Proposal 1: Detroit voters’ guide to the Michigan ballot initiative

Kayakers at Belle Isle in Detroit. Credit: Amy Sacka

UPDATE, Oct. 16: This story was updated with additional information from Richard Bowman, policy director of The Nature Conservancy’s Michigan Chapter. See sections on reliance on fossil fuels and why this issue is on our ballots. It also clarifies that a minimum of 25% of MNRTF funds must be spent on land acquisition and that the proposal would fund capital improvements but not maintenance. See sections on How would a “YES” vote on Proposal 1 change the MNRTF and Cliff Notes.

This election, every Michigan voter is being asked to decide on Proposal 1, a ballot initiative that would amend the state Constitution. The ballot language is complicated, with detailed changes that address how the state collects and spends money on state parks and public land. 

The money up for debate is revenue the state receives from companies that mine on public lands. No matter what voters decide, those funds will continue to be collected. This proposal’s major change would affect how the funds are spent, and would remove a cap that currently is set to funnel the bulk of this money back to the state’s general fund several decades from now.   

Funding for parks and public lands sounds like an easy yes for conservationists — but that’s an oversimplification of what’s at stake with Proposal 1, and not all environmentalists agree on this issue. 

In this guide, we’ll explain how the proposal would change things, and why some environmental groups support it while others oppose it, with a particular focus on the impact for Detroit. We talked to those who care about the environment in Detroit on both sides.

Here’s what you need to know:

What is Proposal 1?

Proposal 1 is a state ballot initiative that voters will decide in the Nov. 3 general election. It would amend the Michigan Constitution. Here is the language you will see on your ballot:

Michigan Proposal 20-1, Use of State and Local Park Funds Amendment (2020)

A proposed constitutional amendment to allow money from oil and gas mining on state-owned lands to continue to be collected in state funds for land protection and creation and maintenance of parks, nature areas, and public recreation facilities; and to describe how money in those state funds can be spent.

This proposed constitutional amendment would:

• Allow the Michigan State Parks Endowment Fund to continue receiving money from sales of oil and gas from state-owned lands to improve, maintain and purchase land for State parks, and for Fund administration, until its balance reaches $800,000,000.

• Require subsequent oil and gas revenue from state-owned lands to go into the Michigan Natural Resources Trust Fund.

• Require at least 20% of Endowment Fund annual spending go toward state park improvement.

• Require at least 25% of Trust Fund annual spending go toward parks and public recreation areas and at least 25% toward land conservation.

Should this proposal be adopted?

You will be able to vote YES to approve Proposal 1 or NO to reject it.

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What would it change?

A “YES” vote on Proposal 1 would amend two parts of the Michigan Constitution: 

• Sec. 35 – Michigan Natural Resources Trust Fund (MNRTF)
• Sec. 35a – Michigan State Parks Endowment Fund (MSPEF)

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Okay, what does that actually mean?

To explain the proposal, first, we have to explain the funds it addresses, as well as how they capture and distribute money now and how it would change were Proposal 1 to be adopted. The state has two separate funds, with two sets of rules for how they collect the money and how it can be spent on parks and public land. Why there are two is a long story — read more on the funds’ history here — but there are a few important differences.

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What is the MNRTF?

The MNRTF is a fund that receives revenue from companies with oil and gas leases on state-owned land. It was established by a vote of the people in 1984 and amended the state Constitution. The fund is earmarked for environmental, conservation, and recreational purposes. Local units of government compete for this revenue to fund local parks projects. The fund builds a principal balance — or corpus — that guarantees a future annual revenue stream. The principal cap was raised over time from $200 million to $500 million, effectively allowing the state to increase how much of the fund can be distributed for park projects.

Decisions on MNRTF spending are guided by the MNRTF Board, which reviews applications and submits funding recommendations to the legislature for approval. The Board members are appointed by the governor. 

How the MNRTF works now: Under the Michigan Constitution, 50% of annual oil and gas revenue, plus interest earnings, were eligible to be spent each year until the $500 million cap was reached in 2011. Since then, only interest earnings have been eligible to be spent. At least 25% of those annual dollars must be spent on land acquisition and no more than 25% on development. Since 1976, the fund has spent $1.2 billion in acquiring public land and developing it for outdoor recreation.

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How would a “YES” vote on Proposal 1 change the MNRTF?

• The MNRTF’s $500 million principal cap would be eliminated, which means there would be no limit to how much oil and gas revenue can be directed into the fund. (That revenue will be collected by the state either way.)

• MNRTF interest and earnings would be allowed to be spent on “renovation and redevelopment” in addition to “development” of public recreational facilities. Essentially, that means money could be spent on fixing up projects in existing parks and recreation areas, rather than just creating new ones, or building new amenities like trails, bathrooms, and fishing piers.

