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Rep. Craig Headland, R-Montpelier, one of the sponsors of House Bill 1066, or "Operation Prairie Dog," speaks during a floor debate on Wednesday, Feb. 20, 2019, at the state Capitol in Bismarck in favor of the infrastructure funding bill to fund projects for cities, counties, townships and airports using oil tax revenue. Mike McCleary / Bismarck Tribune

Legacy Fund income tax proposal taken off the table as North Dakota legislative session nears end

BISMARCK — North Dakota House lawmakers agreed to back down from a proposal to use Legacy Fund earnings to buy down state income taxes Wednesday, April 24, as part of a deal struck between the two chambers.

The Senate had resisted using earnings from the state's oil tax piggy bank to reduce income taxes, an idea House Republicans resurrected and inserted into the tax commissioner's budget bill. A House-Senate conference committee removed that provision Wednesday.

The Republican House and Senate majority leaders, Rep. Chet Pollert and Sen. Rich Wardner, said that was done in exchange for the Senate taking off the table an infrastructure bonding proposal using Legacy Fund dollars.

The move came in the final days of the 2019 legislative session as House and Senate lawmakers continue to strike deals on a last batch of bills. For much of the session, lawmakers have argued over how and whether to tap the Legacy Fund after voters created it in 2010.

The original income tax bill passed the House in February before the Senate overwhelmingly rejected it in March. It would have diverted half of the Legacy Fund's earnings each two-year budget cycle to an “income tax rate reduction fund,” as long as the transfer was at least $50 million.

It was expected to take roughly a decade to chop the taxes to such a small rate that lawmakers could repeal them.

Backers said the proposal could help North Dakota compete with states that don't levy income taxes, including South Dakota, while designating a use for the money to head off potential ballot measures. But Republican Gov. Doug Burgum previously said the idea was poor policy, and others argued for a balanced tax revenue stream.

Republican Rep. Craig Headland, who championed the income tax proposal and chairs of the House Finance and Taxation Committee, said lawmakers intend to study the idea during the interim period between legislative sessions.

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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