BISMARCK — North Dakota's top lawmakers are looking to stabilize and clarify the way the state spends from its oil tax reserve account.
Legislators on the interim Legacy Fund Earnings Committee unanimously approved a bill draft on Tuesday, Sept. 22, that would create a separate fund for the money made off interest and investments of the Legacy Fund. The bill draft will go before the Legislature when lawmakers convene in January.
In 2010, voters in the state overwhelmingly approved the creation of the Legacy Fund, which currently contains about $7.25 billion. Since then, 30% of the state's oil and gas tax revenue has gone to the savings fund, which lawmakers couldn't touch until 2017. During the last budget cycle, some of the earnings were used to balance the state's books, replenish an education fund and boost a rainy day fund.
In addition to creating an "earnings fund," the bill draft would create a metric that committee members said would give lawmakers a sense of how much they can spend or reinvest without overestimating the amount due to booms in oil tax revenue. If passed as is, the Legislature would be able to allocate up to 6% of the five-year average value of the Legacy Fund during each two-year budget cycle, but lawmakers indicated Tuesday that the specifics will be discussed again during the legislative session.
The Legislature can already spend up to 15% of the fund's principal every two years but only with at least a two-thirds vote in both chambers.
Adam Mathiak, a senior fiscal analyst with the Legislative Council, also noted that creating a separate fund for earnings would be useful because the money would be more easily trackable. Committee members said the process of tracking how Legacy Fund dollars are used to backfill the state budget has been hard to follow in previous years, and the new fund would add transparency.
House Minority Leader Josh Boschee, D-Fargo, noted that lawmakers must assure North Dakotans in the future that they're not just using the Legacy Fund to pay everyday bills. Leaders from both parties, including Republican Gov. Doug Burgum, agree that voters established the savings account with large-scale projects in mind. Residents and lawmakers have floated using the money for property tax relief, school construction, road infrastructure and social services among many other ideas.
The special 11-member committee, which was created by the 2019 Legislature, also approved a bill draft Tuesday that would renew the committee for the next interim period. House Majority Leader Chet Pollert, R-Carrington, said the committee's trips around the state to gather thoughts from residents on how to use the fund have been "rather enjoyable."