In 2009 the North Dakota Legislature passed a constitutional amendment to create a fund out of a portion of taxes on oil and gas development. It was passed by the voters in the 2010 election, and the result is the Legacy Fund which has a balance of around $5 billion.
Over the years there have been a lot of ideas for how to use the Legacy Fund.
As we head into the 2019 legislative session, we have a bunch of eastern North Dakota interests wanting to funnel Legacy Fund revenues into NDSU and UND. We have some lawmakers who want to invest the Legacy Fund in bonds for certain North Dakota infrastructure projects. A rural school superintendent is getting some traction behind using Legacy Fund dollars for school building projects. Governor Doug Burgum, meanwhile, proposes spending about $300 million in Legacy Fund revenues on various projects in his executive budget.
But there is another group, some of whom were behind the legislation which created the Legacy Fund, who continue to insist there was a point to that exercise but can’t ever seem to come up with something they’d actually like to do with the billions of dollars worth of other people’s money they’ve stockpiled in the government’s coffers:
BISMARCK — Members of the original committee that pushed for North Dakota’s Legacy Fund have reconvened and are cautioning against spending oil revenue before it’s in the bank.
North Dakota Treasurer Kelly Schmidt is now a member of the committee that is working to educate the public and legislators as they consider proposals to tap into the earnings from the $5.6 billion fund.
“We know there’s lots of ideas for spending Legacy Fund earnings,” said attorney Bob Harms, a member of the North Dakota Legacy Committee. “Some of us that were involved in this thing 10 years ago have some thoughts about that.”
“When we put this together, there was never a thought of ever spending the principal,” former Bismarck lawmaker Dave Weiler is quoted as saying in the article.
Consider the implications of that statement. Weiler is talking about billions of dollars worth of private sector money tucked away into government for no other reason than to hoard it.
The supporters of this folly like to talk about the Legacy Fund’s earnings and what a boon they are to the state, and yet they completely ignore what is destroyed by the taking of that money from the private sector.
Yes, the Legacy Fund earns interest for the state, but those earnings are offset by the opportunity cost of taking it in the first place.
But that’s water under the bridge. The Legacy Fund exists now, it has billions of dollars in it, and the time has come to begin using it to the benefit of the taxpayers. Not treating it like some miser’s hoard of treasure, to be talked about but not utilized.
There are a lot of voices worth listening to in that debate, some with good ideas and many with bad.
But the people we ought to stop listening to are those who keep insisting we do nothing. They like to cloak themselves in the rhetoric of fiscal conservatism, arguing that saving money is a good principle, but for government there’s nothing fiscally conservative about taking billions away from the private sector for no defined purpose at all.