North Dakota House Republicans resurrect Legacy Fund income tax proposal
BISMARCK — Top Republicans in the North Dakota House have resurrected a proposal to use Legacy Fund earnings to replace state income taxes, an idea senators swiftly defeated last month.
A panel of House appropriators added an amendment largely reflecting House Bill 1530 to the budget bill for the tax commissioner's office Thursday, April 4. But it delays any reductions to individual and corporate income tax rates until the 2022 tax year.
The original bill, introduced by House Finance and Taxation Committee Chairman Rep. Craig Headland, R-Montpelier, passed the House in February before the Senate rejected it in a 41-4 vote in March.
Mandan Republican Sen. Dwight Cook, who chairs his chamber's Finance and Taxation Committee, said that vote is "indicative" of the Senate's position. He prefers to keep in place a "three-legged stool" to balance the state's tax revenue streams.
The idea's proponents have said it would allow North Dakota to better compete with states that don't levy income taxes, including South Dakota.
House Majority Leader Chet Pollert, R-Carrington, expected the debate would land in a joint House-Senate conference before the bill's final passage. The budget bill passed the Senate unanimously in February but is awaiting action in the House.
"We feel strongly about the income tax," Pollert said, noting that "the Senate's adding things that we killed."
Senate Majority Leader Rich Wardner, R-Dickinson, said his chamber is looking to bring back an infrastructure revolving loan fund bill he introduced that the House defeated. Pollert said the two proposals "could be" bargaining chips.
The House's proposal would divert half of the Legacy Fund's earnings each two-year budget cycle to an “income tax rate reduction fund,” as long as the transfer is at least $50 million. It's expected to take roughly a decade to chop the taxes to such a small rate that lawmakers could repeal income taxes, Tax Commissioner Ryan Rauschenberger said.
Voters created the Legacy Fund in 2010, stashing away 30 percent of oil and gas taxes. The piggy bank has ballooned since its inception, prompting lawmakers and Gov. Doug Burgum to float ideas for tapping its earnings.
Burgum, a Republican who previously labeled Headland's bill poor policy, could choose to veto the language if it makes it to his desk.
A revenue forecast adopted by lawmakers last month predicted the state would generate almost $950 million in individual and corporate income taxes in the 2019-21 budget cycle.