According to PlainsDaily.com, North Dakota’s “Legacy Fund” is getting its first deposit.
Which represents tens of millions of dollars socked away in a fund where it can’t be used. Which, some argue, is good because then the legislators can’t spend it. But remember, it also can’t be given back to the taxpayers in the form of tax relief.
BISMARCK, ND – North Dakota State Treasurer Kelly Schmidt has announced that her office will be making a $34,311,019.74 into the state’s Legacy Fund. According to a press release sent from Schmidt’s office, this is the first deposit into the fund which was created by an amendment to the constitution passed by the legislature and approved on the 2010 ballot by voters.
Under Article X, Section 26 of the North Dakota Constitution, thirty percent (30%) of all state oil revenue derived from oil and gas production and extraction after June 30, 2011, will be 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.
Keep in mind too that the Legacy Fund will be invested, and that those investments will be State Investment Board. The same board that handles the state’s pension investments, which currently have hundreds of millions (if not billions) in unfunded liabilities.
In other words, we’re locking tens of millions (ultimately hundreds of millions as funds go in) into this account instead of giving these surpluses back to the taxpayers that paid them. And these funds are to be invested by a government board with a dubious track record when it comes to investing.
But hey, at least the legislators can’t spend it all. Which was the main selling point of this fund, but I think we’re going to learn that the problems with this fund are larger than the advantages.