The Michigan Natural Resources
Trust Fund was established in 1976, and voters gave it constitutional
protection from legislative “fund raids” in 1985. The trust fund gets money
from royalties on the sale of state-owned mineral rights, including oil and gas
drilling. Since its creation, the NRTF has doled out approximately $873 million
for its stated purposes, which are:
Purchase of land because of its environmental importance
or its scenic beauty, and for recreational purposes.
It is no longer sound public policy to keep acquiring more state land just because the money is available, while ignoring the long-term fiscal consequences of these actions.
The development of public recreation facilities.
Administration, which may include payments to local
governments in lieu of property taxes they would collect if the land was
still in private hands.
When the trust fund balance exceeds
$500 million (subject to some conditions), additional income is deposited into
a State Park Endowment Fund, until that fund’s balance is $800 million. As of
2010, the NRTF had $700.3 million in assets, of which $72.5 million is eligible
to be spent.
Recently, several bills have been
introduced in the Legislature that would authorize using earnings from the
trust fund’s principal for various purposes, including road projects. Another
bill, sponsored by Rep. Joel Johnson, R-Clare, would require (rather than
simply allow) that those state payments in lieu of taxes to local governments
come out of the trust fund. This would free-up around $500,000 annually that
the state could use for other purposes, or return to taxpayers as tax cuts.
Although some may claim that this use strays from the purpose of the fund, it
is explicitly authorized in the constitutional language approved by voters in
Actually, that constitutional
language should be amended to allow trust fund earnings to cover other items in
the Department of Natural Resources budget. Gov. Rick Snyder has recommended
$323.7 million in spending for the department in the next fiscal year, of
which $242.3 million is earmarked as tax and fee revenue, $68.6 million is
federal money, and $13.7 million is from the state’s general fund, which is “discretionary”
money the Legislature can use for any purpose.
The NRTF could easily cover that
general fund portion without jeopardizing any of its other purposes, in the
process freeing up revenue for other important uses. Constitutional language
providing for this change should be constructed in a manner that would prohibit
the DNR’s budget from growing faster than the rate of inflation.
Two other mandates in NRTF language should also be
amended. One requires at least 25 percent of earnings from the fund be used to
buy land, and the other caps at 25 percent
the amount of earnings that can be used for maintenance and operations
related to that state land. The DNR is already having difficulty in managing
the department’s considerable land holdings, as seen in the recent closing of
numerous state forest campgrounds. It simply does not make sense to keep buying
more state land when the DNR claims it lacks sufficient resources to properly
manage current responsibilities.
The time to change the Natural
Resource Trust Fund is now. Few would argue that the trust fund has not
benefited outdoor recreation opportunities in the state. But times have
changed. It is no longer sound public policy to keep acquiring more state land
just because the money is available, while ignoring the long-term fiscal
consequences of these actions. In the past, Michigan voters have supported the
NRTF, and despite the demagoging that could be expected, it’s likely they would
support common sense changes today, given the chance. The Michigan Legislature
should allow voters that opportunity.
Harding is the senior environmental policy analyst at the Mackinac Center for
Public Policy, a research and educational institute headquartered in Midland,
Mich. Permission to reprint in
whole or in part is hereby granted, provided that the author and the Center are