BISMARCK, N.D. (AP) — A proposal by top Republican House members to tap some earnings from North Dakota’s voter-approved oil tax savings account for income tax relief could bridle some future pet projects pushed by the governor and fellow lawmakers, the bill’s sponsor said Tuesday.
Rep. Craig Headland, who chairs the House Finance and Taxation Committee, told The Associated Press the primary intent the bill is to allow residents to directly share in the state’s Legacy Fund by lowering their tax burden. He said the measure also could help repel potential initiated measure attempts to drain the fund that currently holds more than $6 billion.
Headland told his committee Tuesday that the bill is “a way to share some of North Dakota’s wealth with future generations … from one corner of the state to the other.”
It also would make North Dakota more competitive with other states that don’t have income tax, which would help attract workers in the state that has thousands more jobs than takers, he said.
House Majority Leader Chet Pollert and GOP Rep. Jeff Delzer, who chairs the powerful House Appropriations committee, are among the measure’s co-sponsors.
The proposal calls for using half of the earnings from the Legacy Fund, beginning in 2021, to reduce individual and corporate income taxes. The bill would only use any earnings in excess of $300 million in the next two-year budget cycle.
Headland said state income taxes likely would be eliminated over the next decade with Legacy Fund earnings.
North Dakota Tax Commissioner Ryan Rauschenberger said the tax liability for residents is about $900 a year. The state collects about $900 million every two years in income tax, with corporations accounting for only $100 million of the sum, he said.
Voters endorsed a constitutional amendment in 2010 that requires setting aside 30 percent of state tax revenues on oil and natural gas production in the fund. The amendment barred the Legislature from spending any of the fund’s assets until June 2017. Currently, a two-thirds vote of the North Dakota House and Senate is needed to spend any of the fund’s principal. Lawmakers may not withdraw more than 15 percent of the principal every two years.
The Legislature has had no problem spending interest from the oil money piggy bank.
Lawmakers are reviewing several proposals to spend the interest this session, including a plan by GOP Gov. Doug Burgum to use $300 million for education loans and grants, and projects that include a $50 million Theodore Roosevelt Presidential Library in western North Dakota.
No one spoke against the House bill on Tuesday. The Greater North Dakota Chamber, the state’s largest business organization, supported the legislation, as did Dustin Gawrylow, managing director of the North Dakota Watchdog Network, which keeps tabs on how public money is spent.
Gawrylow said lawmakers have turned oil tax savings account into a “second general fund” to pay for government.
Headland, the bill’s sponsor, said while the measure may sail through the House, the Republican-led Senate has been lukewarm on the idea.
“At least they will know the House’s plans for the fund for the future,” he said.