The North Dakota House rejected a 9-5 Do Not Pass recommendation from its committee on Finance and Taxation today for House Concurrent Resolution 3055. The proposed constitutional amendment easily passed on a 69-23 vote. As explained in the resolutions Statement of Intent:
“This measure requires a vote of at least two-thirds of the members of each house of the legislative assembly to expend the principal and earnings of the legacy fund.” (Emphasis Added)
As it’s currently written, the verbiage of Article X, Section 26 of the North Dakota State Constitution allows up to 15% of the principal of the Legacy Fund to be spent with a 2/3 majority vote of the Legislature each biennium. But the earnings of the fund are transferred to the state’s General Fund, at the end of each biennium, where they can be spent by the Legislature.
If HCR 3055 makes it through the legislative process and ultimately wins the approval of the voters, the possibilities could be big. While the Legislature could most certainly still spend the earnings, it wouldn’t be as simple anymore with a 2/3 majority requirement. And in addition to this, the change would also mean that the earnings could no longer be accessible via initiated measure. Instead, as Rep. Corey Mock (D – District 18) — who is also the bill’s primary sponsor — explained, the power of compound interest could significantly grow the fund.
Mock shared projections that demonstrated that if the Legislature spent all the earnings — under the current system — there might be $34 billion in the Legacy Fund after 40 years. But if all the earnings were reinvested — under the proposed constitutional amendment — there could be $143 billion after 40 years. And at $143 billion, the earnings would be $15.5 billion each biennium. That’s significant.
Now, it’s certainly debatable whether the numbers would ultimately match the projections. But think of what Rep. Mock — a Democrat — is proposing here. This would literally make it more difficult for the Legislature to access (i.e. spend) the earnings. So, while many of his Republican colleagues have been trying to figure out ways to spend the Legacy Fund earnings, Mock is proposing a way to save more of them.
It’s worth noting that Rep. Craig Headland (R – District 29) voted against the resolution. As you might recall, Headland’s proposal to use Legacy Fund earnings to reduce income taxes — with the goal of eventually eliminating them — was passed last month. I’m guessing he sees HCR 3055 as a threat to his bill. But both Representatives Corey Mock and Ben Koppelman (R – District 16) explained that the Senate is willing to hold the resolution and make necessary amendments on their side, if a proposal like Headland’s ends up passing.
I suppose there’s a possibility I’m missing something. But with all the ideas that have been floated around for spending the Legacy Fund earnings, I think Rep. Mock deserves credit for coming up with a way to save more of them. After all, doing so provides a means whereby the tax burden on North Dakotan’s can be reduced or eliminated. And I think that’s a good thing— if legislators will actually do it.
HCR 3055 will now go to the Senate for consideration. If it ends up passing, it would end up on the 2020 General Election ballot.
PLEASE LIKE & SHARE!