North Dakota House advances $680 million bonding package

BISMARCK — The North Dakota House of Representatives has approved a significant $680 million bonding proposal to pay for infrastructure projects. It's the first step in bumping up the state's funding commitment to the Fargo-Moorhead Area Diversion Project.

The lower chamber on Friday, Feb. 19, voted 74-17 to send House Bill 1431 to the Senate, where it's expected to undergo more changes. Republican leadership has thrown its weight behind the plan, which draws on earnings from the state's $8.2 billion oil tax savings account, known as the Legacy Fund, to pay back the bonds to investors in 20 years or fewer.

The bill approved by lawmakers Friday represents a slimmed-down version of a $1.1 billion proposal Republicans scrapped last month.

In its current form , the bill includes:

• $435.5 million for the Fargo-Moorhead diversion project.
• $74.5 million for a Minot area flood-control project.
• $70 million for highway repairs.
• $50 million for infrastructure loans to cities and counties.
• $50 million for renovations on North Dakota State University agriculture building Harris Hall.

The proposal leaves out funding for technical education and public building restorations that was tucked into the original blueprints.
North Dakota has already put about $434.5 million toward the ambitious Fargo flood-prevention endeavor, said Joel Paulsen, executive director of the Diversion Authority.

If the bonding bill becomes law, it would fulfill the state's pledged $750 million share of the project's cost and boost its total contribution to $870 million. Other funds for the $2.75 billion project are due to come from the federal government and sales taxes levied in Cass County.

Bill supporter Rep. Jim Schmidt, a Huff Republican, said the state would end up saving money on the project by committing the funding now rather than making payments incrementally.

Paulsen said he was "extremely happy" to get the House's approval on a bill that would help his agency complete the project by 2028.

"This legislation provides the project with financial certainty — a real benefit given the urgency and complexity of keeping construction on schedule," Paulsen said in testimony earlier this month.

Proponents of bonding believe the state should strike while interest rates are low and paying back investors over the next two decades won't put a massive strain on the books. But some fiscal conservatives, like House Appropriations Chairman Jeff Delzer, are opposed to bonding as a matter of principle.

"(The bill's) not in horrendous shape, but I have a hard time tying the hands of 10 more Legislatures with close to $100 million payments (every two years)," Delzer said.

Delzer added that he worries approving a massive bonding proposal would set a precedent of relying on borrowed money for major projects.

The bill will soon land in the Senate Appropriations Committee, but chairman Ray Holmberg said the panel will wait to take up the legislation until after it receives new state revenue projections on March 16.

If revenue forecasts come back sunny, the Grand Forks Republican said it's likely his committee would consider adding more road and bridge funding to the bill. Holmberg noted he expects the House and Senate will fire the proposal back and forth at each other before it reaches a final form.

Friday's vote likely puts the final nail in the coffin for a $1.25 billion bonding plan proposed by Republican Gov. Doug Burgum.