Thanks to record oil production, North Dakota finds itself in an enviable financial position and the state is socking away some of the current cash windfall for the future.
Forum News Service reports that a record high deposit of $112 million will be made in July in North Dakota's Legacy Fund. With that deposit, the state's rainy day fund is gushing with money; its balance exceeds $2.2 billion. The fund is now expected to beat the projections that it will hit $2.68 billion by January.
"Holy cow! I mean in our office we see big numbers, and they're something that you never get comfortable with because they're shocking," state treasurer Kelly Schmidt told KFRY in Bismarck. "To put things into perspective, the highest deposit we made to the legacy fund prior was in May and July of 2013 and that was $92 million."
North Dakota voters approved the Legacy Fund in 2010 through an amendment to the state constitution. It receives 30 percent of the revenue generated by state taxes on oil and natural gas production and extraction.
In a May article, Slate offered evidence that North Dakota is taking a conservative approach to its newfound wealth. "Decades of boom and bust in agriculture have forged a culture of thrift, an abhorrence of debt, and a healthy mistrust of high finance," the story said. It went on to note that the fund could increase to $5 billion by June 2017 and the state's budget for the 2013–15 period is less than $14 billion.
"The state could easily start paying a dividend in 2017, or use cash flows and assets to fund the state’s operations," the story opined. "More likely, it will take the winnings from the seven fat years and hold it as an insurance policy against the possibility of seven thin years."
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