BISMARCK, N.D. (AP) — A program aimed at helping North Dakota communities deal with the adverse effects of energy development has been suspended due to slumping oil activity and less-than-expected funding.
North Dakota’s Board of University and School Lands voted Thursday to put on hold the program that provides grants for projects that range from domestic violence shelters and airports to hospitals and schools. The board also put a freeze about $7.4 million in Oil and Gas Impact Grant Fund grants appropriated for projects were work hasn’t begun.
Gov. Jack Dalrymple, the land board chairman, directed officials to notify entities to immediately to postpone planned projects “or otherwise things are going to be magically started.”
The land board oversees the state Department of Trust Lands, which manages rights to explore for oil, coal and other minerals beneath 2.5 million acres of land. The board’s members are Dalrymple, Attorney General Wayne Stenehjem, Treasurer Kelly Schmidt, Secretary of State Al Jaeger and Kirsten Baesler, the state superintendent of public instruction.
The trust lands department’s commissioner, Lance Gaebe, said the Legislature approved about $140 million for the the Oil and Gas Impact Grant Fund for the two-year-budget cycle. A new revenue forecast done this month projects the fund will only collect $28.6 million for the budget period due to a downturn in oil activity and weakened oil-tax collections.
The board has already obligated about $42 million in projects so the fund is “upside down,” Gaebe said.
“We have a grave challenge in that we have already granted $14 million more than it appears we will be collecting,” Gaebe told the board.
Separately on Thursday, a state-performed audit of the Trust Lands department criticized the agency for operating the grant program “ineffectively.” Dalrymple told reporters he had not seen the audit and Gaebe said he disagreed with the report’s findings.
Gaebe said his agency began contacting some 300 entities earlier this month to notify them of the fund’s financial problems and cautioned against beginning projects.
Even so, he said, “it created a run on the bank, so to speak.”
The oil-impact grant program was started in 1982 and was capped at $5 million per two-year budget cycle until the current boom began in about 2007. Not all the money was spent in lean oil-producing years of the 1980s and 1990s.
Funding for the program comes from part of the state’s oil and gas production tax. The cap was raised to $135 million in 2011 and $240 million in 2013, all of which was spent by local governments where populations soared and whose infrastructure was strained by oil development.
Janelle Moos, the executive director of North Dakota’s Council on Abused Women’s Services, told reporters the land board’s action Thursday has caused “a little bit of panic.”
Moos said $2 million in grants and matching funds from cities and individuals are now in limbo for new domestic violence shelters in Minot, Dickinson and Williston. She said the current shelters in the cities are “at capacity.”