Gov. Burgum signs landmark infrastructure bonding bill
BISMARCK (AP) — Gov. Doug Burgum on Wednesday signed a landmark $680 million infrastructure bonding bill that will use earnings from North Dakota’s multibillion-dollar oil piggybank to pay off the money over the next two decades.
The bipartisan bill has highlighted North Dakota’s legislative session and got wide support in both chambers, but only after months of negotiations. It represents the most amount of money borrowed in state history. It also has helped push the Legislature’s proposed two-year budget, including federal aid, to a record $15.8 billion, or about a billion dollars more than the current budget cycle that ends June 30.
The legislation allots three-quarters of the bond money for flood-control projects: $435.5 million in Fargo and $74.5 million for the Minot area. The bill also includes $70 million for highway and bridge infrastructure and $50 million for an agriculture development center at North Dakota State University in Fargo.
The bonds would be retired in 20 years or less using earnings from the state’s oil tax savings account known as the Legacy Fund, which voters enacted in 2010. The fund’s value is currently about $8 billion and it’s expected to earn about $500 million in the next two-year budget cycle.
The state budget has more than doubled in the past decade, and lawmakers historically have shown little appetite for bonding and generally have funded projects with money on hand, instead of borrowing for them.
Burgum and legislative leaders now tout bonding as a way to quickly finance infrastructure projects without using other revenue sources or increasing taxes. Earnings from the Legacy Fund are expected to be higher than the less than 2% interest charged for the bonds.
Burgum called the legislation “historic” at a bill-signing ceremony at the state Capitol, attended by lawmakers, lobbyists and government officials.
“The time to bond is now,” the Republican governor said.
Proponents, including Burgum, said the bonds will ultimately result in a savings to taxpayers.
“With historic low interest rates, investing in infrastructure now is the financially conservative thing to do. We will save tens if not hundreds of millions of dollars for our state and political subdivisions over time versus waiting for years and paying cash. That’s just smart economics, and it’s going to save our taxpayers dollars,” Burgum said.
Burgum, himself, had proposed a $1.25 billion bonding proposal before the Legislature convened in January. Leaders in the Republican-led Legislature largely ignored the idea and proposed a $1.1 billion bonding package themselves. But that amount to was whacked to $680 million after criticism among some lawmakers who believed it was attached to too many unnecessary extras, referred to as “Christmas tree” items.
Democrats also had offered a $2 billion bonding package that included a revolving loan fund of $750 million for school construction. The proposal got nowhere and was seen only as a political statement from the party that is badly outnumbered in the Legislature.