FARGO-North Dakota's Legacy Fund now stands at almost $4 billion and legislators will for the first time tap earnings from the fund to help balance the budget.

Lawmakers voted to spend up to $200 million from the fund's earnings to help balance the 2017-19 budget, in a session in which legislators grappled with a severe retraction in state revenues from sagging oil and farm prices.

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The oil-financed Legacy Fund, in fact, is unlikely to reach the soaring levels that appeared possible just three years ago in 2014 during the go-go years of the booming Bakken Formation. Revenues were flowing into the fund at a rate of more than $90 million a month in 2014; by 2016, the rate had plunged to about $30 million per month.

"The Legacy Fund has only half the potential we thought it would have a couple of years ago," said Brad Crabtree of the Great Plains Institute, which advocates drafting a strategy to invest Legacy Fund earnings. He added, "There's nothing certain about projections," noting that oil prices are, by their nature, volatile.

Besides the drop in oil prices, legislators in 2015 reduced oil taxes, which also will restrain the growth of the Legacy Fund, he said. "The fact of the matter is it fundamentally changed future revenue for the Legacy Fund," reducing the revenues flowing into the fund, Crabtree said.

Even in diminished form, "It's still an extraordinary resource for the future," he said.

An analysis by Great Plains Institute concludes that the value of the Legacy Fund can double or triple through prudent management. The group sketched out several scenarios for managing the fund, which voters created in 2010 by setting aside 30 percent of state revenues from oil and gas.

Under one possibility, which Crabtree said no one advocates, all of the earnings of the fund could be spent, leaving a projected Legacy Fund balance of $20 billion by 2060.

At the other extreme, reinvesting all earnings, the Legacy Fund would mushroom to $102 billion by 2060, but would forego making any strategic investments in initiatives that could help residents or enhance the economy, creating more opportunities, Crabtree said.

Two more middle-of-the-road options would enable meaningful investments that would create benefits while also allowing the Legacy Fund to grow significantly, he said.

Under one scenario, 75 percent of the fund's earnings would be reinvested, while 25 percent would be spent, leaving a projected fund balance of $65 billion in 2060.

Alternatively, in what an advisory group called its preferred option, the so-called "reinvest, replace and spend" management scenario, the Legacy Fund would be tapped for investments, including replacing declining oil and gas revenues, and would have an estimated balance of $50 billion by 2060.

Under this scenario, the Legislature would spend 25 percent of annual earnings from 2017 to 2039, reinvesting the remaining 75 percent back into the fund until oil production peaks and begins falling. At that point, the Legislature would still spend 25 percent of the earnings, but also use part of the remaining 75 percent of earnings to replace diminishing state oil and gas revenue, while still reinvesting the rest.

The point of highlighting the various scenarios, Crabtree said, is to encourage policymakers to devise a strategic plan for investing the Legacy Fund, rather than simply using it as the state's checkbook by making withdrawals as needed.

It was understandable that lawmakers are tapping the fund to balance the 2017-19 budget, but Crabtree said he hopes that is not the start of a pattern of short-term spending of the fund.

By making strategic investments from the Legacy Fund, leaders can chart a much more promising future for North Dakota, he said.

"We're a state that has had a challenging history in being dependent on agricultural commodities," Crabtree said. That led to a decades-long exodus of young people leaving the state to seek a brighter future.

Invested wisely, the Legacy Fund could help develop and expand the state's economy, providing more stable streams of revenue.

"It could become a resource for helping to finance and support the diversification that we know we need to do as a state," he said.

Rep. Al Carlson, R-Fargo, the House majority leader, agrees that the Legacy Fund should be invested strategically.

"That is a future fund," he said, and should not be spent for running government. "It's dangerous to build that into government."

Carlson said "great ideas" for investing the Legacy Fund are welcome. As the fund grows, spending proposals will proliferate, he said.

"As this grows it becomes a bigger target," Carlson said. He predicted there will be proposals to tap the Legacy Fund to expand behavioral health services, for instance.

Legislators will chart a course for the Legacy Fund, probably within the next biennium, Carlson said.

"I think next session you're going to see some of that discussion take place," he said.

Spending any principal of the fund would require a two-thirds majority vote in both the House and Senate.