The Legislative Budget Section set aside the $16 million in fracking grants for individual discussion before unanimously approving the bulk of newly appropriated federal funds, which were reallocated by the state Emergency Commission last week.
The hundreds of millions of dollars approved by the Budget Section on Wednesday are part of the $1.25 billion pot allocated to North Dakota through the federal CARES Act in March. With the end-of-year expiration date on CARES money fast approaching, the state has looked to redistribute a large cut of the funding that North Dakota agencies and institutions have been unable to spend according to their originally designated purposes.
The state treasurer's office received the largest single reallocation, $61 million to be distributed among city and county governments for law enforcement payrolls. Other major items included $33 million to the Department of Public Instruction for broad pandemic related spending like staff retention, mental health programs, and air filtration systems, as well as $29 million to the Department of Commerce for COVID-19 resiliency business grants.
The Department of Health received $10 million for distribution to the state's major hospitals in Fargo, Bismarck, Grand Forks and Minot, aimed at incentivizing staff retention and attracting flex nurses from out of state to address the health care staffing shortage.
While the $16 million designated for fracking grants is a relatively small cut of the $212 million, it has also raised eyebrows among some Democrats and environmentalists who see it as an oil industry gift with tenuous ties to coronavirus relief.
Originally proposed by Department of Mineral Resources Director Lynn Helms, the approved funding will be distributed to oil companies in the form of $200,000 grants for hydraulic fracturing work on 80 uncompleted wells. Helms estimated that the program will employ 500 to 1,000 people in North Dakota between now and the end of the year.
The funding is leftover from the original $66 million in CARES money given to the Department of Mineral Resources for an oil well reclamation program, which has been cut short by winter weather.
Several lawmakers pushed back on the proposal on Wednesday, with Sen. Tim Mathern, D-Fargo, and Rep. Josh Boschee, D-Fargo, calling on the body to address the plan separately from the rest of the funding package.
The two Democrats raised concerns about the benefits of gifting money to oil companies at such an urgent moment in the pandemic, when the money could have gone to public health measures.
"We are at a point now where we are peaking every day as we try to battle this crisis, and I think any of the funds that we use need to be addressed to help us reduce the spread of this virus to help the lives and livelihoods of thousands of North Dakotans," said Boschee, highlighting state nursing homes, many of which recently scaled back visitation, as outlets particularly in need of public health funding right now.
Sen. Brad Bekkedahl, R-Williston, countered that the $16 million would inject jobs into a sector of the state that has been disproportionately impacted by the pandemic recession. "We are facing an unemployment disaster out here that the rest of the state is not seeing," he said, calling the Bakken region an "island" of joblessness compared to most of North Dakota.
Lawmakers also asked questions of Helms, who outlined the specifics of his plan and forecasted its economic benefits to the state. Helms argued that the fracking grants will pay for themselves in tax and royalty kickbacks with the completion of just nine out of the 80 targeted wells. And while North Dakota oil production has seen a small resurgence in recent reports, Helms said he expects output to drop off again without the boost. The Bakken region is currently producing about 1.3 million barrels a day, and Helms said he expects the program will allow North Dakota to sustain that level over the next year.
Lawmakers approved the bulk of the CARES Act reallocation unanimously on Wednesday. The $16 million in fracking grants passed by a 33-4 vote.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at email@example.com.