Burgum: State should reinvest some earnings from oil savings

BISMARCK (AP) — North Dakota should reinvest half of the earnings from the state’s voter-approved oil tax savings account to grow the fund’s principal by billions of more dollars over the next decade, Gov. Doug Burgum said Wednesday in his State of the State speech.
The state is “strong, growing and full of boundless opportunity” but “there’s a lot more we can do,” the first-term Republican said during his nearly two-hour speech at the University of North Dakota in Grand Forks.
Burgum’s speech was somewhat unscripted and largely fell short on policy specifics, including his plan to spend earnings from the state’s the Legacy Fund, which voters enacted in 2010. How and when earnings from the fund should be spent has long been point of contention even among Republicans in the GOP-led Legislature.
The state is required to put 30 percent of its tax revenue from oil and natural gas production into the fund. A constitutional amendment barred the Legislature from spending any of the fund’s assets until June 2017. Earnings from the fund are now put into the general fund, which is spent on an assortment of programs and projects.
Lawmakers have spent $455 million from the earnings since 2017, including $200 million three years ago to balance the state budget when crop and energy prices tanked.
Burgum has long advocated spending interest from the fund before for programs he calls “transformative” that would benefit future generations. His spending plan unveiled prior to the legislative session last year wanted to use $300 million of the interest from oil tax savings account for education loans and grants, and funding for projects that included a $50 million Theodore Roosevelt Presidential Library in western North Dakota. Those ideas were either rejected by the Legislature or financed partially from other state funds.
The fund now holds about $6.8 billion and has grown faster than projected with strong oil prices and production. About $400 million in earnings from the fund are forecast during the current two-year budget cycles.
Burgum said the fund could grow to more than $26 billion by 2033 if the state would commit to reinvesting half the earnings during that time.
Republicans have a more than two-thirds majority in the Senate and House.
Senate Majority Leader Rich Wardner said he has to study the governor’s proposal.
“If his assumptions come true, then it would be great but my assumptions are a little more conservative,” Wardner said “There are some of us that want to spend 25 percent of the interest and some who want to spend 75 percent. The governor wants it 50-50. We could end up there, but I’m not there yet.”
North Dakota is the No. 2 oil producer behind Texas and production has reached record levels with rebounding crude prices. The state’s populations has grown to all-time high of more than 762,000 residents.
Led by its oil patch in the western part of the state, North Dakota has attracted thousands of new residents in recent years, reversing a decades-long trend of out-migration, where more people were going than coming. The state has about 30,000 more jobs than takers.
Burgum said earnings that are not reinvested in the fund’s principal to help build infrastructure, support workforce development, and provide property tax relief.
Burgum, who announced in October he would seek a second term, touched on familiar themes during the address, including his so-called Main Street Initiative that aims to turn downtown areas into vibrant social and economic hubs that are attractive to live in.
Dressed in his trademark jeans and sport coat, he choked up several times during the speech, as he has in past years, including times when he spoke about his family, the state and its residents.
Burgum is known in North Dakota as the godfather of software for building Fargo’s Great Plains Software into a billion-dollar business, which he later sold to Microsoft. He campaigned on a promise of controlling spending and “reinventing government.”
Burgum reemphasized that, saying the state needs to be “more efficient and more responsive to taxpayers.” It also needs to embrace and pursue more technology industries, and diversify beyond energy and agriculture, he said.
“It’s not wise to put eggs into two baskets,” Burgum said.