North Dakota funds the majority of its water projects through the Department of Water Resources (DWR). State funding that is provided through DWR for water development has historically come from several sources including the General Fund, Resources Trust Fund (RTF), and Water Development Trust Fund. Today, the primary source of funding is the RTF.
The RTF is funded with 20.5 percent of revenues from the oil extraction tax. A percentage of the RTF has been designated by the Legislature to be used for water-related projects and energy conservation. DWR develops its budget based on a forecast of oil extraction tax revenue for the biennium, which is provided by the Office of Management and Budget.
Because revenues from the oil extraction tax are highly dependent on oil prices and production, it is very difficult to predict future funding levels. With that in mind, the March 2023 forecast includes $449.8 million for the 2023-2025 biennium from oil extraction. Additional revenue into the RTF comes from Southwest Pipeline Project reimbursements, DWR water supply program loan repayments, interest earnings, and oil royalties. These are estimated to total an additional $12.5 million.
Federal contributions for water supply projects have primarily been appropriated through the Dakota Water Resources Act - Municipal, Rural, and Industrial (MR&I) Water Supply Program.
The Commission is also authorized to issue revenue bonds for water projects up to $2 million and has some oversight of the Drinking Water State Revolving Fund Program that is administered by North Dakota’s Department of Environmental Quality. Other loan opportunities for project sponsors are available through the Bank of North Dakota (BND) administered Water Infrastructure Revolving Loan Fund (WIRLF) and the Infrastructure Revolving Loan Fund (IRLF). Sponsors must first receive Commission approval to apply for WIRLF and IRLF prior to moving forward with BND’s loan review process. Additional loan opportunities are available through the Drinking Water State Revolving Fund that is administered by the Department of Environmental Quality.