Legacy fund?

johnr

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The more I see of it the more I have come to believe that the legacy fund was a mistake. It is just a huge pot of money that has enabled reckless spending by the legislature.

Does anyone really think that the amusement pork at Jamestown or the Roosevelt library are going to be worthwhile attractions? We are also preparing to throw a lot of $$$ at carbon capture that is completely unproven at any kind of scale.
That Roosevelt Library is awesome, but will never be a success.
 


Allen

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I don't know why we would think it should be undone, or anything like that. The Legacy fund was originally intended to take money from the Clampetts and build a nice bankroll that would eventually put a good portion of ND's general fund on its shoulders.

It would seem to be coming to fruition. Note that $800+ million it put into the general fund for the 2019-2021 biennium. Without the Legacy fund, we would either be just like every other state (and our federal govt) and be running some red ink to support our lifestyle, or our other taxes would have to go up to cover the missing revenue.

While I am NOT a fan of being Alaska where we would distribute the monies to the general population via direct checks, I am a fan of minimizing our tax burden.

As far as projects go that were mentioned and possibly being wasteful spending, that's a different topic. Those should live or die on their own, regardless of where we get the money from for initial construction. Anyone been to the Cowboy Museum out in Medora? I have, a couple of times. It's not like there's a waiting line out the front door to get in.

It would be nice to get to the point where we have no state income tax, or all the extra taxes that states who currently have no income tax use to support their general fund.


https://www.treasurer.nd.gov/north-dakota-legacy-fund-0

[FONT=&quot][h=1]North Dakota Legacy Fund[/h][/FONT]
[FONT=&quot]In 2009, the Legislative Assembly passed House Concurrent Resolution No. 3054, which placed the question of creating the Legacy Fund on the 2010 general election ballot. North Dakota voters approved the measure which created a perpetual source of state revenue from the finite national resources of oil and natural gas. The Legacy Fund was created as Article X, Section 26, of the Constitution of North Dakota.
The first constitutionally mandated transfer of Legacy Fund earnings to the General Fund occurred in July of 2019. The total amount transferred for the 2017-2019 Biennium was $455,263,216. This amount increased to $871,687,384 for the 2019-2021 Biennium.
The investment of the Legacy Fund is under the purview of the Retirement and Investment Office. To view monthly financial statements for the fund, please visit RIO's website.








[/FONT]
 

Reprobait

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I am a single guy with a average income. I pay about 300 to 400 dollars a year in income taxes. Let's call it $360. $30 a month. $15 per paycheck. Eliminating the income tax wouldn't change my life one bit.
 

eyexer

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The legacy fund could probably replace the property taxes. Or for sure cut them in half.
 

johnr

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I am a single guy with a average income. I pay about 300 to 400 dollars a year in income taxes. Let's call it $360. $30 a month. $15 per paycheck. Eliminating the income tax wouldn't change my life one bit.
That doesnt sound right, maybe you need to pay your fair share... :;:howdy, but the state takes about what my trip to Cabo cost every year, would change my life for the awesomeness.
 


wjschmaltz

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The legacy fund is WAY different animal than what happens in AK. It's my understanding that the legacy fund is a tax on oil production that would otherwise go to producers and mineral owners. Distributing this money to everyone else would be full blow redistribution of wealth socialism (you could argue the tax already is in it's current form).

The PFD in AK is in place because the people of AK own the mineral rights on the majority of production zones on the north slope (state land). So most oil revenue from state land goes to the general state budget and a portion of it goes toward the PF to be paid out to the citizens. This means we pay no income tax. But, we all know how government works. So when the patch was booming, they spent every penny that came in and expanded govt. programs and then when oil prices fell and now as production is falling off further with the current administration, the state government has decided to take half of everyone's PFD instead of shrinking their spending. I personally think the PFD in AK is a huge joke and should be done away with. But the bright side is that as revenue falls off and more money is needed, at least they have a giant ass fund to draw from where everyone feels it instead of just taxing the working class (since we know they won't do the right thing and cut the budget). So I would like to see the permanent fund in AK just paid out and be done away with, but I know that would just mean guys like me would be paying it all back in the form of taxes over the next few years and then 20x again over my lifetime. As far as where the money is invested, I hope that they invest it for maximum returns, don't really care where that may be.

What I hate is how everyone seems to feel entitled to oil money because they live in a state with the resource. Everyone is hiring, if you want a piece of the oil field pie, go earn it! I guess that's just the millennial in me.....
 
