BISMARCK — North Dakota lawmakers have sent a bill to Gov. Doug Burgum's desk that would set targets for investing part of the state's oil tax savings account in local companies and infrastructure.
The Senate unanimously passed House Bill 1425 on Monday, March 29, a month after the House approved the legislation. A spokesman for Burgum declined to comment on the bill or whether the Republican governor would sign it.
The proposal sets an objective for the State Investment Board to designate up to 10% of tax collections flowing into the voter-approved Legacy Fund for creating loans tailored to North Dakota cities, counties and businesses. Another allocation of up to 10% would be earmarked to invest in stocks and other equity in North Dakota-based companies.
The Legacy Fund, derived from 30% of the state's oil and gas tax revenue, currently holds nearly $8.2 billion. As it stands now, only about 1% of the Legacy Fund is invested in a loan program for North Dakota businesses. Most of the rest of the money goes toward investments in companies based outside the state.
The idea of investing more of the budding fund locally has picked up steam in the last year, with Insurance Commissioner Jon Godfread, an investment board member, throwing his support behind the cause.
Bill sponsor Rep. Mike Nathe, R-Bismarck, said the plan would provide much-needed capital to localities for infrastructure projects, while promoting up-and-coming businesses in the state. Godfread said the legislation would help North Dakota realize "the multiplying factor of investing in yourself."
Nathe notes that his bill only sets goals for investing up to a fifth of the fund in-state and the investment board may never reach that level.
Senate Majority Leader Rich Wardner, R-Dickinson, said the Legislature is taking "a small step" in investing the Legacy Fund in the state by passing the bill Monday.
The board has already taken steps toward directing more in-state investments, said Dave Hunter, director and chief investment officer of the State Retirement & Investment Office. Hunter said the board has a target to invest 5% of incoming Legacy Fund revenue in a program through the Bank of North Dakota that provides low-interest loans to businesses in the state.
The board is also working to hire one or two investment managers to oversee a new in-state investment program, Hunter said. That program would target 3% of the fund toward North Dakota-centric investments, but the details are still being ironed out. Hunter said shifting to more in-state investments will take a significant amount of time.
The bill passed Monday is one of three major proposals dealing with the Legacy Fund. The Senate will soon consider a massive bonding package and legislation that divvies up Legacy Fund earnings in future years.