North Dakota Legacy Fund

The North Dakota Legacy Fund is a sovereign wealth fund of the U.S. state of North Dakota. Contributions to the fund must include "[t]hirty percent of total revenue derived from taxes on oil and gas production or extraction."[1] The fund was established by ballot initiative in 2010. The fund is modeled after the Norwegian Sovereign Wealth Fund.[2] As of February 28, 2023, the fund has a principal balance of approximately $8.817 billion.[3] The fund is projected to have assets worth approximately $90 billion by 2039, $150 billion by 2050, and $250 billion by 2060. The fund intends to diversify wealth obtained from oil extraction into other sectors.[2] Money in the fund could not be spent by the state legislature until 2017.

Background

North Dakota is a commodity-based economy. North Dakota experienced an uptick in oil extraction from 2008-2014.[4] The legacy fund was established to ensure that the financial windfall gained from the Bakken Oil Boom would benefit the state in the long-run, even if oil prices collapse.[5]

2023 Changes

In 2023, the North Dakota Legislative Assembly passed House Bill 1379, a bill which divvied Legacy Fund earnings for the 2023-24 biennium while providing a roadmap for use of future interest payments. Before House Bill 1379, the first $150 million in Legacy Fund earnings are spent on infrastructure bonds and funding the state employee retirement system. The next $60 million fund roads and highways under the old law.

House Bill 1379 keeps these allocations in place, while also establishing $485 million in new spending beginning July 1, 2023.[6] The first $200 million funds tax relief. The next $30 million is allocated for grants and loans aimed at cutting carbon output in the energy sector. The next $10 million funds public university research in the state. The next $10 million funds companies deemed to be advancing technology. The next $10 million funds workforce development in the state. The next $90 million funds "legacy projects," such as tourism or other economic development. The next $100 million funds the repair of bridges. The next $15 million funds infrastructure enhancements tied to value-added agriculture. The final $15 million funds bioscience innovation grants. Any funds after this point go into a rainy day fund.

References
  1. North Dakota State Constitution, Art. X, sec. 26.
  2. https://www.betterenergy.org/wp-content/uploads/2018/03/North_Dakota_Legacy_Fund_Recommendations.pdf
  3. "Legacy Fund". Retirement Investment Office.
  4. "North Dakota's Oil Boom is over. What Now?". The Atlantic. 27 June 2015.
  5. https://www.betterenergy.org/wp-content/uploads/2018/03/North_Dakota_Legacy_Fund_Recommendations.pdf p. 14
  6. Turley, Jeremy (Feb 10, 2023). "Bill shapes spending of North Dakota Legacy Fund earnings". The Bismarck Tribune. Retrieved May 5, 2023.


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