North Dakota’s Legacy Fund Balance Crosses The Half-Billion Mark

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Written By:
Rob Port

Sep 24, 2012
4:07pm

A press release from State Treasurer Kelly Schmidt’s office:

State Treasurer Kelly Schmidt recently transferred $45,425,341.17 into the Legacy Fund.  This transaction brings the total of deposits to the Legacy Fund to $535,224,264.65 since making the first transfer one year ago.

“The principal balance of the Legacy Fund is growing much more quickly than originally anticipated” commented Treasurer Schmidt. “The fund is well on its way to becoming a significant and permanent source of revenue for the people of North Dakota.”

Under Article X, Section 26 of the North Dakota Constitution, thirty percent (30%) of all revenue derived from North Dakota’s oil and gas extraction and gross production taxes are deposited in to the Legacy Fund.  Neither the principal nor the income of the Legacy Fund may be spent prior to July 1, 2017.  Income earned after this date will be transferred to the state General Fund at the end of each two-year budget cycle, but it will require a two-thirds majority vote of both houses of the legislature to expend any of the principal balance of the fund.

The Legacy Fund is invested by the State Investment Board.

Here’s a graph showing growth in the Legacy Fund since the first deposit last year through this latest deposit (for some reason I can’t locate specific deposit numbers for July and August:

This is a starting level of growth, and far beyond what the proponents of this fund expected.  So might see this as a positive, money socked away for the state’s future.  I see it as money that could be used for tax relief for North Dakota individuals and businesses locked away in government.

It was always surprising to me that some conservatives in the state backed the creation of this fund.  Their argument is that, by putting this money into a fund and restricting access, it would keep the legislature from funding it.  The reality is that this fund will be an engine for government growth for generations into North Dakota’s future.