Published December 22 2012
Forum editorial: ND fund on way to $1 billion?How’s this for a Christmas present? North Dakota’s Legacy Fund (where a lot of the oil revenues go) likely will reach $1 billion in two years if current trends continue. That amount is about twice what was projected when voters established the fund a little more than two years ago.
The latest indication of the fund’s incredible growth was a monthly transfer by state Treasurer Kelly Schmidt of about $60.8 million into the fund, which now has fattened to just more than $707.5 million. That total has been reached in a little more than two years. The latest deposit was the largest monthly transaction in the fund’s history. It continues a current fiscal year trend of bigger and bigger monthly deposits since September.
The constitutional fund receives 30 percent of all revenue derived from oil and gas gross production and extraction taxes. The fund cannot be tapped until 2017, and then only income earned after that date will be transferred to the state General Fund. The fund’s principal cannot be accessed without a two-thirds majority of both Houses of the Legislature, and even then, only 15 percent per biennium would be available.
In other words, the people of North Dakota voted to sock away a lot of oil and gas revenue in anticipation of the day when the oil boom either busts or slows. Better safe than sorry, right?
That being said, the state’s other constitutional and statutory funds are growing at unprecedented rates, piling up reserves never before experienced. Some of those funds are easily accessed for specific purposes, such as education or water development. Others are less easily tapped, such as the so-called rainy-day fund, because the legislative sentiment for generations has been that a rainy day eventually will come.
Bottom line? North Dakota has more money to spend and save than at any time in its relatively short history. The Legacy Fund is off the budget table for now, but other sources of funding (some earmarked for specific programs) are available to lawmakers. It is, by any objective measure, an “opportunity budget,” wherein lawmakers and the governor can make smart investments, shore up sustainable expenditures, cut taxes and squirrel a lot away for the future.
It doesn’t get much better than that.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.