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Why we’re suing the state of Minnesota over the Environmental Trust Fund

Whitney Clark
In the final hours of the 2018 legislative session, lawmakers raided an estimated $164 million from the state’s voter-approved Environment & Natural Resources Trust Fund (ENRTF) to pay principal and interest on state bonding projects. In its 30-year existence, the Environmental Trust Fund has never before been used to pay off state bonds.

This raid is unconstitutional and violates the will of the voters. Legal intervention is not something we take lightly, but exceptional times call for exceptional measures.

These legislative actions leave us no choice but to sue Minnesota Management and Budget, the state agency charged with selling these bonds. Minnesota’s next governor and Legislature deserve a chance to correct this mistake and fund the proposed projects at a much-reduced cost through traditional sources of funding.

Raiding our Trust Fund: the wrong approach

In 1988 (and twice since then), Minnesota voters approved a constitutional amendment to dedicate a portion of Minnesota’s lottery proceeds to projects that support clean air, clean water and wildlife.

Raiding any voter-backed trust fund to pay interest on state bonds is irresponsible, but this bill is in exceptionally shortsighted and violates state law and the Minnesota Constitution several times over.

  • Illegal substitution: the enabling legislation for the trust fund is clear: “… the trust fund may not be used as a substitute for traditional sources of funding environmental and natural resources activities.” The state’s general fund has always paid for debt service on bonding projects, making this a clear case of illegal substitution.
  • Forbidden use of funds (1): The enabling legislation forbids ENRTF money from being used for hazardous and solid waste disposal facilities. The raid claims $6 million plus interest from the trust fund for just such a facility: the Anoka landfill.
  • Forbidden use of funds (2): The enabling legislation prohibits the ENRTF from being used for municipal wastewater treatment, yet this raid claims millions in ENRTF funds for just that purpose.
  • A massive fiscal blunder. The raid wastes an extra $35 million. Why? Paying off debt from the Trust Fund comes at a higher interest rate, meaning it will cost taxpayers at least $35 million more than if the state used regular bonds, and $66 million more than using cash from our state’s current budget surplus. We can certainly think of better ways to use $35 million dollars in voter-approved funds.

Michael Noble
Legal intervention is not something we take lightly. However, these legislative actions require the conservation community to take this unprecedented step.

Voters approved this trust fund because they wanted to protect our land, air and water. Instead, legislators approved this eleventh-hour proposal without public testimony.

At risk: every constitutionally dedicated fund

If the state of Minnesota allows this practice, there may be no end to it. Every constitutionally dedicated fund is at risk. When voters approved the Minnesota Lottery through a constitutional amendment, they understood the proceeds would fund new projects to protect Minnesota’s environment, and not be siphoned off to pay for basic government services that already had a source of funding. Two decades later, when voters approved the Legacy Amendment, they understood that they were dedicating new funds to clean water, arts, parks, trails, and our outdoor heritage.

While the specific wording of each amendment is different, the principle underlying both is the same: Voters chose to dedicate new funds for these priorities. The Environmental Trust Fund raid undermines that dedication, and tests this constitutional principle. That is why we are compelled to challenge it.

The projects proposed to receive this funding are much needed, and should be funded through proper means. Our hope is that through legal intervention, we can work with legislators and Minnesota’s next governor to fund these projects through traditional sources during the next session.

Whitney Clark is the executive director of Friends of the Mississippi River, a nonprofit that engages people to protect, restore and enhance the Mississippi River and its watershed in the Twin Cities region. Michael Noble is the executive director of Fresh Energy, a nonprofit speeding Minnesota’s transition to a clean energy economy.

The organizations participating in the lawsuit include Clean Water Action, Fresh Energy, Friends of Minnesota Scientific and Natural Areas, Friends of the Mississippi River, Minnesota Environmental Partnership, Minnesota Outdoor Heritage Alliance, The Izaak Walton League of Minnesota, and the Minnesota Native Plant Society, Inc.

Comments (4)

  1. Submitted by Paul Udstrand on 10/24/2018 - 08:39 am.

    Dude, you don’t understand… Republicans HAVE to find a way to pay for their tax cuts and budget deficits. Since they have no coherent sense of governance they rely on accounting tricks like this one.

    Good luck with the lawsuit, I think you have a decent chance of prevailing.

  2. Submitted by Kent Fralish on 10/24/2018 - 10:14 am.

    The states surplus tax collection went to pay down the state employee retirement obligations that had very insufficient source of funding.
    Lots of things to fix.

  3. Submitted by Susan Scufsa on 10/25/2018 - 12:44 pm.

    Is this going to be another sue and settle the enviros are so fond of.

    • Submitted by richard owens on 10/25/2018 - 04:56 pm.

      Hopefully the Legislature will stop trying to avoid paying bills and more importantly, begin to protect our natural resources and the programs that do that.

      I am offended by your label “enviro” and challenge you to care also about the things we have in common as human beings in Minnesota at this time in the history. You too need clean water, clean air, and our children need us to protect it from those who seek profits at any expense.

      Going to court shouldn’t be necessary because the Legislature has legal guidance while they consider laws and regulations.

      The failure is either not getting that advice or ignoring it.

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