Surplus money placed in special funds, given to communitiesGreetings from your District 36 senator.
By: George Nodland, The Dickinson Press
Greetings from your District 36 senator.
I received an update on the status of our state finances at the end of last month from the Legislative Council. With all the discussion in the media about our state surplus, I thought you may be interested in this report.
The current estimated general fund balance for June 30 is $848.9 million. This is an increase of $642 million over the 2011 legislative projected forecast.
General fund revenues collected for the first 11 months of this biennium is $651.7 million (40 percent more than 2011 legislative forecast). Sales tax, individual income tax and corporate income tax have exceeded projections in historic amounts.
Contrary to most people’s thinking, a great amount of the surplus money is placed in special funds and given back to counties, cities and schools per past legislative action and constitutional provisions voted in by the people of North Dakota. Following is a summary of the main funds:
Budget Stabilization Fund — This fund is what I call the savings account for budget shortfall. The governor may draw from this fund only if the general fund revenues for the biennium are 2.5 percent less than the balance estimated by the last approved legislative session. The fund may not exceed 9.5 percent of the general fund budget approved at the last legislative session. The current balance in the fund is $386.4 million.
Common School Trust Fund — The principle balance in this fund may not be spent. Only the income earned in this fund may be used to support the schools in the state. This fund is funded by 10 percent of the oil extraction taxes received by the state. The balance in this fund is $1.622 billion. ($92 million is anticipated to be distributed to state aid to schools this biennium).
Foundation aid stabilization Fund — This fund may only be used to offset foundation aid to schools if there is a revenue shortfall. The fund is funded by 10 percent of the revenue from the oil extraction taxes received by the state. The balance is $204 million.
State aid distribution Fund — the purpose of this fund is to share state revenue with the counties and cities in the state. The amount is adjusted by the Legislature. It is funded from sales tax, use tax and motor vehicle excise tax. The estimated fund receipts for this biennium are $160 million. Of this amount, the counties in the state will receive $85.9 million and the cities in the state will receive $74.1 million.
Legacy Fund — This fund was enacted by the people of the state last year. It is funded from 30 percent of the oil and gas gross production taxes received by the state. The projected balance for June 30 is $708 million. This fund cannot be spent until after June 30, 2017. After that time, no more than 15 percent of this fund can be spent in each biennium. This is a good idea to set aside 30 percent of this windfall from the energy industry for the future of our children and grandchildren.
This is a short summary of some of the main special funds we have in the state. We also have the Water Resources Trust Fund, which funds water projects in the state. As you can see, a good portion of the oil and gas tax revenue is used for special purposes. In addition to these funds, the cities, counties and schools in the oil producing counties also receive a portion of the tax collected by the state.
Their share needs to be increased in the next legislative session to the first 25 percent of the taxes collected. The impacts here in oil country are beyond my thinking and growing each day!
Thank you for the opportunity to serve you.
Nodland is District 36 senator from Dickinson. Email him at email@example.com.