BISMARCK — North Dakota lawmakers have laid out a blueprint for divvying up earnings from the state's $8.4 billion oil tax savings account in future budget cycles.
With the clock running out on the biennial legislative session, both chambers of the state Legislature passed a freshly amended House Bill 1380 on Thursday, April 29, after sorting out several differences on the complicated legislation. The proposal will now go to Gov. Doug Burgum, whose spokesman declined to comment on whether the Republican will sign it.
The bill, sponsored by Dickinson Republican Rep. Mike Lefor, would create a detailed but malleable plan for spending Legacy Fund earnings from 2023 onward. The foundation of the legislation is built on an algorithm that sets aside 7% of the five-year average balance of the Legacy Fund as a baseline for spending earnings during each two-year budget cycle.
Under the algorithm:
- The first $150 million in incoming earnings would be put toward repaying investors for infrastructure bonds and funding the state employee retirement system. Earlier this month, the Legislature and Gov. Doug Burgum approved a $680 million infrastructure bonding package that includes $435.5 million for the Fargo-Moorhead flood diversion project.
- The next $60 million would go to highway and road funding.
- Any remaining money earmarked through the algorithm would be used at lawmakers' discretion. Legislative leaders couldn't agree on exact streams for the funds, but they agreed up to $50 million could go toward tax relief, while workforce development and research initiatives and a "clean sustainable" energy fund could each receive up to $30 million.
Any additional earnings not spent through the algorithm would be either saved for future bond repayments, sent back into the Legacy Fund or put in a rainy day fund often used for balancing the books.
A committee of lawmakers will work to come up with ideas for spending the earnings before the next session in 2023.
Bill supporters said the plan can be altered when the Legislature meets again in two years, but creating a forward-looking framework for spending Legacy Fund earnings and paying off bonds right now is valuable. Lefor said the legislation is "an investment in the people of North Dakota" that builds on the success of the bonding package.
Sen. Ron Sorvaag, R-Fargo, wanted more well-defined destinations for the earnings spelled out in the bill, but he said it was "a good start." Sorvaag added he hopes the next Legislature that convenes in Bismarck will be "a little more visionary" with the streams of funding.
If Burgum signs the bill, it will complete what Senate Majority Leader Rich Wardner, R-Dickinson, describes as the "trifecta" of Legacy Fund legislation. In addition to Lefor's bill and the bonding package, the Legislature passed a bill that set targets for investing part of the fund in local companies, enterprises and infrastructure.
Wardner and other leaders have said they wanted to show residents this legislative session that the fund is being put toward quality-of-life improvements. Voters approved the establishment of the savings account in 2010.