After several failed attempts to ask voters to raise their taxes for school capital projects, Nick Klemisch turned to North Dakota lawmakers.
The superintendent of Garrison Public Schools in central North Dakota, Klemisch has been advocating a proposal to tap the state’s $5.7 billion Legacy Fund so local school districts can pay for much-needed building and maintenance upgrades.
“People just don’t want to pay more taxes, even if it is benefiting the schools,” he said Monday. “A lot of what our community will say is, ‘The state’s sitting on that Legacy Fund with billions of bucks.’”
Klemisch’s proposal is just one of several ideas for using the ballooning fund that have been raised before lawmakers return to the Capitol Jan. 3.
Gov. Doug Burgum himself suggested tapping $300 million in earnings for nine different projects across the state during his budget address Wednesday, while some lawmakers float their own ideas for infrastructure loans, paying down the unfunded liabilities of the state’s retirement plan and helping bring private sector research to commercialization.
“I think the legislators themselves have gone on record that if they don’t identify something this session, the people will,” said Steve Burian, the co-chairman of the Valley Prosperity Partnership, an economic development group in the Red River Valley. “The interest is just really starting to accumulate.”
North Dakotans voted to stockpile 30 percent of oil and gas tax revenue in 2010, but the money only became available to spend last summer. State officials invest the fund’s principal, which is expected to generate $300 million in earnings available for lawmakers to spend in 2019-21, said David Hunter, executive director and chief investment officer of the North Dakota Retirement and Investment Office.
The state constitution doesn't specify how the Legacy Fund is to be used, setting off debates about what purpose it should serve. Burgum and Republican legislative leaders appear to agree, however, that the principal is off-limits.
But some lawmakers have expressed concern that the Legacy Fund could be vulnerable to the whims of the electorate and out-of-state groups pushing ballot measures. Dickinson Republican Rep. Mike Lefor was in the process of crafting a proposed constitutional amendment to require a 60 percent vote of North Dakotans in order to tap the Legacy Fund through initiated measure.
Lefor's proposal would require voter approval, however.
“There’s going to be as many ideas as there’s dollars in there in the future,” he said. “It’s an opportunity for the voters of this state to determine if they want a higher threshold for groups using the initiated measure process to take funds from Legacy principal or Legacy earnings.”
Among Burgum’s proposals are $50 million for a Theodore Roosevelt Presidential Library, $55 million for an infrastructure revolving loan fund and $30 million for unmanned aircraft infrastructure. He said those projects and others he suggested would have a long-term "regional, state or national impact."
“Certainly people want to see the Legacy Fund tapped as a resource. They do not want it to be a back end to providing basic government services and government operations,” House Minority Leader Josh Boschee, D-Fargo, said before Burgum unveiled his budget recommendations.
State Treasurer Kelly Schmidt, a Republican who helps oversee the Legacy Fund, called on lawmakers to set a policy for spending it. She also warned against "pre-spending" the money.
"We don't have that money in the bank," she said. "The market could do a re-correct. A lot of things could happen."
Sen. David Hogue, R-Minot, said he’ll propose a bill to use some of the fund's principal to create a revolving loan fund for infrastructure projects, including water supply, flood control, bridges, roads and schools.
A member of the joint legislative committee that debated the Legacy Fund resolution in 2009, Hogue said he was unsure whether lawmakers should have specified appropriate uses for the money.
“What does legacy mean? It means multi-generational to me,” he said. “I didn’t necessarily want to tie the hands of the next generation.”