Resolution calls for harder look at use of Legacy Fund

BISMARCK -- A Senate committee was told Thursday that studying the Legacy Fund and how to maximize investment of future earnings will help benefit future generations.

Bismarck Tribune Photo by Tom Stromme Sen. Kelly Armstrong, R-Dickinson, testifies before the Senate Government and Veterans Affairs Committee on Senate Concurrent Resolution 4014 on Thursday at the State Capitol Building in Bismarck.

BISMARCK - A Senate committee was told Thursday that studying the Legacy Fund and how to maximize investment of future earnings will help benefit future generations.
The Senate Government and Veterans Affairs Committee heard testimony on Senate Concurrent Resolution 4014. The resolution would direct Legislative Management to study reinvestment possibilities for the multi-billion dollar fund and identify potential priorities for its future earnings.
Prime sponsor Sen. Kelly Armstrong, R-Dickinson, said the resolution was the result of work by a bipartisan group last year called the Legacy Fund Initiative. The group studied the fund and made recommendations on how to invest the principal and spend future earnings.
“I thought it was a very good conservative idea. This is something that is going to span generations,” Armstrong said.
The resolution includes a recommendation for reinvesting 75 percent of all annual earnings into the fund from 2017 through 2039.
The Legacy Fund, approved by voters in 2010, had risen to $2.77 billion as of December. Thirty percent of all oil and gas production and extraction tax revenue go into the Legacy Fund, which can’t be accessed until June 30, 2017.
A two-thirds vote of both houses of the Legislature will be required to spend any of the fund’s principal, capped at 15 percent per biennium. Earnings after June 30, 2017, are to be deposited into the state general fund at the end of each biennium by the state treasurer.
Sen. Dwight Cook, R-Mandan, questioned the need for a study. He said the interim Government Finance Committee studied the investment of Legacy Fund dollars.
House Bill 1033 was introduced as a result of the interim study. That bill requires all earnings be invested in the fund until oil and gas production decreases by 25 percent from the previous biennium or if the total earnings exceed more than one-third of total oil and gas revenues collected in the same biennium. The House passed HB1033 earlier this month.
“We did study it. (Do) you suggest we study it again?” Cook said.
Armstrong said it’s important to continue studying investment of the Legacy Fund and see what the principal and earnings could be based on various projections.

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