Sen. Dwight Cook (R-Mandan) wants to start a statewide discussion about how oil and gas tax money being invested in North Dakota’s new trust fund should be spent in the future. Five years from now is the earliest that state lawmakers can get their hands on the cash.
“We’ve got some time and I think now is the time to start the discussion of what it is that we’re truly going to do with this Legacy Fund. How are we going to invest it? How are we going to help the people of North Dakota? And I would hope that whatever this plan ends up to be that it’s a plan that will assure that the intent of the voters when they initially passed it is carried through, and I believe to carry out that intent it needs to be a plan that’s going to protect future generations of North Dakotans,” said Cook.
About $220 million has been deposited into the Legacy Fund since deposits began about 8 months ago. State leaders say deposits could reach $1 billion dollars, that’s with a ‘B,’ by the end of this year, which would leave estimates made during last year’s Legislative Session in the dust.
“This is a nice position to be in and we are certainly the envy of the nation today. But we’ve got to be careful. We’ve got to take a look at this opportunity and make the best of it,” said Cook.
Like North Dakota, Alaska is a major oil-producing state and it has an oil tax trust fund similar to North Dakota’s Legacy Fund. Alaska’s state government uses money from its fund to send residents checks in the mail. But Senator Cook is not convinced that that’s the best approach for North Dakota.
“I’ve visited with folks from Alaska. There’s some concerns about their plans. I think there’s a lot that wish they hadn’t done that. I’m not too excited about the Alaska way, sending the checks back to the people. I know when people get their checks, the jails are full, spousal abuse goes through the roof. It’s got its downfalls,” said Cook.
Cook, who is a major player in the Legislature when it comes to tax policy, says there are other options for North Dakotans to consider. “There’s other state plans out there. Wyoming has a plan that funds, gives nice, attractive college tuition scholarships to every high school graduate in Wyoming. That’s a plan that exists. We’ve got to look at all of the plans. We’ve got to learn from the plans, their mistakes that they’ve made, don’t do the same mistakes,” said Cook.
There is at least one state that Senator Cook is not even interested in looking at. North Dakota recently surpassed it in oil production. “California, of course, had tremendous oil exploration over the years. They don’t have a plan. They spent all of the money and you still look at the situation they are in. We’re not going to use California as a model state to follow,” said Cook.
Cook is not picking favorites, yet, although he likes the idea of tax relief and some other options. “I don’t know if I’m leaning towards something. I think it would be a very attractive characteristic of the State of North Dakota to be able to say that if you graduate from high school in North Dakota, you could pursue a college education, reach your dreams and not be straddled with a pile of debt. You know, that’s very attractive,” said Cook.
Regardless of the final plan North Dakotans eventually choose, Cook does have a wish list he’d like to see included. “I would hope we don’t grow government. That’s the last thing we want to do is to grow government that we need to sustain. I hope we will find something that, again, benefits future generations. We’re mining the oil. We’re taking it. We could be leaving it in the ground for them. But our country needs it. We’re mining it now. That doesn’t mean we can’t leave something for those who are not going to be able to enjoy it,” said Cook.
It took a lot of work to create the Legacy Fund, which voters approved in November 2010. An attempt to create it two years prior to that was rejected by voters. Here’s how it works: 30% of the state’s oil and gas tax revenues go into the fund. Constitutionally, lawmakers cannot touch the principal and interest until July 1, 2017. After that, the interest will go into the state’s General Fund and the Legislature can decide how to spend the interest. And that’s what Cook wants to create a dialogue about. “It’s a little risky to depend on this revenue to keep coming in, coming in. As Chairman of the Finance and Tax Committee, I can tell you if this industry goes south, the State of North Dakota is going to be hurting real soon,” said Cook.
There aren’t too many guarantees with the oil boom, which makes the state’s budgeting process all the more difficult. “As somebody who sits in policy arena and has to make the tough decisions, it certainly plays in my thought process. To what degree it plays in the thought process of other people, you know, there’s people out there that think it will never end. But we’ve got to be concerned about it and certainly there’s a lot of concern in the Legislature,” said Cook.
State lawmakers will now begin working on a plan that reflects the will of the people. “I don’t see this as being a big partisan thing,” said Cook.
Cook plans to introduce legislation at the next Legislative Session to direct Legislative Management to study methods to assure that the Legacy Fund provides the lasting benefits intended by voters who created it.