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Board may restore suspended grants as oil tax revenues rebound

BISMARCK -- A rebound in North Dakota's oil tax collections could restore more than $7 million in oil impact grants that were suspended in February, but Land Commissioner Lance Gaebe said he won't recommend a wholesale restart of the program.

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North Dakota Department of Trust Lands Commissioner Lance Gaebe answers questions from state lawmakers about recent audits as Audit Manager Jason Wahl listens behind him on Thursday, April 21, 2016, at the Capitol in Bismarck. Photo by Mike Nowatzki / Forum News Service

BISMARCK - A rebound in North Dakota's oil tax collections could restore more than $7 million in oil impact grants that were suspended in February, but Land Commissioner Lance Gaebe said he won't recommend a wholesale restart of the program.

"The best news is that we can fulfill the obligations we've already made in grants," he told the Board of University and School Lands on Thursday.

Lawmakers appropriated $139.3 million for the Oil and Gas Impact Grant Fund for the 2015-17 biennium to help airports, schools, law enforcement agencies and other local entities cope with the impacts of oil and gas development.

The land board had already awarded about $42 million in grants when a revised revenue forecast released in February projected the fund would take in only $28.6 million during the two-year cycle. Board members voted to suspend future grant rounds and put a hold on about $7.3 million in grants for projects that hadn't started yet.

An updated revenue forecast released this month now projects the grant fund will take in $73 million by the end of the biennium next June, Gaebe said. It's received about $30.7 million so far.

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Gaebe said the new forecast means there should be enough money to cover the $42 million in previously awarded grants and leave about $30 million for additional grants - though he noted revenues can change and $6 million is already earmarked in state law for critical access hospitals and providers of services for the developmentally disabled.

Gov. Jack Dalrymple, who chairs the five-member board, said it will proceed cautiously.

"But the good news is there might be a little bit left," he said.

State Treasurer Kelly Schmidt warned that oil prices hit a three-month low this week, and the effect on the grant fund won't be seen for three months.

"We're so cyclical, we don't want to get back to where we were before," she said.

Gaebe said he will contact the entities that were awarded the $7.3 million in suspended grants to determine the status of their projects, adding some may have found other funding sources by now or decided not to proceed.

"If they still need the grant, I would bring it back to the board and figure out what to do with it," he said after the meeting.

The suspension of future grants rounds in February was disappointing to local officials who were counting on grants that had been designated - but not mandated - in legislation, including $2 million for domestic violence shelters in Dickinson, Minot and Williston.

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Gaebe said he'll present a plan next month for the suspended grants and possibly additional grants, but he told the board, "I would not be anxious to open it wide-open again."

"We've certainly learned not to spend it until it's collected, so it'll be a go-slow approach," he said afterward.

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