On the November ballot, Michigan voters will be asked whether to approve or reject an amendment to the constitution concerning the state’s Natural Resources Trust Fund. Among other changes, Proposal 1 would constitutionally require future state revenue from mineral, oil and gas leases and royalties earned on state lands be used by this trust fund for certain conservation or environmental purposes.
There are two conservation-related trust funds in the state constitution: the Natural Resources Trust Fund and the State Parks Endowment Fund. Under current constitutional language, the NRTF receives the revenues paid to the state for mineral, oil, and gas leases and royalties — companies buying the rights to develop minerals or oil and gas resources on state-owned lands — until it reaches a balance of $500 million. When that cap is reached, these revenues flow into the SPEF, which is capped at $800 million.[1] Once the SPEF reaches its cap, these revenues will become part of the state’s general revenues, and the Legislature will then decide how to allocate the money as part of its annual budgeting process.[2]
The NRTF reached its cap of $500 million in 2011, and, as of Sept. 31, 2019 — the last day of the state’s 2019 fiscal year — it had a $500 million “nonspendable” fund balance and an additional $229 million “restricted” fund balance, money allocated to projects but not yet spent or held in reserve in case of market declines.[3] The SPEF currently has $283 million in its “nonspendable” fund balance and $50 million in its “restricted” fund balance.
The funds operate in different ways, as summarized in this table:
Graphic 1: Comparison of Michigan’s Conservation Trust Funds
[1] Note that the constitutional language allows the State Park Endowment Fund’s $800 million limit to be adjusted for inflation once it reaches its $800 limit, but does not do so for the Natural Resources Trust Fund. Mich Const art. IX § 35; Mich Const art. IX § 35a.; Josh Sefton, “State Parks Funding in Michigan - A 15-Year History” (Michigan Senate Fiscal Agency, Feb. 2015), https://perma.cc/GDX4-KJVK.
[2] MCL § 324.1904.
[3] “State of Michigan: Comprehensive Annual Financial Report” (State of Michigan, March 6, 2020), 232, https://perma.cc/7X73-J4JS.