Posted 9/29/10 (Wed)
By Neal A. Shipman
North Dakota voters are going to get the opportunity in the Nov. 2 General Election to decide the fate of Measure No. 1, a Constitutional Amendment that would set aside 30 percent of both the state’s oil production and state extraction taxes into a permanent trust fund, which is being referred to as the Legacy Fund. And it is a vote that North Dakotans need to think about carefully before election time.
With projections of the state treasury having a surplus of $1 billion by the end of this fiscal year, no one can argue that North Dakota’s tax coffers are reaping the benefits of the energy development in western North Dakota. But simply because the money is rolling in now, the prudent question that needs to be asked and answered is, “will setting aside this percentage of oil revenue for the future hurt more than it helps?”
What many voters may not recall when deciding on the merits of the Legacy Fund is that North Dakota’s Constitution already mandates that 20 percent of oil tax revenue go into trust funds for schools and foundation aid for students. So in essence, if voters decide to set aside another 30 percent of oil revenues for the future, there is going to be a mighty big chuck of money that is going to be off limits for the North Dakota Legislature to spend on other projects.
It is always a good concept to save money for the future. We all know that the oil development isn’t going to be here forever. And the Legacy Fund would ensure that a significant portion of the current oil production and extraction taxes would be saved for future use.
But saving those dollars now could come at a pretty steep price when it comes to the state not being able to take care of many of the pressing demands that it is now facing.
In a recent legal opinion, Attorney General Wayne Stenehjem noted that the Legacy Fund would “dislocate” oil tax allocations that pay water development bonds for the Southwest Pipeline, allocations that go to the General Fund, the oil and gas research fund, the oil impact fund and to political subdivisions in oil producing counties.
In other words, rather than taking care of the roads, the schools, and the rural water needs in western North Dakota, as well as to provide money to the counties and cities being most impacted by the energy development, if North Dakota voters approve Measure No. 1, the people paying the price for all of this newfound wealth are going to get the least.
To lock up billions of dollars in state revenue that are desperately needed in western North Dakota simply doesn’t make sense.
And now even some of the Legacy Fund bill sponsors, such as Rep. Merle Boucher, said that the Attorney General’s opinion reinforces his change of mind about the timing of the fund. Boucher now feels that it is premature to put so much money away when there’s such an impact from oil development.
Saving for the future is important for the state. But it should not take priority over meeting the needs of the citizens of western North Dakota.
Voters will need to seriously weigh both the benefits and the impacts associated with Measure No. 1 before they cast their votes.