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HB 1435

A BILL for an Act to create and enact a new section to chapter 54-27 of the North Dakota Century Code, relating to a legacy earnings fund; to amend and reenact subsection 1 of section 21-10-06 of the North Dakota Century Code, relating to funds invested by the state investment board; to repeal sections 21-10-12 and 21-10-13 of the North Dakota Century Code, relating to legacy fund definitions and a legacy earnings fund; to provide an effective date; and to declare an emergency.

69th Legislative Assembly (2025-26) Introduced by Brad Bekkedahl and 4 co-sponsors

Creates a legacy earnings fund with a formulaic yearly distribution from the Legacy Fund (7% of a five-year average), funding debt service, tax relief, and other priorities.

Second reading, failed to pass, yeas 4 nays 87
0
WeVote Research Nonpartisan
Bill Summary · HB 1435

HB 1435 — North Dakota (2025) — Legacy Earnings Fund

Status: Introduced (Sponsors: Reps. Kempenich, Warrey; Sens. Bekkedahl, Kessel, Meyer)
Effective date (if enacted): July 1, 2025. Emergency clause included.

Purpose / Intent

Establish a statutory “legacy earnings fund” and prescribe a regular, formulaic process for distributing earnings from North Dakota’s Legacy Fund. The bill clarifies how the state treasurer will allocate the Legacy Fund distribution made pursuant to the State Constitution and places the legacy earnings fund under the State Investment Board’s portfolio of invested funds.

Key provisions

  • Creates a new statutory fund — the legacy earnings fund — in the state treasury. The fund consists of the distributions the state treasurer makes from the Legacy Fund under Section 26, Article X of the North Dakota Constitution.
  • Formula for distribution: On July 1 of each odd-numbered year, the treasurer must distribute an amount equal to 7% of the five‑year average value of the Legacy Fund balance (the five‑year average uses fiscal year-end balances for the five-year period ending with the most recently completed even-numbered fiscal year).
  • Prescribed allocation order (July of each odd-numbered year):
    1. First up to $102,624,000 — or an amount equal to the biennial appropriation from the Legacy Sinking and Interest Fund for debt service, whichever is less — to the Legacy Sinking and Interest Fund (but this allocation may not exceed 33% of the legacy distribution).
    2. Funding for tax relief initiatives approved by the Legislative Assembly (text places this before fixed dollar allocations).
    3. A fixed $225 million to the General Fund (text contains editorial overlap; see legislative text for exact ordering and amounts).
    4. $100 million to the Legacy Earnings Highway Distribution Fund (for allocations under NDCC §54‑27‑19.3).
    5. Remaining amount: 50% to the General Fund; the remainder to the Strategic Investment and Improvements Fund (to be used per NDCC §15‑08.1‑08).
  • Amends NDCC §21‑10‑06(1) to include the legacy earnings fund among funds the State Investment Board may invest.
  • Repeals existing statutory sections 21‑10‑12 and 21‑10‑13 (which previously addressed legacy fund definitions and a legacy earnings fund), replacing them with the new allocation framework.
  • Declares the act an emergency measure (intended to take effect July 1, 2025).

Who or what is affected

  • State treasury and treasurer — responsible for calculating the five‑year average and making distributions on the specified schedule.
  • State Investment Board — will hold/invest the legacy earnings fund.
  • Legacy Sinking & Interest Fund, General Fund, Legacy Earnings Highway Distribution Fund, Strategic Investment and Improvements Fund — will receive specified allocations.
  • State budgeting process — because the bill locks in both formula and fixed-dollar allocation steps, it alters the flow of Legacy Fund proceeds into debt service, general operations, highways, tax relief, and strategic investments.

Procedural / timeline notes

  • Distribution cadence: July 1 of every odd-numbered year, calculated from the five‑year average ending with the most recent even‑numbered fiscal year.
  • Effective date is July 1, 2025, and the bill is declared an emergency measure (meaning immediate/near-immediate effect upon enactment).
  • The bill replaces prior statutory legacy earnings language by repeal and enactment; stakeholders should refer to the enacted statutory language for precise sequencing where the printed bill contains minor drafting overlaps.

Potential impacts (practical effect)

  • Codifies a predictable, formula-based distribution from the Legacy Fund (7% of a five‑year average), providing budget planning certainty.
  • Establishes fixed-dollar components and priority allocations (debt service cap, highway allocation, general fund transfers, and strategic investments), which can constrain or prioritize legislative budgeting choices.
  • The 33% cap on the sinking & interest transfer and the fixed dollar allotments could limit flexibility if Legacy Fund market values change significantly.
  • Exact fiscal outcomes will depend on the Legacy Fund balance and future investment returns; the statutory allocation order may shift amounts available for other state priorities.

Compiled from official sources — confirm details with the bill’s official record.

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