Sections

Weather Forecast

Close

Dunn County oil well blowout taints Badlands, but damage limited

Advertisement

Economist recommends regional legacy trust for oil-impacted counties

Email Sign up for Breaking News Alerts
Energy Dickinson,North Dakota 58602 http://www.thedickinsonpress.com/sites/all/themes/thedickinsonpress_theme/images/social_default_image.png
The Dickinson Press
(701) 225-4205 customer support
Economist recommends regional legacy trust for oil-impacted counties
Dickinson North Dakota 1815 1st Street West 58602

Echoing what a former Minnesota politician hinted at in Dickinson last month, a rural development and resource economist from a national firm said Thursday that it might be time to set up a regional legacy trust fund specifically for western North Dakota.

Advertisement
Advertisement
0 Talk about it

Speaking as part of a webinar staged through Dickinson State University’s Strom Center for Entrepreneurship and Innovation, Dick Gardner, principal and owner of consulting firm Bootstrap Solutions, said his recommendation to leaders in oil-impacted communities is to start a serious dialogue exploring whether such a fund would make sense.

“Something like this could be an enormous tool for future generations,” Gardner said. “What we’re doing is offering some ideas in the spirit of starting some brain-storming. This is some of our best thinking and we think this could be a best-practice for shale plays.”

Comparing and contrasting a handful of other endowment funds from natural resource booms worldwide, Gardner referred to Minnesota’s Iron Range Resources and Rehabilitation Board — which acts as a gatekeeper to a percentage of the wealth created from northeastern Minnesota’s decades-long iron ore mining play — as a possible model for western North Dakota policymakers to study.

During a Vision West ND roundtable meeting in Dickinson in November, IRRRB commissioner Tony Sertich talked about how the formation of the organization — which is a political entity in Minnesota, but controls 63 percent of the revenues the state receives from Iron Range mining — has helped northeastern Minnesota prosper by capitalizing on its natural resources.

In North Dakota, 30 percent of oil and gas tax revenues go into a Legacy Fund, which, by law, can’t be tapped into until 2017 at the earliest. With current estimates showing about $80 million flowing into the pool monthly, the Legacy Fund lays claim to close to $1.4 billion, according to state numbers.

“Our plan would dedicate a portion of your state energy revenues into a trust that would benefit the impacted region,” Gardner said. “Right now, there is nothing like that in North Dakota. In the short run, a portion of the contribution for the trust could be used for impact mitigation and then, as the boom subsides, all proceeds would be housed in a permanent endowment. I would suggest then investing the real earnings over the long haul.”

Thanks to the bustling Bakken shale formation, mostly located underneath North Dakota tundra, the Peace Garden State is now the second-leading oil producer in the nation. North Dakota Department of Mineral Resources Director Lynn Helms stated recently that the state will likely pass the 1 million barrel-per-day oil extraction mark soon.

“We were trying to match up our study with what the IRRRB has done over the years,” Gardner said. “When you extract a non-renewable resource, you’re foreclosing the future opportunities to use that resource. In the future, the region then has one less card to play. There is an opportunity cost there. We also know that there is an effect referred to as crowding out, where the energy boom pushes out other industries and makes them less competitive because they have to pay higher wages and have higher expenses.”

Gardner added that simple fairness could also dictate why a regional fund would make sense because of the day-to-day impacts incurred by residents and businesses in the Oil Patch.

“It might seem like I’m listing only negatives about this energy play, but there are many, many positives that come from such a play as well,” Gardner said. “Would something like a regional trust make sense for the people of western North Dakota? We think it would, but it’s a question that has to be discussed by the people of the area. Any potential regional fund would ultimately have to be a North Dakota idea and would need to be compatible with North Dakota ideals.”

A former policy economist and rural development director in Idaho, Gardner said the Bank of North Dakota could ultimately be the place for a potential regional trust fund, partly because the money would then be separated from the overall state budget and its potential needs.

Packaged with an available white paper, the webinar was made possible through support from the Bush Foundation, through the Western North Dakota Energy Project and Vision West ND, said RayAnn Kilen of the Strom Center.

As far as where to find the money to fill a potential regional trust bucket, Gardner called that important step a “tough nut to crack,” though he offered a number of possible solutions, including the possibility of tapping directly into the state’s oil production tax.

“Does western North Dakota deserve special treatment?” asked Gardner, rhetorically. “We would argue that it does, but we hope our work will help ignite the conversation.”

For more information on Bootstrap Solutions’ findings, visit the Vision West ND website at www.visionwestnd.com.

Advertisement
Bryan Horwath
A Wisconsin native, Horwath has been covering news in the Oil Patch of North Dakota since 2012. Horwath currently serves as the senior agriculture and political reporter for The Dickinson Press and, despite the team's tendency to always let him down, remains a diehard Minnesota Vikings fan.
(701) 456-1207
Advertisement
Advertisement