In Nine Months North Dakota’s Legacy Fund Has Accumulated Nearly $352 Million

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In 2010 North Dakotans approved a constitutional measure to create what is called the Legacy Fund. Under Article X, Section 26 of the North Dakota Constitution, 30% of all state oil revenue derived from oil and gas production and extraction after June 30, 2011 is deposited into the Legacy Fund. No principal or earnings of the fund may be spent until after June 30, 2017. Principal expenditures from the Legacy Fund after 2017 require a two-thirds passing vote of the legislature.

State Treasurer Kelly Schmidt emailed me this morning news of the latest deposit into the fund:

My office will be transferring $44,835,257.70 to the Legacy Fund today bringing the total deposited amount to $351,974,104.91. The first deposit was made in September of 2011….

That’s roughly $352 million deposited in nine months, or an average of just under $40 million per month.

But remember, according to the anti-Measure two activists, if we can’t abolish property taxes or towns will burn for want of fire fighters or something.

A lot of conservatives advocated for the Legacy Fund back when it was put on the statewide ballot by the legislature. I opposed it, arguing that locking up these excess funds in government would only hamper the case for tax relief. Turns we critics who made that argument were right. These funds now aren’t available, and make the case for tax relief. Even setting Measure 2 aside, this is hundreds of millions of dollars that could be displacing tax burdens carried by North Dakota’s citizens.

This is going to be an obstacle to any sort of tax relief, be it property taxes or income taxes or otherwise.

What a mistake.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • http://Sayanythingblog.com The Whistler

    We can have measure 2 and the legacy fund.  We just won’t be able to afford 35~50% increases in state spending.  

    • $8194357

      10 X

  • http://profile.yahoo.com/UEMR3DEKHPNHQREVW7IRJW7SNQ Joel

    ever wonder how Alaska does it?  similar population sizes, similar oil revenues.  Yet Alaska has no state income or state sales tax, and instead actually gives each resident money each year, usually around $1000.   How does that work?  why can’t we do that in ND?

    • http://Sayanythingblog.com The Whistler

      I only have a casual understanding of the Alaska situation but I’ve heard that Alaska owns the mineral rights on most of the oil producing land.  We get a tax based on the extraction, Alaska gets a lot more. 

      Still I think our big problem is that our politicians are a whole lot greedier than the ones in Alaska.  Our politicians would rather give out favors to the special interests and the ones that set up the Alaska fund cared more about the citizens of the state. 

    • http://sayanythingblog.com Rob

      In Alaska most of the oil-producing land is owned by the state, so the lion’s share of royalties go to the state and not private citizens.  Most of the mineral rights in North Dakota are privately-owned.

      The state does own some, and we do have a trust fund for those revenues.  The funding goes toward the state’s schools.

    • Tim Heise

      the 351 million divided by the state population is $514 per person in the state.

  • WOOF

    About $600 per capita ?

    • Awfulorv

      ” $900 to $1800 per 2005 dollars”  is the correct amount”.  And guess who got that bonus increased?  SARAH PALIN,  SARAH PALIN,  SARAH PALIN.  And guess who’s getting Tea Party Nominees elected, all over the country, Sarah Palin, thats whu, whu, whu, Boo… Laugh, thought I’d die, as the Liberals vomit their own Bile from fear…

      • Jonesy

        According to Harold Hamm, oil exploration in Alaska has come to an end due to the tax structure.  Who implemented that tax stucture??  SARAH PALIN, SARAH PALIN, SARAH PALIN

        • Awfulorv

          There is no oil exploration in Alaska other than the North Slope Area. Federal land, which Numb Nuts has declared off limits. You’ll find gold in from mountainous regions, not oil… But wait, let me upset you Liberals once again,  SARAH PALIN, SARAH PALIN,  SARAH PALIN,  there, pull your hair out…

          • Jonesy

            Quoting Harold Hamm and pointing out oil extraction taxes were increased makes me a Liberal?? Times sure have changed.

  • Lynn Bergman

    The voters of North Dakota clearly agreed to set aside 30% of oil revenues for future generations when the oil and gas are GONE.

    I am proud to have supported the Legacy Fund. It is an example of how concern for future generations can co-exist along side the greed that is the engine of capitalism and capital markets. A very small minority of my fellow conservatives who don’t give a rip about future generations will not sour me to the monumental conservative challenges ahead.

    Had the Legacy Fund gone down in the voting booth, I would have lost faith that North Dakotans can make intelligent decisions. Because North Dakotans supported the future of their granchildren, I have faith that they will ultimately understand the idiocy of the property tax system and the need to trash it in the same bin as the personal property tax.

    Love = Work + Courage

  • tony_o2

    We’ve been told that if Measure 2 passes, we aren’t going to be reliant on oil-money to replace the property tax revenue.  We have X amount of revenue streams to replace property taxes.  We shouldn’t worry about funding when the oil-bust happens.

    So why does it matter how much money is in the Legacy Fund?  We aren’t going to use that $352Million to offset property taxes.  We aren’t going to use the other $821Million (the other 70% of extraction taxes) to offset property taxes either.  We’re told that the oil-extraction tax isn’t a factor in replacing property taxes, so we shouldn’t worry about funding when the bust happens.

    Or should we?  Do we really have enough revenue to replace property taxes without depending on oil?  Do we have that much surplus in other taxes that we aren’t supposed to worry about tax hikes to cover property taxes?

    And if we do have e surplus taxes in other areas, why can’t we give those taxpayers a break as well?  Find a compromise between property tax breaks and other tax breaks, if of course there is enough left over without counting oil taxes.

  • Hal149

    The legacy fund is only 30%, the other 70% should be plenty to allow tax relief.

    Any time we can require government to have a two-thirds vote to spend money, I’ll be for it.

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