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eyexer

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The legacy fund isn’t taking from the mineral rights holders. They get their normal percentage far as I know. The funds cut comes from the oil companies (producers). It’s essentially a tax. I believe the majority of the funds comes from state owned minerals. The state is essentially taking this money and not using it. I think if they don’t start putting it to good use you will see a force of hand. If you aren’t to put it to good use don’t take it. You obviously don’t need it. I was all for it when we voted on it but I certainly wouldn’t vote for it again.
 

espringers

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not sure i see anything but upside with this. assuming its 8.4 billion of the oil companies money derived from the state's oil supply that will eventually dry up, isn't it wise to plan for the day when that happens? 8.4 billion at 7% compounded monthly over 20 years will be about 34 billion if my math is correct. not accounting for additional contributions. i think it would be reasonable to expect that account to be nearly 50 billion in 2040. our annual budget is currently about 7.5 billion/year. the interest alone on 50 billion is going to go a long ways towards helping this state pay its bills when the oil fields dry up.
 
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eyexer

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Annual income on the fund is going to start going up soon. There are a few hundred wells that have been drilled and never fracked. They are now being tracked and will start producing soon. Actually some have just recently. And the rig count is now 30 some. That fund will do nothing but go up again for awhile. We should have put a date in which those collections cease. If we only knew then what we know now. It’s really not much different than the state school land trust. Little less money but not much. At the very least there should be a trigger where they can only hoard so much money and they have to spend it or stop collecting it. Should be a cap on it
 

Allen

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The legacy fund isn’t taking from the mineral rights holders. They get their normal percentage far as I know. The funds cut comes from the oil companies (producers). It’s essentially a tax. I believe the majority of the funds comes from state owned minerals. The state is essentially taking this money and not using it. I think if they don’t start putting it to good use you will see a force of hand. If you aren’t to put it to good use don’t take it. You obviously don’t need it. I was all for it when we voted on it but I certainly wouldn’t vote for it again.


Wrong, it absolutely comes directly from the production and extraction taxes. Which is a subtraction from what is paid out to owners of mineral rights.

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Actually, the fund is comingled with royalty revenue from state land, but when you look at the P&E taxes being paid on 36 sections of land, it is a much greater amount than that the State receives from royalties on its 2 sections of land per township.
 


eyexer

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Wrong, it absolutely comes directly from the production and extraction taxes. Which is a subtraction from what is paid out to owners of mineral rights.

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Actually, the fund is comingled with royalty revenue from state land, but when you look at the P&E taxes being paid on 36 sections of land, it is a much greater amount than that the State receives from royalties on its 2 sections of land per township.
So your saying if joe blows mineral check from continental is 10k the state takes its cut out of that 10k? Then they take an equal percentage from continental on the remaining amount?
 

Allen

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So your saying if joe blows mineral check from continental is 10k the state takes its cut out of that 10k? Then they take an equal percentage from continental on the remaining amount?


That is exactly how it works. The tax is on production from the well. The mineral owner is set by contract a percentage of that production, The production tax is absolutely a tax being paid by the mineral owner, as well as the oil production company. I am shocked you are just now learning this.

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p.s. The State is smart enough to make the oil companies withhold it from the Royalty checks. It is a specific line on the monthly check stubs, and it is also on the 1099's the Royalty owners get every year.

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Oh yeah, and then the Royalty recipients also get to pay income taxes on that as well (not to mention the Obamacare tax....I think it's called the Net Investment Tax). It works out to where one's royalty income has a net tax rate of 33-52%, depending on their other income.

So yeah, it really is the mineral owners that are getting taxed into oblivion. There would be open conflict in this country if everyone paid the same rates.

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I am a single guy with a average income. I pay about 300 to 400 dollars a year in income taxes. Let's call it $360. $30 a month. $15 per paycheck. Eliminating the income tax wouldn't change my life one bit.


Unless you are thriving on minimum wage, you may wish to run those numbers again. $400 a year suggests you make $20k a year, or probably less.

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not sure i see anything but upside with this. assuming its 8.4 billion of the oil companies money derived from the state's oil supply that will eventually dry up, isn't it wise to plan for the day when that happens? 8.4 billion at 7% compounded monthly over 20 years will be about 34 billion if my math is correct. i think it would be reasonable to expect that account to be nearly 50 billion in 2040. not accounting for additional contributions. our annual budget is currently about 7.5 billion/year. the interest alone on 50 billion is going to go a long ways towards helping this state pay its bills when the oil fields dry up.

