BISMARCK — A bipartisan group of North Dakota lawmakers has set its gaze on investing a chunk of the state's future oil tax revenue in local businesses and infrastructure projects.
House Bill 1425 would direct the State Investment Board to designate 10% of tax collections flowing into the voter-approved Legacy Fund for creating loans tailored to North Dakota cities, counties and businesses. Another 10% would be earmarked to invest in stocks and other equity in North Dakota-based companies.
As it stands now, only about 1.2% of incoming Legacy Fund revenue is invested in loan programs for North Dakota businesses. Most of the rest of the money goes toward investments in companies based outside the state.
Bismarck Republican Rep. Mike Nathe, the bill's prime sponsor, said the plan would provide much-needed capital to localities for infrastructure projects, while promoting up-and-coming businesses in the state.
"We’ve lost out on some great opportunities here because of lack of access to capital," Nathe said in a statement. "This bill would give the state the ability to direct capital to qualified projects in North Dakota, which in turn will have positive economic impacts that go beyond your basic return on investment. We’re talking more jobs, higher wages, and increased tax revenue."
Insurance Commissioner Jon Godfread, a member of the investment board, has proposed similar initiatives in the past and said Nathe's proposal would help the state realize "the multiplying factor of investing in yourself." Some of the targeted investments could go to companies working in the state's Oil Patch, while other capital might help burgeoning tech firms in the Red River Valley, Godfread said.
The Legacy Fund, derived from 30% of the state's oil and gas tax revenue, currently holds nearly $7.9 billion, but Nathe's bill only draws on the savings account's future income. For example, if Nathe's plan were already in place, about $6.2 million of the January deposit in the Legacy Fund would have gone toward state-oriented investments.
Senate Majority Leader Rich Wardner, co-sponsor on the bill, said he views Nathe's proposal within the context of other Legacy Fund-related legislation in the pipeline this legislative session. Republicans have already put forth an $800 million bonding bill that draws on earnings from the Legacy Fund, and proposals are materializing to decide how earnings will be spent in the future. Budget writers may also use some of the earnings to balance the state's books later in the year.
"When you put it all together, the Legacy Fund is making a huge impact on the state of North Dakota," Wardner, a Dickinson Republican, said.
House Majority Leader Chet Pollert, R-Carrington, said he was supportive of Nathe's efforts but not enough to be a co-signer on the bill.
During the last budget cycle, some of the fund's earnings were used to balance the state's budget, replenish an education fund and boost a rainy-day fund.
Investing more of the Legacy Fund in North Dakota is already a popular idea among residents. An October survey conducted by the Jamestown Development Corp. found that 79% of the state's likely voters favored investing more of the savings account in North Dakota.
The 12-member investment board has not yet stated an opinion on the bill, but Godfread said the group will likely discuss the proposal at its next meeting. A hearing on the bill has not yet been scheduled.