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Burgum says proposal using Legacy Fund earnings to reduce North Dakota income taxes isn't 'good policy'

North Dakota Gov. Doug Burgum presents his two-year budget proposal to state lawmakers Wednesday, Dec. 5, 2018. Tom Stromme / Bismarck Tribune

BISMARCK — North Dakota Gov. Doug Burgum criticized a bill proposing using Legacy Fund earnings to reduce income taxes Thursday, Feb. 7.

Burgum, a Republican who generally avoids commenting on pending legislation, told reporters that a bill pushed by the chairman of the House Finance and Taxation Committee isn’t “good policy.” It would use earnings from the Legacy Fund, which voters created in 2010 by setting aside 30 percent of oil and gas tax revenue, to replace state income tax collections.

“You’re taking tax revenue from one industry and then spreading it out to everybody,” Burgum said in a meeting with reporters in his office’s conference room. “It’s a little bit of Robin Hood stuff going on.”

House Bill 1530, championed by Rep. Craig Headland, R-Montpelier, would divert half of Legacy Fund earnings each two-year budget cycle to an “income tax rate reduction fund,” as long as the transfer is at least $50 million. It would eventually repeal individual and corporate income taxes when the rates are reduced to zero, which could take at least a decade, said Tax Commissioner Ryan Rauschenberger.

Headland said he doesn’t intend to touch the $300 million in projects that Burgum has proposed to spend in Legacy Fund earnings next biennium, which includes unmanned aircraft infrastructure and the Theodore Roosevelt Presidential Library and Museum.

Burgum said his approach focusing on one-time projects allows policymakers to rely on Legacy Fund earnings to shore up agency budgets in the event of a revenue downturn.

Headland said his bill could help address the state’s workforce shortage by attracting new residents.

“The governor and I disagree on this,” he said. “How many billions of dollars worth of visionary one-time projects does this state need?”

North Dakota is projected to raise more than $900 million in income taxes during the biennium that ends June 30. The average individual state income tax liability in North Dakota is $866 per return, according to the tax commissioner’s office.

North Dakota’s income tax rates are low compared to other states, but South Dakota doesn’t impose them, according to the Tax Foundation. North Dakota lawmakers most recently reduced income taxes in 2015.

Burgum’s spokesman Mike Nowatzki said the governor isn’t opposed to cutting income taxes but doesn’t support Headland’s proposal to buy them down with the Legacy Fund. The governor didn’t say he would veto the bill if it reached his desk, saying earlier in the meeting with reporters that it would be “illegal” for him to threaten such action on any bill.

The bill’s cosponsors include House Majority Leader Chet Pollert, R-Carrington, and the chamber’s chief budget-writer, Republican Rep. Jeff Delzer, of Underwood. It received a "do pass" recommendation from Headland's committee and could be debated on the House floor in the coming days.

Also during his hourlong meeting with Statehouse reporters, Burgum expressed support for the concept behind a data privacy bill moving through the Legislature, again pitched a plan for two higher education boards, was uncommitted about abortion legislation passed by the House and reiterated support for LGBT anti-discrimination protections that lawmakers have repeatedly rejected.

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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