Officials defend North Dakota Legacy Fund decision

But some say the overall mission of legacy funds is not well defined or has strayed from its original purpose.

A North Dakota poll conducted by North Dakota News found that a total of 60% of voters want Legacy Fund investments to be directed to development projects in North Dakota, while the fund is primarily 18% think the focus should remain on growth. Released on Tuesday in collaboration.

Lt. Gov. Tammy Miller, head of the state Investment Commission, which is responsible for administering the fund, said in a statement that she was “pleased with the state’s investment strategy and the amount of reinvestment in the state that we feel is appropriate.” “It takes time to evaluate these investments, make decisions and raise capital.”

In 2021, the Legislature approved an in-state investment program under House Bill 1425 that requires a portion of the Legacy Fund to be invested in North Dakota every two years.

Amendments made under Senate Bill 2330 of 2023 create more specific guidelines and target allocations of approximately $1.3 billion for infrastructure loans, funds for the state-owned North Dakota Bank, and other equity investments in the state. instructed.

“These investments help keep entrepreneurs in the state, contribute to economic diversification and contribute to job creation,” Miller said.

Following the poll results, Retirement and Investments Director-General Jean Murtha also issued a statement on February 13 outlining these investments. They detail low-interest infrastructure loans to cities and counties, low-interest loans aimed at attracting businesses, and other targeted investments in businesses and private funds in the state.

Legacy Fund’s trajectory reminds Megan Langley, founder and director of Strengthen ND, which focuses on nonprofit and local development across the state, of organizations experiencing “mission drift.” he said.

In other words, those at the helm of the Legacy Fund may have a good idea of ​​what its mission is, but it appears to be out of touch with voters’ expectations.

“There seems to be a strong desire to know and understand what’s going on. I see this as a very positive sign that people are invested in what this fund means for the future of the state.” I take that as a signal,” Langley said.

“This gives me great hope for the future of North Dakota and I hope we can do even more,” she said.

Joe Raso, president and CEO of the Greater Fargo-Moorhead EDC, said the poll clearly shows that residents want more money invested in the state. said.

That should include room to invest in growth industries that are the state’s future after oil revenues level off, he said.

“The agricultural technology sector, the biosciences, autonomous systems, all of these things and energy obviously have huge investments already in place,” Raso said. “So, wouldn’t it make sense to focus on these areas, given the public’s opinion that they need more investment and economic development, and look at financing to help achieve those goals?”

State Rep. Mike Nate (R-Bismarck), who helped craft HB 1425, said he believes the changes to direct more investments from legacy funds to states are working as intended. .

“We see that voters want to reinvest the money, and we’re working on that, and we’re already working on that,” he said. “When I see that voters want more investment in the state, I agree. That’s what 1425 is for.”

Naate said he believes the public as a whole does not want to disrupt the balance of the Legacy Fund. He also said that a distinction should be made between increasing balances and disbursing interest income.

“They may want to use the interest they earn from it on other projects, but the overall balance will be close to $10 billion by the time (lawmakers) get through the door next January. I don’t think we want to cut back,” Nate said. He said.

According to the poll, 68% of voters would like investments in legacy funds to be made “within North Dakota,” rather than following current policy that funnels most of the money to investments outside the state. There is. The poll also found that 59% support using Legacy Fund money for initiatives such as eliminating local property taxes.

Naate also said that Legacy Fund money is already being used to reduce property taxes by funding projects that would have been completed by increasing property taxes in those areas. .

Naate cited the example of $100 million being spent on a flood diversion project in Fargo and another $100 million going to the state Department of Transportation for roads and other infrastructure funding.

“I think the people who responded to this want to invest in North Dakota,” said state Rep. Glenn Bosch (R-Bismarck). “At the same time, I think they want us to get a good return on our principal. And I feel like they want to take the profit we get and put it toward tax relief. . And I agree with that too.”

Some believe the original concept of creating a legacy fund to fund the state’s general fund if oil revenues decline has been lost in much of the discussion. Currently, approximately 50% of the state budget comes from these revenues.

They believe the ultimate goal is to build an endowment that will be available to future generations, and they compare the Legacy Fund to other state sovereign wealth funds such as Alaska, New Mexico, and Wyoming. There is also.

Alaska’s endowment is currently valued at about $77 billion, New Mexico’s at $43 billion, and Wyoming’s at $28 billion.

The current total value of the Legacy Fund is approximately $9.8 billion.

“I think there’s been a conversation in the community over the last four or five years about how to use the Legacy Fund, but there hasn’t been a lot of conversation in the community about what the concept of the Legacy Fund is,” said the ex. Governor Ed Shafer said. .

“It would be interesting to ask people how much money they think is flowing into the general fund from the Legacy Fund for the next Congress, and how much has been spent by legislators since its creation.” he said.

Schaefer added that other tax relief measures, such as eliminating portions of income and sales taxes, would have a broader impact on all North Dakotans, rather than just focusing on property owners.

The Legacy Fund, sometimes referred to as the sovereign wealth fund or “rainy day” fund, was created by a constitutional amendment initiated by the state Legislature and approved by voters in 2010.

A total of 30% of total oil and gas production and oil extraction taxes on oil and gas are contributed to this fund every month. Over the past 12 years, an average of more than $54 million has been deposited each month.

The latest ND poll also captures calls for greater transparency regarding legacy funds, with 84% of voters asking the State Investment Commission to invest in legacy funds without requiring citizens to submit formal documentation. The company hopes to publish its investment list.

“There’s a pretty big gap between the level of transparency that voters want and the level of transparency that the State Investment Commission provides,” said House Majority Leader Zach Ista. “I also am not particularly surprised that North Dakota voters want legacy funds to be used in a way that our communities feel its impact more directly.”

Opinion polls show that support for greater transparency spans the political spectrum, with more than 80% of self-identified Republicans, independents, and Democrats all supporting making investments public.

Arik Spencer, president and CEO of the Greater North Dakota Chamber of Commerce, said it’s “loud and clear” that North Dakotans want a better understanding of the Legacy Fund and related policies. He said that.

“We appreciate this call for transparency,” Spencer said. “It is clear that voters are ready to actively participate and bring their ideas to the polls in this upcoming election, regardless of party platform.”

The new North Dakota poll surveyed 500 likely voters from February 4 to 6 and has a margin of error of plus or minus 4.4 percentage points. There is.