Posted 3/20/19 (Wed)
By Neal A. ShipmanFarmer Editor
Thanks to the foresight of the North Dakota Legislature and to state voters, the state is now sitting on a huge pile of cash that could truly transform North Dakota.
Back in 2009, the North Dakota Legislature, in its infinite wisdom, thought it would be a good idea to start putting away a portion of the tax money that the state was receiving from the oil and natural gas production into a newly created Legacy Fund. And by an overwhelming show of support, North Dakota voters in 2010 agreed to set aside 30 percent of those tax dollars into a permanent savings account for the state. As approved by the voters, the money in the Legacy Fund was inaccessible until 2017 in order to grow the fund. And then after 2017, the Legislature can use the fund’s earnings with a simple majority vote and tap into the fund’s principal balance, with no more than 15 percent of the balance being spent during a two-year budget cycle, with a two-thirds vote by the Legislature.
So the question now being asked in the Legislature is where should the interest from the Legacy Fund be used?
Last biennium, the state used $200 million in Legacy Fund earnings to balance its budget. While paying for day-to-day operations of the state government isn’t probably what most North Dakotans had in mind when they voted a “legacy,” that is what the Legislature thought was the best use of the money.
And now, legislators, as well as Gov. Doug Burgum have some thoughts of what they think are appropriate uses of the Legacy Fund. For some legislators, they think that using those funds to eliminate property tax and income tax in the state is a good idea. For Gov. Burgum, he would like to see projects that meet the four criteria of: 1.) having regional, state and/or national impact; 2.) being multiplied through partnerships, matching funds or loan funds; 3.) being used to diversify the state’s economy and attract workforce; and 4.) having a lasting impact beyond the state’s current generation.
Among Burgum’s proposals are to spend $80 million for permanent revolving loan funds to spur $535 million in infrastructure and school construction, $30 million for a statewide UAS infrastructure network to diversify the state’s economy, and $50 million to build a Theodore Roosevelt Presidential Library and Museum in Medora.
Another bill being considered by the Legislature would transfer 15 percent, to a maximum of $45 million, of Legacy Fund earnings to an economic diversification research fund that would support work by the University of North Dakota and North Dakota State University.
Obviously, there are a lot of worthy causes that could use the infusion of money from the Legacy Fund. The trouble is that while the $300 million that the Legacy Fund is anticipated to generate this biennium in interest income is a lot of money, it really doesn’t go very far when there are so many possible projects that so many groups are championing.
Which is why the North Dakota Legislator needs to be very judicious when they start tapping into these monies. The decisions that they make during this legislative session will set the precedent for what the Legacy Fund will be used for in the future.
Is tax relief, revolving loan funds, money for university research or a presidential library the best use of the Legacy Fund? That’s what seems to be on the table today. And for every legislative session to follow, there will be another list of projects that someone is going to champion.
Obviously members of the Legislature and Gov. Burgum have a difference of opinion on what constitutes a Legacy Fund project. And maybe that telling difference illustrates the need for North Dakota to develop a long-range plan on how to use these funds.