Trust fund changes discussed

MARQUETTE – Gov. Rick Snyder and Michigan Department of Natural Resources Director Keith Creagh both said they support discussing potential changes to the formula dictating how money is spent from the Michigan Natural Resources Trust Fund.

State Reps. John Kivela, D-Marquette, and Andrea LaFontaine, R-Columbus Township, are scheduled to hold a town hall discussion, focusing largely on the trust fund, at 7 p.m., Wednesday in the commission chambers of city hall in Marquette.

LaFontaine, chairwoman of the state House Natural Resources Committee, has been holding similar discussions across the state. Additional meetings in the Upper Peninsula this week will be held in Escanaba and Iron Mountain.

Early discussions have focused on whether to maintain the original intent of the trust fund. On Nov. 6, 1984, Michigan residents voted in favor of Proposal B, which amended the state Constitution and created the trust fund. The constitutional amendment required that oil, gas, and other mineral lease and royalty payments be placed into the trust fund, with proceeds used to both acquire and develop public recreation lands.

There has been recent discussion about whether the current distribution formula for acquisition and maintenance and development projects is appropriate. Currently, 75 percent of the funds are directed to land purchases.

“I haven’t taken an official position other than saying that it’s great to have the discussion,because in a lot of ways it’s important we have the resources to have assets,” Snyder said. “So, I think it’s been very successful the way it’s worked. The question is, is there some better mix to look at longer term, not a dramatic change, but to say, ‘Is there more we can do for improvements versus acquisition?’ That would be the biggest piece that stands out to me.”

Creagh said the trust fund reached a $500 million cap and currently has about $560 million in it. The investment profit from the fund is the portion spent. Creagh said the investment strategy is to get about 5 to 5.5 percent return. Of that return, 3 percent is retained to fund Payments in Lieu of Taxes to local governments and other costs. The remaining 2.5 percent is what is spent on land and projects, which is between $15 million and $20 million each year, Creagh said.

“Recent history: we’ve gotten more requests for development than acquisition and so we may want to look at that,” Creagh said. “Because people are – as opposed to continuing to buy some land, they’re now wanting to develop some land. So there is that. That’s a fair question to have.”

Creagh said now the royalties from the oil and gas and minerals goes into the park endowment fund and that amount is, by Constitution, capped at $800 million.

“So we start at zero again, we’re about $175 million, so we’ve got a while until we reach that cap. So the question is, should you remove that cap, should you change part of that percentage funding, so that you can do a more broad public lands management strategy,” Creagh said. “So I think it is fair to look at the $500 million trust fund itself to see about percentages on acquisition and development because the demand seems to be on the development side.”

Creagh said the trust fund doesn’t do a lot of land acquisition.

“The trust fund has bought 160,000 acres over its lifetime, 40,000 of that’s in the Upper Peninsula. So 40,000 – we (the DNR) manage 4.6 million acres. So 40,000 is a fairly small percentage of thatso the trust fund really doesn’t buy that much land. It buys high-value, small parcels,” Creagh said. “If you’re at an access to the Great Lakes, it’s probably through a trust fund site and that’s expensive property. If you’re at an inland lake, a county park, a city park – so that’s really the trust fund tends to buy high-value assets that the local communities can’t afford on their own to then actually have access to the natural resources of the state.”

Neither Creagh nor Snyder support diverting trust fund proceeds for other uses. Earlier this year, some lawmakers had suggested using some of the money for emergency dredging projects.

“I wouldn’t use that for dredging,” Snyder said. “Again, the Natural Resources Trust Fund is a great asset of the State of Michigan and its been a wonderfully used resource. Again, it’s just more should we be looking out farther.”

As an illustration of his viewpoint, Snyder highlighted the state’s land strategy.

“We’re doing a land strategy now for the State of Michigan, and as we get that and it’s being launched…I think it’s a smart strategy, but that’s going to continue to evolve,” Snyder said. “So in some ways, my view is, is I don’t want us to necessarily be locked in a vise – fee simple land acquisitions – as opposed to saying how can we do easements, how can we do capital improvements, how can we be flexible in terms of making sure we’re taking care of our natural resources. But stick with the natural resource theme for those resources.”

Creagh said, “I think that there will be a lack of support, and I don’t think there’s legislative support even, to move it into just general maintenance programs. The Legislature by and large supports the trust fund.”

Creagh said he thinks the trust fund is “one of those public policy projects that both the administration and the Legislature over time has gotten right.”

Over the life of the trust fund, Marquette County has had 49 projects funded, totaling $11.5 million.

“In the end it will take the vote of the people because it’s a Constitutional issue and they have spoken a couple different times that they support the trust fund,” Creagh said. “And that should go for a non-renewable resource into a non-renewable resource so that it’s available to our kids and our children’s children.”

John Pepin can be reached at 906-228-2500, ext. 206.