Since North Dakota voters created the Legacy Fund it has been a tempting target. Now, members of the original committee that put the fund measure on the ballot are urging caution in spending the earnings.
In 2010 voters approved establishment of the fund, which set aside 30 percent of oil and gas revenue as a permanent savings account for the state. The money became available to spend after June 30, 2017. However, tapping into the principal requires approval from two-thirds of the Legislature. No more than 15 percent of the principal can be spent during a two-year budget cycle.
The Legacy Fund is at $5.6 billion.
The Tribune Editorial Board has no problem with the state using the earnings from the Legacy Fund. We do feel it would be better if the governor and the Legislature could reach an agreement on how Legacy Fund money should be used.
Gov. Doug Burgum in his budget proposal has asked legislators to spend $300 million from the fund for projects with a statewide or nationwide reach. He favors projects that will have a perpetual impact on residents, citing the $50 million requested for the Theodore Roosevelt Presidential Library and Museum.
Legislators have a number of proposals to spend fund money including on education.
The Tribune likes the direction the governor is trying to take the Legacy Fund. We don’t necessarily believe the fund has to be used just for lasting projects, but we don’t think it’s wise to use the fund to plug budget holes. The fund was established for our children and grandchildren, thus the name Legacy.
Dave Weiler, a former legislator and a member of the original Legacy committee, reminded the Tribune Editorial Board that the option to spend the fund’s principal was meant to be only in a disaster or extraordinary situation. The committee wants to protect the principal and the governor’s budget doesn’t touch it.
Not everyone agrees with the committee, arguing it’s foolish not to use the money. They believe providing a financially stable present is one way to build for the future.
The committee also believes the state shouldn’t spend the money before it’s in the bank. They don’t think it’s smart to budget the money based on estimated revenues during the biennium. State Treasurer Kelly Schmidt, now a member of the committee, feels strongly about this.
The state’s budget is based on projected revenues for the next two years. Doing the same with the Legacy Fund doesn’t seem unwise. The Legislature has the ability to save days during a session and reconvene. The governor also has the power to call special sessions. There are ways to deal with emergencies, financial or otherwise.
In 2013 a group spent a year looking at ideas on the use of the Legacy Fund, such as education as well as promoting research and development in the state, that would benefit the public. They issued their report in 2014, but little came of it. The concept of the study was sound: develop a strategy for using the Legacy Fund to benefit the next generations.
As we noted earlier, state leaders need to develop such a strategy. The Legacy Fund shouldn’t be used as a rainy day fund unless some disaster occurs. In the meantime, the Legacy Fund committee promises to monitor proposals before the Legislature to use fund money and to take part in legislative hearings. It’s sort of a watchdog role.
The Legacy Fund has the potential to greatly benefit the state. We shouldn’t be miserly or careless in our use of the money. We need a strategy.