The Legacy Fund Should Be About Legacy, Not the Spending Needs of the Moment

Charley Johnson, president of the Fargo-Moorhead Convention and Visitors Bureau, makes the case for Legacy Fund support of a destination development grant fund before the North Dakota Legislature's Legacy Fund Earnings Committee, which met Tuesday, Nov. 12, at the Harry D. McGovern Alumni Center at North Dakota State University. Patrick Springer / The Forum

Earlier this year, I wrote a print column headlined, “We’re Going to Do Something Stupid With the Legacy Fund.”

Yesterday the Legislature’s Legacy Fund Earnings Committee held a hearing in Fargo and the various special interests who pitched ideas for spending now-$6.8 billion fund, and I’m more convinced than ever that I’m going to be right.

The tourism flacks want money dumped into tourism. The lackeys for the developers want the money dumped into tax breaks for development. Higher education’s apologists want more money stuffed into our already bloated university system.

These are hardly visionary proposals.

Some want to use an estimated $116 million per two-year budget cycle to pay for every single North Dakota student’s school lunch.

We need to do something with the Legacy Fund, and that something needs to benefit all North Dakotans, not some well-connected faction.

I mean, I get that the issue is making headlines of late (I wrote about it yesterday), but c’mon.

Not all of the ideas are stupid, per se. Some of them, such as the cost of building school infrastructure in western North Dakota, represent genuine problems. Others are only stupid if we really do use Legacy Fund dollars to fund them.

The Legacy Fund should be about legacy. It should be used to spur some fundamental change in the way our government works for the benefit of all North Dakotans. It shouldn’t be about addressing some hot-button, 2019 spending priority.

The time has come to begin leveraging the Legacy Fund. Some want to keep stuffing money under the mattress, but the government shouldn’t be in the habit of stockpiling cash. These are dollars taken from the private sector.

Either use them or give them back.

The good ideas for the Legacy Fund address the structure of how the state government operates. There have been various proposals that would invest Legacy Fund dollars in loans to local governments for things like infrastructure (say, a new sewage plant) or even school buildings. These are good ideas. We’re always going to need new infrastructure or to replace old infrastructure. Loaning the money to ourselves from the Legacy Fund would reduce the cost of financing those projects significantly, and speed up the process of completing them.

Those would be wins for everyone in North Dakota.

Leveraging the Legacy Fund to eliminate the income tax is another solid idea. Scoffers suggest that North Dakota’s income tax is such a light burden that removing it wouldn’t be a benefit to the state. That’s until you realize that in the 2017-2019 biennium, North Dakotans paid about $1 billion in combined individual and corporate income taxes (and most of it was from the individual tax).

You’re telling me North Dakotans would benefit from the relief of that financial burden?

State Rep. Craig Headland (R-Montpelier) pushed legislation earlier this year to use a portion of Legacy Fund earnings to buy down and eventually eliminate the income tax over time. That was a pragmatic and entirely sustainable approach that would have lowered the burden of government on North Dakota citizens without diminishing services.

Eliminating income taxes would fundamentally change our way of life in North Dakota. It would be, dare I say, a real legacy move. Unfortunately, it failed during the legislative session earlier this year, but hopefully, the idea isn’t dead.

One thing is sure, however. We have to do something with the Legacy Fund. As it grows, it becomes a moral hazard. A big, fat pot of money that special interests with political clout will increasingly target for their hobby horse policy ideas.

Even more of a threat is North Dakota’s deeply flawed initiated measure process, which basically allows any interest with enough money (like, say, a disgraced California billionaire) to buy their way onto the statewide ballot.

With billions of dollars just sitting in state coffers with no defined purpose, how long will it take before a group with deep pockets pays to collect signatures to put a spending plan for those billions on the statewide ballot?

Do we really want to risk the fate of those billions on whims of an electorate that is deeply influenced by 30-second campaign commercials?

We need to do something with the Legacy Fund, and that something needs to benefit all North Dakotans, not some well-connected faction.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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