In August of 2018, we published an article in which I expressed the view that our very own North Dakota Legislature is perhaps the greatest threat to the state’s Legacy Fund. I’m even more convinced of that today than I was then.
At that time, Senator David Hogue (R – District 38) expressed his view that some group may use the initiated measure process to tap the Legacy Fund. In his words, it’s a “huge target”. Hogue’s position comes from the two-fold reality that a simple majority vote of the people can change the State Constitution and that outside dollars can indeed influence the outcome of a vote on an initiated measure (think Marsy’s Law).
While Senator Hogue’s concerns may have some merit, I do think they’re a bit exaggerated. Is the Legacy Fund a “huge target”? Most certainly. But I’m not convinced the greatest threat to that target is who Hogue says that it is.
In 2018, I suggested that it’s Senator Hogue and his colleagues at the State Capitol who would be most likely to zero in on the Legacy Fund. And that now seems to be playing out before our very eyes.
During the 2019 Legislative Session, the legislature passed Senate Bill 2015, which included a provision that established the interim Legacy Fund Earnings Committee. Under the mandate of “shall”, this committee was tasked with the responsibility to:
“… study the potential uses of legacy fund earnings, including the use of earnings to provide tax relief, provide for reinvestment of legacy fund earnings, fund research and technological advancements, promote economic growth and diversification, and promote workforce development and career and technical education.”
In addition, under the verbiage of “may”, the committee was also given the option to:
“… consider public input on the use of legacy fund earnings and review the operation of other funds, such as Norway’s sovereign wealth fund.”
With a balance now north of $6.3 billion, the Legacy Fund Earnings Committee held public input meetings on Tuesday and Wednesday this week in Fargo, to hear ideas for using the dollars. As you can see by the agenda, and this report from Forum News Service, a variety of interest groups were more than willing to line up and pitch their ideas for tapping the fund.
Whether it’s throwing more money at higher ed, begging for additional dollars to go towards tourism, enhancing Renaissance Zones, or a number of other ideas that have no business in government, is it really surprising to hear it all? Not in the least. Throw out a pail of slop and the hogs are sure to come running.
It appears the same folks in Bismarck, who are doing their best to convince us that the Legacy Fund is at risk of being raided via some well-funded initiated measure, are the same ones telling us we need to do something with it now. Indeed, it seems they’re using the “huge target” argument as a tactic to garner support for spending it themselves.
Unfortunately, this isn’t surprising either. After all, House Concurrent Resolution 3055 was defeated last Legislative Session, which sought to reinvest the earnings from the Legacy Fund and make it more difficult for the legislature to spend the money. It was literally defeated in the name of preserving their ability to spend— as you can see in the floor debate here.
The projections regarding the future of the Legacy Fund are interesting. According to this memorandum, if 100% of the earnings were transferred to the General Fund, it could potentially have about $28 billion by 2041. If only 50% were, that figure might increase to $36.72 billion. And if none of the earnings went to the General Fund (i.e. were 100% reinvested), the possibilites grow to $48.33 billion over the same period of time.
At this point, I’m not sure what the legislature will end up spending Legacy Fund dollars on. But it sure looks like they’re going to spend them. Which, again, isn’t really surprising. After all, with some exceptions, these are big spending lawmakers we’re talking about here.
When all is said and done, if the North Dakota Legislature uses the Legacy Fund to do anything other than reduce the burden felt by taxpayers, then they will have squandered an opportunity to do something truly “Legendary”.
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