It is so NICE to see someone else that gets it. This can be a ticket to a very low tax bill down the road, we are just now starting to see it come to fruition. Our kids though...
 
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Reprobait

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I am a single guy with a average income. I pay about 300 to 400 dollars a year in income taxes. Let's call it $360. $30 a month. $15 per paycheck. Eliminating the income tax wouldn't change my life one bit.

I checked my tax forms and I was wrong. My state income tax is about double that. It is about $30 per paycheck. It adds up a little but still really doesn't change my life.
 


eyexer

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That is exactly how it works. The tax is on production from the well. The mineral owner is set by contract a percentage of that production, The production tax is absolutely a tax being paid by the mineral owner, as well as the oil production company. I am shocked you are just now learning this.

- - - Updated - - -

p.s. The State is smart enough to make the oil companies withhold it from the Royalty checks. It is a specific line on the monthly check stubs, and it is also on the 1099's the Royalty owners get every year.

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Oh yeah, and then the Royalty recipients also get to pay income taxes on that as well (not to mention the Obamacare tax....I think it's called the Net Investment Tax). It works out to where one's royalty income has a net tax rate of 33-52%, depending on their other income.

So yeah, it really is the mineral owners that are getting taxed into oblivion. There would be open conflict in this country if everyone paid the same rates.

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Unless you are thriving on minimum wage, you may wish to run those numbers again. $400 a year suggests you make $20k a year, or probably less.

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It is so NICE to see someone else that gets it. This can be a ticket to a very low tax bill down the road, we are just now starting to see it come to fruition. Our kids though...
I was well aware where the money was coming from what I didn’t know is who was on the hook for making the distribution payments and the various technicalities in it. And there would be no reason to know that unless your involved with that process. So going back to the legacy fund why are we taking money from North Dakotans then? Especially when the state doesn’t need it. We have to eliminate this. There are numerous changes that need to be made of not a complete end to this taking without using. It’s probably gone on long enough. Nobody ever anticipated this find ever accumulating this much money anyway so there’s really no reason to continue it.

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I checked my tax forms and I was wrong. My state income tax is about double that. It is about $30 per paycheck. It adds up a little but still really doesn't change my life.
Eliminating income tax via this fund would be a joke. It should be used to end or drastically cut property taxes.

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not sure i see anything but upside with this. assuming its 8.4 billion of the oil companies money derived from the state's oil supply that will eventually dry up, isn't it wise to plan for the day when that happens? 8.4 billion at 7% compounded monthly over 20 years will be about 34 billion if my math is correct. i think it would be reasonable to expect that account to be nearly 50 billion in 2040. not accounting for additional contributions. our annual budget is currently about 7.5 billion/year. the interest alone on 50 billion is going to go a long ways towards helping this state pay its bills when the oil fields dry up.
the state should be able to pay its bills without the oil field anyway. Stealing money from people and companies and not using it is asinine at best. It’s time it stops. You just made a great case for it’s elimination. The find is far too big now. It was never imagined it would get this big. It’s like a drunk falling off the bar stool saying I think I can get drunker.
 

espringers

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i guess i disagree. but, that's fine. when the oil is all gone, this state will still have the mess to deal with and the infrastructure to take care of that was put in place with tax dollars as a result of this boom. imagine this scenario if ya will: state operates on a budget much like you suggest. spends only what it takes in and takes in only what it spends. for X years that number is roughly 10 billion (for example) 50% of which (for example) is fueled by the economic activity in the oil fields. when the oil dries up (i know it won't happen overnight), do you think the state is going to be able to cut its budget from 10 billion to 5 billion to account for the loss without significant consequence? without $ in the bank (legacy fund) or some other unforeseeable income in the future, we would go from running well in the black to significantly in the red in a matter of a decade. almost seems like planning for retirement i guess. just seems wise.
 

eyexer

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It’s certainly a tough issue. But if we end the fund now they can certainly use the ten billion plus whatever it makes in interest until the oil runs out, to ease the transition from mega budget back to normal. Transition funds if you will.
 

johnr

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My guess is most of it will go east of 83
If fargo was the one putting in the huge excesses of cash, I am sure they would be fine with it going to Williston and Dickinson, they are nice like that over in little minneapolis.
 


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