• A minimum of 25% of the money available from the MNRTF (as opposed to the current 25% maximum) would be required to be spent on development of public recreational facilities.

• The proposal would limit the amount of oil and gas revenue that the MNRTF can spend each year —  that the legislature may appropriate for the acquisition and development of trust fund projects — to 50% of the total it receives (in addition to interest and earnings). The other 50% would grow the corpus.

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What is the MSPEF?

The MSPEF was established in 1994 and is a second fund that receives oil and gas revenue from leases on state land. It received $10 million in total annually until 2011 (when MNRTF hit its $500 million cap) — since then, MSPEF has received all oil and gas revenue. The money is earmarked to fund operations, maintenance and capital improvements at Michigan’s state parks and recreation areas. Decisions on how this money is spent each year is made by Department of Natural Resources staff.

How it works now: The fund has an $800 million cap, which it is projected to reach by the early 2050s. Annual spending is limited to 50% of annual revenue plus interest earnings until the $800 million cap is reached. After the cap is reached, only the interest and earnings can be spent. The principal balance was $283 million on Oct. 1, 2019.

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How would a “YES” vote on Proposal 1 change the MSPEF?

• After the MSPEF reaches its principal cap of $800 million (again, likely after 2050), all future oil and gas revenue generated from state-owned land would be directed to the other fund, the MNRTF, instead of going into the general fund, which is what will happen under current law.

• The “administration of the endowment fund” would be added to the allowable purposes of the MSPEF. That means the state DNR would be able to use some of the fund’s revenue to pay for its administrative staff costs. 

• Would require MSPEF to spend a minimum of 20% of the money available each year to be spent. Right now, there is no lower floor for how much money should be spent each year.

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More Detroit elections coverage from Detour:

–Everything to know about early voting in Detroit
–Here are all of Detroit’s ballot drop boxes and satellite voting centers
–How accessible is voting in Detroit?
–Does Detroit have enough poll workers?

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Who supports Proposal 1?

Proposal 1 is supported by a broad coalition of Detroit business and conservation organizations, including the Michigan Environmental Council, DTE Energy, the Detroit Regional Chamber, Transportation Riders United, the Detroit Greenways Coalition, Six Rivers Land Conservancy, Belle Isle Conservancy, the Detroit Riverfront Conservancy and others.

Some local conservation groups support Proposal 1 because of the way it would change how funding is distributed, allowing more to be spent on redevelopment of recreation areas — which is a more common need in and around Detroit, where there is less undeveloped land that can be acquired. 

Todd Scott, president of the Detroit Greenways Coalition, points out that his organization wrote a $3.4 million MNRTF grant for the City of Detroit that allowed the purchase of a section of abandoned railroad corridor for the Joe Louis Greenway. In a blog, Scott wrote: “the proposed change is especially beneficial to Detroit where land acquisition is less of a necessity compared to the funding needs for developing parks and trails.”

And Michelle Hodges, President & CEO of the Belle Isle Conservancy, told Detour that the MNRTF has invested more than $3 million on Belle Isle, and has been crucial to the development and restoration of canals and fishing piers on the island. “A YES vote will improve the likelihood for a continuation of funding,” she wrote in an email.

Detour reached out to DTE Energy for more information on why the company supports Proposal 1. We will update this story if we get a response. 

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Who opposes Proposal 1?

The Michigan Chapter of the Sierra Club, the Green Party and the Michigan Land Conservancy oppose Proposal 1. First, they object to the continued reliance on fossil fuels to fund parks and recreation. Second, they object to the possibility that more money may be spent on development and capital improvements than on acquiring and preserving public land. 

Sally Petrella, a Detroit resident who has worked in parks and local conservation for decades, also opposes the proposal. She pointed out that the current funding allocation for the two funds has actually worked for major Detroit projects, including those of Proposal 1 supporters.

“It is tragic that people are being given a choice between protecting land and improving parks. Whoever created this proposal is pitting conservationists against park supporters, two groups that normally work together,” she wrote in an email. “The City of Detroit has greatly benefited from land acquisition for parks. The Detroit Riverfront would not be where it is today without the $4.5 million for land acquisition from the Trust Fund. Milliken State Park got $20 million for land acquisition. The Inner Circle Greenway got $3.4 million for land acquisition. You can’t have one without the other and skewing it to development will hurt us.”

The Sierra Club issued a statement that included the following criticism of Proposal 1: “Shifting prioritization of money from the MNRTF away from purchasing land and towards the development of facilities is shortsighted. Requiring revenue from a non-renewable source to go to ongoing, increasing funding needs creates financial problems, it doesn’t solve them. If we are to mitigate climate change, we need to protect and preserve land, and we need to find new revenue sources for the MNRTF as we work to get ourselves off of fossil fuels. We should not rely on oil and gas royalties as a funding source, when we urgently need to end our reliance on fossil fuels to combat climate change. We need to find new, sustainable, long-term revenue sources for land acquisition and protection as well as for our state parks.”

