As your state treasurer and a North Dakota taxpayer, I've found the recent news articles regarding the introduction of a legislative bill to spend dollars from the principal of the Legacy Fund very interesting.

Let's take a moment to recall how the Legacy Fund was developed. In 2010, voters overwhelmingly voted for the creation of the Legacy Fund, which is a perpetual fund derived from taxes on oil and gas production. By law, the state treasurer is required to transfer 30 percent of the tax dollars collected into the Legacy Fund each month. Also by law, the principal and earnings of the fund could not be expended or used until after June 30, 2017. Any expenditure of principal after the June 30, 2017, date would require a vote of at least two-thirds of the members of each House. Only 15 percent of the principal of the Legacy Fund may be expended during a biennium.

The Office of the State Treasurer is required to transfer earnings after June 30, 2017, to the state general fund at the end of each biennium. The first transfer is scheduled for July of 2019. The anticipated earnings for this first transfer exceeds $400 million, of which $200 million was appropriated or spent during the 2017 legislative session to balance the state budget.

A legislative bill has been drafted which would require an initial 15 percent transfer of the principal or nearly $850 million to the Bank of North Dakota for a revolving infrastructure loan fund. The bill also directs the state treasurer to transfer 15 percent of any annual increase in principal to the loan fund for 10 years, estimating an additional $810 million. That's $1.6 billion over a 10-year span.

The details of the loan term, size and rate continue to surprise me, up to 50 years at 1.56 percent! To give you a comparative, 2.83 percent of the Legacy Fund is currently invested in an infrastructure portfolio and the rate of return for FY 2017 was 5.85 percent. We currently invest $200 million with BND for their matching loan program, $63 million is being used at 1.75 percent fixed rate for five years.

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I can be convinced investment earnings of the Legacy Fund should be used for current needs. It's much harder to convince me to use the principal for expenditures. Thankfully, the $200 million in earnings was available to balance the budget in the 2017 legislative session. Let's hope that was a one-time event.

Pulling $1.6 billion from the principal of this fund is not what North Dakotans voted for. The principal of this fund should be left to grow for generations and the interest income used for special funding needs. To date, we have deposited over $4.25 billion into the fund with investment earnings the balance is over $5.42 billion. The investment earnings will be available for the peaks and valleys of our economy today. I once heard, "A simple fact that is hard to learn is, the time to save money is when you have some." Now is that time!

Schmidt serves as North Dakota’s state treasurer