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Bill expands North Dakota Legacy Fund board, addresses in-state investment mandates

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Changes are coming to the panel that guides North Dakota’s $8.3 billion oil tax savings amid frustration over the implementation of new mandates for investing more of the money in businesses in the state.

The Republican-controlled Legislature during its special session last week passed a bill by Rep. Mike Nathe, R-Bismarck, to expand the Legacy Fund’s advisory board and to allow the panel to develop guidelines for eligible in-state investments.

A governor’s Cabinet official disputes the notion that the new investment components have not been rolled out quickly enough.

Gov. Doug Burgum on Friday signed the bill, which takes effect Dec. 1.

Board reshaped

The voter-approved Legacy Fund is derived from 30% of monthly oil tax revenue. Earlier this year, the Legislature passed another bill by Nathe to invest up to 20% of the savings in the state, including 10% in companies in the state.

But implementation of those investment mandates has not moved as quickly as some people would like. There is no application process, and the state Retirement and Investment Office is critically understaffed, which the agency’s head has said is affecting the speed of implementing the in-state requirements.

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Nathe brought House Bill 1512 in the special session to help expedite the situation, expressing frustration with the pace of the advisory board. 

His bill originally proposed a three-member “in-state impact investment committee,” but the Legislature’s 16-member Joint Technical Corrections Committee didn’t go that route.

The approved bill adds a third state representative and a third state senator to the seven-member advisory board, removes the Office of Management and Budget director from the panel, and adds the state treasurer and insurance commissioner.

The latter two already serve on the 12-member State Investment Board, which oversees investment programs for state funds.

The advisory board will comprise three senators, three representatives, the Bank of North Dakota president, state tax commissioner, state treasurer and state insurance commissioner. A lawmaker member will chair the board no more than two years at a time.

House Majority Leader Chet Pollert, R-Carrington, said the additional lawmakers on the panel are necessary to keep the Legislature in control. 

“I don’t want to swear, but I’ll be darned if I’m going to give the executive branch and the agencies a chance for a 4-4 vote. The Legislature’s in charge of the Legacy and Budget Stabilization Fund (Advisory Board), and we should keep it that way, just plain and simple,” he told the House on Thursday.

‘Problematic’ language

The House originally passed the bill that day with a section requiring the advisory board develop guidelines and review and advance proposals for in-state investments of the Legacy Fund.

That provision drew concerns on Thursday from the head of the Retirement and Investment Office.

“This language is saying that the advisory board … is going to do things that the State Investment Board does, and so that does completely change our framework and our processes,” interim office Executive Director Jan Murtha told the advisory board.

State Retirement and Investment Office Interim Executive Director Jan Murtha talks to members of the Legacy and Budget Stabilization Fund Advisory Board at the state Capitol in Bismarck in October 2021.

North Dakota Securities Commissioner Karen Tyler

The section would require the board to meet monthly and take on duties of Murtha’s office and the State Investment Board, and would add “quite a lot of workload” onto her office, she said.

State Securities Commissioner Karen Tyler told the board she disagrees that the investment mandates have not been met fast enough.

“I don’t see that there was anything broken here to begin with,” she said, posing “What would this look like in the private sector?”

The bill’s “quite problematic” language would have made the Legacy Fund’s advisory board essentially “the decision makers for a private pool of capital,” Tyler said.

The investment mandates essentially created “an $800 million megafund” and need “to be given some time, and I think expectations need to be adjusted,” she said.

“I think that this program just needs to be given the time it deserves to work,” she said.

Sen. Jerry Klein, R-Fessenden, discusses amendments to a bill for changes to the Legacy Fund’s advisory board.

Key lawmakers met after the board meeting to discuss how to proceed with the bill after it had passed the House that morning, a situation that threatened to extend the special session potentially past Friday.

Sen. Jerry Klein, R-Fessenden, said the bill’s language also drew concerns for “circumventing” the Legacy Fund section of the state constitution.

Later that day, the Senate sent the bill to the Joint Technical Corrections Committee, which stripped the concerning language, and amended the bill to allow rather than require the advisory board to take up investment guidelines.

The Senate on Friday passed the amended bill 46-1. The House then concurred on the amendments, and passed the bill in an 85-2 vote before adjourning, ending the five-day special session.

The Legislature also passed a bill adding six new full-time staff positions and $1.7 million in salaries to the Retirement and Investment Office. The bill awaits the governor’s action.

Murtha has said the new positions will help the implementation of the in-state Legacy Fund investment mandates.

Reach Jack Dura at 701-250-8225 or