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House overrides governor's veto of Legacy Fund bill; Senate still must act

BISMARCK — The House Republican supermajority clashed Monday with GOP Gov. Jack Dalrymple over what to do with earnings from the Legacy Fund when the trust fund for oil taxes becomes available for spending in July 2017.

House members voted 67-23 to override the governor's veto of House Bill 1033.

The bill, which came from an interim committee, would require Legacy Fund earnings that are transferred to the general fund to be immediately invested back into the Legacy Fund's principal.

It also bars the governor from considering Legacy Fund money in his spending proposals.

In a letter to the House speaker explaining his veto, Dalrymple said the bill would infringe upon his executive authority to submit spending proposals and "would clearly contradict the intent of the voters" when they approved the Legacy Fund in November 2010 after lawmakers put the constitutional amendment on the ballot.

House Majority Leader Al Carlson, R-Fargo, said the Legislature is within its authority as the policy-making and spending branch of government to decide what to do with the earnings, and a majority of members don't want them appropriated at this time.

"This clearly is a legislative responsibility," he said.

House members voted mostly along party lines Monday to override the bill, with four members absent. It now goes to the Senate.

Overriding a governor's veto requires two-thirds of the members in each chamber—63 of 94 representatives and 32 of 47 senators.

Monday's vote is the latest development in the debate over what to do with the Legacy Fund, which receives 30 percent of the revenue from state taxes on oil and gas production and extraction and will top $3 billion after this month's transfer of $38.7 million. The State Investment Board invests the money into stocks, bonds, real estate and other assets.

Language approved by voters in 2010 requires the state treasurer to transfer earnings after June 2017 to the general fund at the end of each biennium. No more than 15 percent of the Legacy Fund's principal may be spent during a two-year budget cycle, and even then it requires a two-thirds majority vote in both chambers.

The bill would require earnings to be added back to principal until either oil and gas tax collections decrease by at least 25 percent from the previous biennium or total earnings exceed 33 percent of oil and gas collections in the same biennium.

Dalrymple argues that such an automatic reversal of the earnings transfer "is a clear conflict with the intent of voters when they voted to approve the procedures of the Legacy Fund."

He also objects to the bill's language stating that the amount of Legacy Fund money available for spending during a biennium "may not be included in draft appropriations," calling it unconstitutional.

Carlson disagreed.

"It's the only safeguard we have for not just continuing to grow the size of government," he said.

Carlson noted that the original bill passed the House 82-9 and the Senate 47-0 with no amendments.

"I think we need to send a message that this is an issue that we are in control of," he said.

House Minority Leader Kenton Onstad, D-Parshall, objected to the process, saying the bill probably should have had an additional hearing.