A leading North Dakota lawmaker has a new plan for spending Legacy Fund earnings. Here's what made the cut

BISMARCK — Legislative leaders in North Dakota have devised a blueprint for divvying up earnings from the state's $8.5 billion oil tax savings account in future budget cycles.

The new plan comes as a revision to a complex law passed in 2021 that laid out designs for spending Legacy Fund investment earnings in 2023.

House Majority Leader Mike Lefor, R-Dickinson, was a central figure in the legislative push two years ago, and he has grabbed the baton again this year as the prime sponsor of House Bill 1379.

The latest proposal would designate more money for tax relief and economic diversification initiatives while maintaining a commitment to infrastructure upgrades, Lefor said. The conservative leader told the House Appropriations Committee on Wednesday, Feb. 8, that nothing is set in stone and he hopes the bill “starts the conversation.”

The bill keeps in place an algorithm that sets aside 7% of the five-year average balance of the Legacy Fund as a limit for spending earnings during each two-year budget cycle.

As it stands, the algorithm would allow more than $485 million to be spent starting July 1, the first day of the 2023-25 biennium.

Under current law, the first $150 million in earnings would be put toward repaying investors for infrastructure bonds and funding the state employee retirement system. The next $60 million would go to highway and road funding.

Lefor’s bill this year would pick up where the 2021 law leaves off by designating how any available earnings are spent beyond the first $210 million.

Under House Bill 1379:

• The next $200 million would go toward tax relief. Lefor said this money could be spent to reduce income taxes or property taxes depending on what legislators support this session. 
• The next $30 million would fund grants and loans for projects aimed at cutting carbon output in the energy sector.
• The next $10 million would bankroll public university research on diversifying North Dakota’s economy. 
• The next $10 million would fund loans to companies deemed to be advancing technology. 
• The next $10 million would go toward workforce development programs and technical education.
• The next $90 million would fund “legacy projects,” which Lefor said could be related to tourism or other types of economic development. 
• The next $100 million would go toward fixing bridges. 
• The next $15 million would support infrastructure enhancements tied to “value-added” agriculture ventures.
• The next $15 million would fund bioscience innovation grants. 
• Any remaining funds available for spending would go into a rainy-day fund. 

The bill also sets out a “road map” for lawmakers to spend Legacy Fund earnings in 2025 and beyond, but Lefor noted that this plan is malleable to allow for changing circumstances and policy preferences.
Advocates for higher education, including North Dakota University System Chancellor Mark Hagerott, spoke in favor of the bill Wednesday, noting that extra money for economic research could pay dividends for the state.

Agriculture lobbyists also received the bill warmly, noting that the funding for agriculture infrastructure would be useful.

Sen. Ron Sorvaag, a Fargo Republican who helped shape the legislation two years ago, said establishing a blueprint on Legacy Fund spending is more urgent with legislative term limits looming. Inexperienced lawmakers of the future will benefit from the work today’s legislators put in, he said.

The committee did not take action on the bill Wednesday.

A previous version of this story incorrectly stated the amount of Legacy Fund earnings projected to be available July 1, 2023, for spending. The correct amount is more than $485 million.