Michigan ballot proposal 1 and what the Michigan Natural Resources Trust Fund means
The first proposition that voters will find listed on their ballot this November is complex and not likely to affect voters until at least 2050. It deals with how funds the state receives from leasing out publically-owned land to oil and gas companies should be spent. It also alters the caps on two of the state funds designed to acquire public land.
Under Proposition 1, money acquired in Michigan’s Natural Resources Trust Fund (MNRTF) and the State Park Endowment Fund (SPEF) would have more flexibility in how it gets used when it’s plugged back into state conservation efforts. It would also increase or remove the caps that both funds have for how much money each can hold before any interest is accrued. However, it would also divert additional revenue to the MNRTF instead of the General Fund, rendering it money unavailable for the state budget.
What a “yes” vote for Prop 1 means:
- A “Yes” vote supports making changes to how revenue in the state’s park-related funds can be spent, including: Funding projects to improving recreational facilities eligible for grants Allowing the parks endowment fund to be spent on park operations and maintenance until its balance reaches $800,000,000 Future oil and gas revenues would be deposited in the MNRTF instead of the General Fund Remove the MNRTF's $500 million cap
- Funding projects to improving recreational facilities eligible for grants
- Allowing the parks endowment fund to be spent on park operations and maintenance until its balance reaches $800,000,000
- Future oil and gas revenues would be deposited in the MNRTF instead of the General Fund
- Remove the MNRTF's $500 million cap
What a "no" vote for Prop 1 means:
- A “No” opposes changes to how money in the state’s park-related funds can be spent, which means: The SPEF would continue receiving funds from oil and gas royalties until it reaches a balance of $800,000,000, at which point the funds would continue being shifted to the General Fund Continue prohibiting the park's endowment fund from being spent on operations and maintenance Keep a cap on the size of the natural resource trust fund
- The SPEF would continue receiving funds from oil and gas royalties until it reaches a balance of $800,000,000, at which point the funds would continue being shifted to the General Fund
- Continue prohibiting the park's endowment fund from being spent on operations and maintenance
- Keep a cap on the size of the natural resource trust fund
Background
As it stands, for every oil, gas, and mining project being conducted on state-owned land, those private companies must pay royalties to the government for the right to extract resources from the land. Any money made off of those royalties gets placed in the Michigan Natural Resources Trust Fund (MNRTF).
From there, money from the MNRTF is required to be spent on both acquiring public recreation land and developing public recreation land. That could mean both conserving lands as well as developing new outdoor recreation facilities. Currently, there is a $500 million cap on money that can be raised in the MNRTF, which Michigan met in 2011. No more than 25% of the funding can be spent on developing public recreational facilities.
Local governments and state agencies often apply for MNRTF grants to expand and develop public land.
Additionally, the State Park Endowment Fund (SPEF), which was established years after the MNRTF, helps direct funds for the purpose of operating, maintaining, and improving state parks. The SPEF receives all interest on the revenue the MNRTF acquires after it reaches its $500 million cap.
At the heart of Prop 1 is deciding how future revenue from oil and gas royalties should be spent. Should it be diverted to the Michigan Natural Resources Trust Fund or the General Fund? It's not expected to have an impact on state funding for the next 30 years if it's approved. If the money is distributed to the General Fund, lawmakers would have full discretion on how to spend the money. If it is earmarked for the MNRTF, it will be designated for renovating and redevelopment of public recreation land.
If Prop 1 is approved, the cap on the natural resources trust fund would be removed entirely. It would only start receiving revenue after the State Park Endowment Fund reached its $800 million cap.
The new law would also allow for projects that renovate and redevelop existing recreational facilities, not just develop them. At least 25% of all grant funding would be required to be spent this way. The rule about spending money on acquiring land would not change.
The new law would also allow funds from the SPEF to be spent on park operations and maintenance, requiring 20% to be spent on capital improvements at state parks.