Sen. Brad Beckettall’s bill would raise legacy fund withdrawal rate, direct extra 1% to highway distribution

Senator Brad Beckettall, of District 1 in Williston, told the Appropriations — Government Operations Division committee that Senate Bill 23‑72 would raise the legacy fund percent-of-market-value (POMV) used to calculate legacy earnings from 7% to 8% and dedicate the extra 1% to the Legacy Earnings Highway Distribution Fund to increase statewide transportation distributions.

Beckettall said the bill grows from Governor Armstrong’s budget proposal presented to the House and Senate Joint Appropriations Committees and explained the mechanics: under current law three legacy‑earnings “buckets” are paid first — a debt‑payment bucket ($102,600,000 per biennium), a tax‑relief bucket ($225,000,000 per biennium) and a highway distribution fund bucket ($100,000,000 per biennium) — with the remainder split between the general fund and the state investment fund. "This bill takes the Governor Armstrong proposal and changes the POMV from 7% to 8% with the additional 1% to be always deposited in the legacy earnings highway distribution fund for increased transportation funds distribution statewide," Beckettall said.

Beckettall and fiscal staff cited forward estimates showing the extra 1% would add roughly $85–87 million to the highway distribution bucket in the next biennium, increasing the highway distribution from $100 million to about $185 million in that projection. He also said legacy fund growth has been driven by new deposits from oil and gas tax revenue, and that the Common Schools Trust Fund’s 10% withdrawal rate has remained healthy as a precedent.

Committee members pressed for specifics on how the extra funds would move to roads and bridges. Senator Dwyer and others asked whether the additional 1% should be routed into a DOT‑administered “flex fund” (so DOT could coordinate grants and matches) or left in the legacy distribution formulas that send 60% to the State DOT, 28.5% to counties and cities, 10% to townships and 1.5% to transit projects. Ron Hanke, director of the Department of Transportation, told the committee: "The way I understand it, if it goes into the legacy fund, we get 60% of what's ever in that fund. The other stuff goes straight out to cities, straight out to counties, straight out to townships, straight to transit. It does not come through the Department of Transportation. The flex fund... we touch it if it goes in the flex fund. In the legacy fund, we don't touch the portion that goes to cities, counties, and townships, and transit." The committee discussed that routing the extra 1% into a flex fund would give DOT administrative control but leave counties and townships less direct, guaranteed revenue.

Township representatives favored predictable formula distributions. Larry Severs of the North Carolina Township Officers Association told senators, "Formula funding would come in very handy," noting townships face maintenance needs and levy constraints and that the existing $100 million distribution is already allocated based on certified road miles.

Committee members also discussed interactions between SB 23‑72 and House Bill 11‑76, the primary residence property tax credit proposal. Beckettall and fiscal staff said the House changes to 11‑76 had reallocated the $225 million tax‑relief bucket into a primary residence credit, and that Beckettall’s draft amendments aim to avoid conflicts between the two bills if both pass. Beckettall cautioned that final fiscal impacts depend on pending House amendments; he said the House had reduced an earlier fiscal estimate for 11‑76 from about $584 million to roughly $504 million after removing a $50 million income‑tax relief provision.

Committee members raised implementation questions and contingencies: whether bonding proposals later in the session would require a different POMV change (the governor earlier proposed 8.5% to support bonding), whether the bill should be incorporated into the DOT budget instead of remaining standalone, and how emergency effective dates would affect timing (Beckettall said an emergency clause would make the change take effect July 1). No formal vote was taken in the division; senators said staff would draft possible amendments for consideration at the next meeting.

The discussion also touched on DOT operational items financed from highway distributions, including equipment needs (DOT identified a $4 million need for four rotary snowblowers and a larger backlog of equipment) and the department’s ability to match federal grants. DOT representatives said the department could consider lines of credit or other sources to match federal funds if additional state distribution money were available.

The committee did not adopt final language at this hearing and deferred action. Members asked legislative fiscal staff to reconcile cross‑bill language with House 11‑76 and to prepare amendment language for the appropriation committee.