BISMARCK — North Dakota lawmakers are looking at establishing a reserve fund for earnings from the state's oil tax piggybank to give some shape to a budgeting process that has garnered plenty of public attention.
The Legislature's interim Legacy Fund Earnings Committee met Wednesday, July 8, to consider a rudimentary bill draft that formally introduces the concept of a reserve fund, which was floated by lawmakers at a February meeting in Watford City.
In 2010, North Dakota voters overwhelmingly approved the creation of the Legacy Fund, which currently contains about $6.8 billion. Since then, 30% of the state's oil and gas tax revenue has gone to the savings fund, which lawmakers couldn't touch until 2017. During the last budget cycle, some of the earnings were used to balance the state's books, replenish an education fund and boost a rainy day fund.
The special 11-member committee, which includes legislative leaders from both parties, is tasked with trying to find some kind of consensus on how to use and maintain the fund. Over the last year, the committee has held meetings in the eastern and western parts of the state to gather input from residents and lobbyists on ideas for using the money, including the common themes of school construction, property tax relief and road infrastructure.
The committee did not take action Wednesday on the bill draft, which Legislative Council intentionally crafted with several significant holes. While the lawmakers seemed to agree that establishing a reserve fund would be good for knowing how much can be spent each budget cycle, they did not discuss specific percentages of the fund's earnings that would be set aside for saving and spending
House Majority Leader and Committee Chairman Chet Pollert, R-Carrington, noted that the volatile price of oil and recent downturn in western North Dakota's Bakken formation meant it would be difficult to fill in some of the bill draft's blanks right now. The Legacy Fund received its lowest ever monthly deposit in June at $10.24 million.
Even so, Pollert said having a preliminary conversation on a reserve fund, which will likely come up in next year's legislative session, was worthwhile.
At the end of the committee's February meeting, House Appropriations Chairman Jeff Delzer, R-Underwood, floated the idea of establishing a metric that would find a "rolling five-year average" of earnings going into the fund. The metric would give lawmakers a sense of how much it can spend or reinvest without overestimating the amount due to booms in oil tax revenue.
Senate Majority Leader Rich Wardner, R-Dickinson, has expressed support for the concept, saying that until the Legislature establishes a metric for average earnings, it won't know how much it can responsibly spend through the budget process. Right now, the length of time used in the rolling average remains blank in the bill draft.
State lawmakers rejected several proposals for using the money from the fund during last year's session, including bills that would have reduced state income taxes and funded paid family medical leave.
Gov. Doug Burgum pitched $300 million worth of Legacy Fund projects, including the Theodore Roosevelt Presidential Library, which received conditional funding from other sources. Burgum said in his recent State of the State address that about half of the money in the fund should be reinvested, while the remaining funds should be used judiciously to have "lasting impacts beyond our current generation."
Delzer, who lost his bid for reelection in the June primary, asked Legislative Council to create a separate bill draft that would allow the special committee to exist after the next legislative session. If the interim committee is not renewed by the Legislature, its final meeting will likely be in September.