution-mandated school funds that may have been shortchanged for years.

Land Commissioner Jodi Smith believes more than $137 million in state revenue from the oil-rich Fort Berthold reservation should have been deposited over the past decade in the common schools trust fund and the foundation aid stabilization fund that benefit schools.

A hearing on the legislation is expected next week, and GOP Senate Majority Leader Rich Wardner said the bill may be amended to do nothing, meaning the disbursements would remain the same.

The Legislative Council, the Legislature’s nonpartisan research arm, will present a report on the history of the disbursements, Wardner said. Lawmakers want “to get the facts on the table.”

Republicans contend 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 never was a shortfall” in school funding, Wardner said. “I don’t think anybody been hurt at all.”

GOP leaders believe the state’s share of taxes from the reservation were correctly distributed by Republican state Treasurer Kelly Schmidt, based on guidance from the attorney general’s office in 2012.

The state Democratic Party said in a statement Wednesday that Schmidt was “sloppy” and “incompetent,” and blamed GOP lawmakers for supporting her.

The statement drew a rebuke Thursday from Democratic Senate Minority Leader Joan Heckaman, who called it “disrespectful.”

Still, Heckaman said Democrats will push to have the funds reimbursed, and will offer amendments to the bill to do that, though it will be a tough sell to the GOP-controlled Legislature.

Heckaman said the extra dollars would help the state’s K-12 education budget that she described as flat in recent years.

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 for schools if tax collections fall short, holds nearly $375 million.

The Republican bill is sponsored by Wardner, House Majority Leader Chet Pollert, Sen. Dwight Cook, the chairman of the Senate’s Finance and Taxation Committee, and members of each chamber’s powerful appropriation committees.

Cook said none of the bill sponsors support reimbursing funds that may have been misallocated in the past.

“None of us has the appetite for looking back,” Cook said.