What will be the legacy of the Legacy Fund?
North Dakota voters decided in 2010 to set aside 30 percent of state oil and gas tax revenues for the Legacy Fund. The trust fund was inaccessible until 2017, but now – and every two years into the future – the Legislature can use the fund’s earnings with a simple majority vote.
So, we find ourselves at a pivotal point in North Dakota’s history: What will be the legacy of the Legacy Fund? Will we use it to transform our future? Or will we use it to fund ongoing government operations?
When revenues fell short last biennium, we used $200 million in Legacy Fund earnings to close the gap and balance the budget. Yet most North Dakotans would likely agree that funding day-to-day operations isn’t what they had in mind when they voted for a “legacy,” given that the state today is still collecting billions of dollars in oil tax revenue.
In the Governor’s Office, we took a thoughtful, high impact-based approach to investing $300 million in Legacy Fund earnings when preparing our executive budget recommendation for the 2019-21 biennium.
Our first rule was to leave the Legacy Fund’s rapidly growing $5.3 billion principal untouched so it can continue to grow for future generations.
Secondly, we propose that any Legacy Fund project must 1) have regional, state and/or national impact; 2) be multiplied through partnerships, matching funds or loan funds; 3) diversify our economy and attract workforce; and 4) have lasting impacts beyond our current generation.
The projects we’ve proposed do just that, from $80 million for permanent revolving loan funds to spur $535 million in infrastructure and school construction; to $30 million for a statewide UAS infrastructure network that will help diversify our economy; to $50 million for a Theodore Roosevelt Presidential Library and Museum that will catalyze 2-to-1 federal and private matches to create a world-class tourism and workforce draw.
Some try to frame this as an either-or situation, suggesting that transformational, one-time investments are competing against general operating expenses such as further increases to long-term care, K-12 education or behavioral health. However, the truth is, due to the wisdom of voters creating the Legacy Fund, we have moved from a world of scarcity to a current state of abundance.
Like Theodore Roosevelt, who used his time in North Dakota to transform himself into a bold and fearless leader, we have an opportunity to transform our image as a state. Future North Dakotans will thank the 66th Legislative Assembly for initiating a new era of high-impact investments that will generate returns for generations to come.
Perhaps someday, when oil revenues slow, it may become necessary to rely on Legacy Fund earnings to balance the budget and fund general government operations. But now is not that time.
Now is the time to shed our mindset of scarcity and dream of a brighter future where we exercise sound fiscal management, fund our priorities and truly invest in a legacy for the great state of North Dakota.