Jack Smiley, founder of the Southeast Michigan Land Conservancy and President of the Michigan Land Conservancy, opposes the proposal and questions Scott’s contention that Proposal 1 would benefit Detroiters by increasing focus on development of park facilities.

“The notion that the Trust Fund doesn’t presently benefit urban communities is simply wrong,” he wrote in an email.  “More than $61 million has gone to acquire land in the City of Detroit — primarily along the Riverfront.  This is more than any other community in the state has received.  Even with the 25% restriction for development, over $11 million has gone for recreational development in Detroit.”

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Wait, why are we relying on fossil fuels to fund our parks and public lands?

Many of those opposed to Proposal 1 have questioned why Michigan relies on oil and gas revenue to support its natural resources. 

“The Vote Yes Campaign is slick and includes major state environmental organizations but also includes the Michigan Oil & Gas Industry, DTE Energy, and Michigan Realtors, not exactly organizations who care about public lands,” said Petrella. 

One thing to know is that oil and gas revenue is not the sole funding source for parks and public lands in Michigan. First, while lease revenue from fossil fuels like oil and gas is a major contributor to the MNRTF and MSPEF, other minerals are also included. Second, other sources of funding also come into play, including revenue from the Recreation Passport license plate that supports state parks, as well as the use fees people pay to enter parks, rent campsites, etc.

“Some folks may think that this in some way encourages or incentivizes fossil fuel development. And I would argue that it’s actually just the opposite,” said Richard Bowman, policy director of The Nature Conservancy’s Michigan Chapter, which has endorsed Proposal 1.

According to Bowman, the original intent when the MNRTF was created in 1984 was to take a volatile, unpredictable and non-renewable resource (fossil fuels) and turn it into something that would support Michigan long-term — with dedicated funding that can’t be used for other Legislature priorities.

“When we created this trust fund in 1984, it was to dedicate the money to conservation and not allow the Legislature to use it to plug all of their other budget holes, which they’d been doing before that,” he said.

Regardless of how society utilizes fossil fuels, Bowman told Detour, this proposal is about what we do with the money that we receive from using those — whether it’s a lot, or a little (if fossil fuel use declines).

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Okay, can you give me the Cliff Notes?

• Proposal 1 permanently earmarks all future oil and gas revenue from public lands to the MSPEF and the MNRTF by eliminating the cap on the MNRTF and directing all future oil and gas revenue to the MNRTF once the MSPEF cap of $800 million is reached (estimated to happen in the early 2050s). Right now, that future oil and gas revenue would end up in the state’s general fund, and future legislators would not have access to this funding source for parks without a vote of the people to once again amend the Michigan Constitution.

• Proposal 1 broadens how MNRTF funds can be spent, adding “renovation and redevelopment” in addition to “development” projects. This means existing projects (like trails, boardwalks, fishing piers, etc.) would be eligible to receive redevelopment funds from the MNRTF; currently, the fund only pays for new development projects or the acquisition of land from private owners for a public purpose. Note: there is already some funding for operations, maintenance and capital improvements at Michigan’s state parks and recreation areas through the MSPEF, which is projected to collect funding until 2050 and is allocated by the DNR. Also note: the proposal would not allow MNRTF funds to be used for daily or yearly maintenance or operations. It would allow funds to be used for major capital improvement projects.

• Proposal 1 would potentially increase the amount of MNRTF funding allocated to development projects vs. acquisition projects by requiring a minimum of 25% of annual funding to be allocated to “development” projects. Currently, the MNRTF can spend only a maximum of 25% on development.

If Proposal 1 is voted down, the MSPEF would continue to receive oil and gas revenue until its principal balance reaches its cap of $800 million. Once that happens, all future oil and gas revenue would be directed to the general fund. The interest and earnings of the two funds would continue to be available for spending for their stated purposes, subject to recommendations by the MNRTF Board and appropriation by state lawmakers.

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Why did Proposal 1 end up on the ballot — and why now?

Proposal 1 was placed on the ballot by the state Legislature in 2018. According to Bowman, legislators decided to place the ballot initiative now because of the volatility of the energy market. He pointed out that when voters amended the Constitution in 2009 to raise the cap on the MNRTF from $200 to $500 million, many thought it would take 20 years to reach the cap. Then energy prices spiked, and the cap was reached in 18 months. By 2011, the MNRTF was capped and oil and gas revenue no longer added to the corpus.

“Nobody knows when the State Parks Endowment Fund will reach its cap,” Bowman told Detour. “But the more important question would be: If it’s a good idea, why not just do it now? And if for some reason 30 years from now, it’s not a good idea, the citizens of Michigan 30 years from now can change it, just like we’ve changed it multiple times before.”