Official Newspaper of Eddy County since 1883
Official Newspaper of Eddy County since 1883
After 10 years of waiting for the courage to tackle spending the $8 billion Legacy Fund, the present legislature has blossomed with more ideas than dandelions in an unkempt cemetery.
Legislators and committees have been dreaming about the day this fund could be touched to grow North Dakota. It seems that day has arrived.
The dialogue went public in January, when Insurance Commissioner Jon Godfread started talking about using the fund for investing. Not to be outdone by a member of the executive branch, legislators poured in more bills relating to the Legacy Fund than were introduced in any previous session.
Godfread proposed a broad brush.
“Investments may be with startups or technology companies, as well as infrastructure projects, but also other types of businesses, large or small.”
Most of the proposals focus on business investment. But, according to news reporter, Jeremy Turley, “leaders from both parties say they want to show residents this legislative session that the fund is being put toward quality-of-life improvements,” a vague, but worthy goal.
Launched June 30, 2012, the Legacy Fund is funded with a diversion of 30% of the oil and gas extraction taxes. According to the state constitution, the legislature can spend the interest, but it takes two-thirds of both houses to cut into the principal.
The idea of investing in North Dakota warrants support, but we need to be realistic about the consequences. First, we have to expect a lower return on investments than would be earned if the State Investment Board continued to follow its present investment pattern.
According to a publication of the State Investment Board, the “Legacy Fund investment returns exceeded 14.3% in the last half of 2020, and 9.25% per annum for the five years ending 12/31/2020.” That record is quite remarkable.
We should expect our in-state investment earnings to decline because the SIB has investment opportunities all over the United States and the world. If investment opportunities in North Dakota were as lucrative as out-of-state investments, we would see more out-of-state money coming into North Dakota. We will lose on investment earnings, but we should experience economic growth to offset these losses.
Then, there is the hazard found in our political culture. It is difficult to get a handle on such an abstract term as “political culture,” but it can be defined as the way North Dakota conducts its public affairs.
We are a small state with intimate politics. By politics, I do not mean partisan politics, but the use of influence. In a small government, much is done through personal relationships. So the question is: do we have the discipline to invest with sound business judgment, or will chunks of money be invested in response to political influence?
We may start out pure, but over years, procedures and institutions lose the original vision. Take the North Dakota Hall of Fame in the Capitol.
When the North Dakota Hall of Fame was created in the 1960s, the plan was to recognize North Dakotans who rose to prominence, nationally. But an astute observer would question the national prominence of some of the later additions. More likely than not, political influence shaped some of these choices.
In a late amendment to a bill, Senator Rich Wardner proposed that the legislation include $60 million for building technical education centers. This suggestion gets to the quality-of-life issue, because it will train and retrain North Dakota men and women for careers that will give their lives new quality.
Senator Wardner’s technical education centers should be broadened to include former prisoners, and those who become unemployed because they lack skills for the new economy.
