Gov. Doug Burgum today signed House Bill 1425, which sets targets for investing a greater portion of the Legacy Fund principal in North Dakota and requires that the State Investment Board (SIB) give preference to qualified investment firms with a presence in the state.
Joining Burgum at a bill signing ceremony today were Lt. Gov. Brent Sanford, who chairs the SIB; the bill’s lead sponsor, Rep. Mike Nathe, R-Bismarck; Insurance Commissioner Jon Godfread, an SIB member and leading proponent of the concept; Senate Majority Leader Rich Wardner; and other bill sponsors.
The legislation sets targets for 10 percent of the Legacy Fund principal to be invested in equity investments in the state and 10 percent in fixed income investments within the state. The bill was approved 85-8 in the House and 47-0 in the Senate.
“We’ve heard from innovators about the need for better access to capital. We hope that they’ll come forward and utilize this program, help us keep entrepreneurs in our state, help us diversify our economy, help create jobs, all while ensuring positive investment returns to provide for future generations,” Burgum said before signing the bill. “Our goal here is not only to provide capital for in-state ventures, but if we can do so, we can attract, accumulate and retain more private sector capital and more private sector talent.”
“With this bill, we’re going to do what we all want to do for the citizens of our state: We want to tip the scales further in our favor to empower people, improve lives and inspire success,” Burgum added, thanking the bill’s sponsors and supporters. “This does set us up for a starting line for a new era of investment in North Dakota.”
“These entrepreneurs want to start their businesses and keep their businesses here in North Dakota, but that startup capital is very light in its availability coming from the coasts,” Sanford said. “We can take a piece of this opportunity ourselves and invest in North Dakota.”
“(House Bill) 1425 sends a really strong message that the people of North Dakota believe in investing in themselves and investing in our great state,” Godfread said. “This bill certainly puts the Legacy Fund to work for North Dakota. It recognizes the true, inherent possibilities that we have with the Legacy Fund.”
North Dakota voters approved a constitutional amendment creating the Legacy Fund in 2010. The Legacy Fund receives 30 percent of state tax revenues from oil and gas production and extraction. The fund currently has a value of $8.3 billion and has generated net income of about $2.8 billion since receiving its first deposit in September 2011.
The SIB is currently in the process of selecting an investment manager to direct the in-state equity investments. Three firms are being considered, and the board is expected to select a manager by the end of April to target the first $100 million of in-state investments.
North Dakota already allocates part of the Legacy Fund for in-state investments. Last year, the SIB and Legacy and Budget Stabilization Advisory Board doubled the Legacy Fund’s commitment to the Bank of North Dakota’s Match Loan CD program, from $200 million in 2019 to $400 million in 2020 for in-state investments. The program provides cost-efficient funding to businesses looking to grow existing operations or establish a new business in North Dakota.