BISMARCK, ND (AP) – The North Dakota House on Wednesday overwhelmingly approved bipartisan legislation aimed at creating broader investment policies for the state’s voter-approved oil tax savings account.
MPs voted 85-8 to pass the bill, which would put 20% of future oil tax revenues into the Legacy Fund to provide loans for expensive infrastructure projects and raise capital for state-owned companies.
Nobody in the Republican-run House of Representatives spoke out against the bill. It now goes to the GOP-controlled Senate, where it also has strong support, including from Senator Rich Wardner, the chamber majority leader and a co-sponsor of the law.
The bill’s main sponsor, Republican Rep. Mike Nathe von Bismarck, said only about 1% of the Legacy Fund’s capital is currently invested in North Dakota. He said the bill will provide “great opportunity, growth and diversification” for the state’s economy.
“This bill sends a strong message … that we believe in ourselves,” he said.
In 2010, voters approved a constitutional amendment requiring 30% of state tax revenue to go towards oil and gas exploration in the Legacy Fund, valued at approximately $ 8 billion. It is expected to raise approximately $ 500 million over the next two-year budget cycle.
Under the proposed law, income from investments will be used to set up a revolving loan fund. Loans from the fund would have an interest rate of less than 2%. They would be administered by the state Bank of North Dakota for projects such as flood control and water systems. Cities, counties and other local authorities are eligible for loans.
The maximum loan amount would be $ 40 million and would not exceed 30 years. The legislation would exclude most routine maintenance and infrastructure repair projects.
A decade ago, the fund’s revenues were mostly parked in short-term, low-risk, low-yield US bonds guaranteed by government agencies. But the fund’s annual returns barely kept pace with inflation.
The State Investment Board now invests the Legacy Fund’s money in a wide range of assets internationally, including stocks, bonds, and real estate. Legislation requires that the board of directors give preference to North Dakota corporations and financial institutions to manage investments in the state.
Income must be at least equal to the other investments in the Legacy Fund, which have a five-year average of approximately 5.5%.