State trust fund formula changes backed by manager
MARQUETTE – The manager of the Michigan Natural Resources Trust Fund voiced support Wednesday for overhauling or eliminating the funding formula that dictates which percentage of the money can be spent on acquisition and development projects.
Steven DeBrabander, who manages the trust fund for the Michigan Department of Natural Resources, said the current formula – it stipulates that 75 percent of fund disbursements be spent on land acquisition, with the remainder directed to development projects – can tie the hands of the fund’s board.
“The one thing we’ve talked about, frankly, is that the more flexibility the trust fund board has to react to applications as they come in every year, the better,” DeBrabander said during a public meeting in Marquette Wednesday. “You could have years where applications come in and maybe the acquisition projects are not stellar but there might be some great development projects and a great number of those.
“If the board had the flexibility to react to that every year, that would be a good thing, in my opinion and my staff’s opinion.”
Due in part to the 25-75 split, he said, the fund had more acquisition money available in both 2011 and 2012 than requests for funds. At the same time, he said, the fund had about four times more development requests than available funding.
“If the board had the flexibility to react to the applications that came in, they could have funded a lot more development projects, primarily all local development projects,” DeBrabander said.
To change that formula or to provide the board with additional flexibility would require a constitutional amendment.
DeBrabander’s comments came during a meeting hosted by State Rep. John Kivela, D-Marquette. Also on hand was Rep. Andrea LaFontaine, R-Columbus Township, who chairs the Michigan House Natural Resources Committee.
LaFontaine has held similar meetings around the state, and said the goal was to get public input on the trust fund and the direction people would like to see it go in the future.
The trust fund is made up of oil, gas and other mineral lease and royalty payments, with proceeds intended for acquiring and developing public recreation lands.
The balance of the MNRTF has reached the fund’s constitutional cap of $500 million – a number which has been increased twice. The fund now makes expenditures only from annual interest and earnings, with all additional royalties flowing into the Michigan State Park Endowment Fund. That fund currently has about $175 million in it, but has a similar cap of $800 million.
If the endowment fund reaches its cap and no additional action is taken, LaFontaine said additional royalties will be directed to the state’s general fund, with no guarantee the money will go toward the types of legacy projects intended by the trust fund.
“We want to ensure that that relationship and that money is still going toward that intention,” LaFontaine said. “This ‘to be determined’ is what scares me.”
Citizens, including officials from the Iron Ore Heritage Trail Recreation Authority, the city of Marquette, Marquette Township and Munising, voiced support for the MNRTF and its related projects.
Marquette Township Planning Commissioner Mike Springer said his board, as well as the full township board, passed resolutions voicing support for leaving the 75-25 formula alone.
“We hate to mess with something that, in our mind, isn’t broke,” Springer said.
Kathy Reynolds, the director of Munising’s Downtown Development Authority, said she would like to see more statewide education related to the trust fund. Many small municipalities, she said, are unaware the MNRTF exists or are unclear on the requirements for eligibility.
Kivela said Wednesday’s meeting, as well as similar gatherings held recently around the state, was an attempt to get out in front of the issue. He said he supports continued acquisition, but that new purchases should be of “high value,” from a recreation standpoint. An example, he said, would be trails, or a trail system similar to the Iron Ore Heritage Trail.
According to DeBrabander, the trust fund has over the years awarded more than $83 million for Upper Peninsula projects, including the acquisition of 2,781 miles of trails.
Kivela said the simplest and most effective action may be to increase the cap on the MNRTF.
“Why couldn’t that $500 million cap go to a $1 billion dollar cap?” he said.
Any changes to the trust fund cap or to the fund’s disbursement formula would have to be made in the state constitution via a ballot initiative, introduced either by the legislature or citizens.
Kyle Whitney can be reached at 906-228-2500, ext. 250.