Special Report: Financing Schemes Put The Legacy Fund In Danger

SB 2330, and the testimony against it, exposes the problems with the way the legislature's been setting up the Legacy Fund to try to do too many things for too many people.

Note: this is a more complex and winding issue to follow than most, which is part of the point of why this approach to state spending is problematic.

Previously, I wrote you about Senate Bill 2196 which is essentially restructuring the way the current loans for the Western Area Water Supply Authority (WAWS) are set up.

Senate Passes Latest WAWS Bailout; Admits Failure

More recently, it was brought to my attention that Senate Bill 2330 also interacts with WAWS as well as the various infrastructure funds. Currently, the Bank of North Dakota is using the “Legacy Infrastructure Loan Fund” as a backstop if the loans the legislature has directed them to give out go bad, or if other infrastructure and water revolving funds run out of money. (It’s unclear whether the bank has used this option, but clearly, they anticipate the need.)

Essentially, instead of having the Legacy Fund loan out money directly for these loans, the Bank of North Dakota can originate the loans, and sell them as an investment instrument to the Legacy Fund.

One of the…