Wednesday, March 11, 2015

NDACo Crossover Report

  Of the 914 bills and resolutions introduced, a record 486 have been identified to contain some impact, influence, or relationship to county officials, county functions, or county finances.
Of these, we have narrowed things down to 85 “High Priority” measures that have consumed the vast majority of our Association’s legislative efforts. We have broken these down into several topic categories to provide you with a brief summary of the situation at the halfway point for the 2015 Session.

The Governor’s signing of the “Surge” bill, discussed in the page 1 story of this issue, is one of three major infrastructure bills that will have significant effects on local road funding across the state. Although it did not contain everything desired by local government, and the allocation was surprising to many, it will be a tremendous shot in the arm for this construction season across the state.
The Gross Production Tax Formula Bill (HB 1176) is another important infrastructure bill; however, it will undoubtedly be worked on until the very end of the Session. Originally proposed to move the local government share of GPT revenues from a 25/75 split with the state to a 60/40 for those counties exceeding $5 million in revenues, the House amended the formula to 30/70, reduced the number of “hub” cities to get funding, and amended the $120 million for county roads, cities and townships in non-oil counties to $112 million for county roads only.
The missing $8 million turned up in the third bill, the NDDOT budget (HB 1012), where it was allocated for townships in non-oil counties in the second year of the biennium. As noted, these both will likely be “final week” conference committees.
Important for the future of local road funding is the appropriation for the Upper Great Plains Transportation Institute. Although it was not included in the governor’s budget, the House added $1.25 million to their budget to continue the local roads study started six years ago and greatly enhanced over the last two years.
Two attempts to divert state, county, city and township road funding from the State Highway Distribution Fund (SHDF) were defeated thus far, but one lives on. The PSC Budget included a new rail inspector to bolster the federal safety inspections – something that is likely needed, but for which another funding source must be sought. The PSC proposed pulling $1 million from the SHDF for this function, with the logic that the railroads pay fuel taxes into the fund.
 Governor Dalrymple followed through on his proposal from his budget address and is supporting SB 2206 to begin the process of shifting county social service costs from property tax support. The bill passed the Senate with only one negative vote. As passed, the state would assume all county social service grant costs (foster care, subsidized adoption, SPED, etc.) beginning on January 1, 2016. The bill also provides funding to cover county costs where proximity to a state facility or a reservation has traditionally forced counties to use the “emergency poor” levy. Additionally, and possibly most importantly, the bill establishes a commission of state and local officials charged with developing a reimbursement mechanism for state assumption of 100% of county social service costs on January 1, 2018. This bill suggests no change to the current administrative structure of county employment, just a change to how the services, staffing, and related costs are funded.
The Department of Human Services Budget is always of considerable interest, and concern, to counties. This year in particular, county officials are watching to ensure that the $23 million for “phase 1” of SB 2206 implementation is funded – and so far it is. The DHS Budget, SB 2012, is the largest agency budget approved by the Senate – EVER. It rounds out at $3.5 billion. Like all agencies, the governor’s 4% per year salary increases were reduced to 3% for each year. With over 1000 employees, that alone adds up to a lot. Like the employees, the service providers, which are so critical to much of what county social services must do, will also be allowed 3% increases to their reimbursement rates.
A final major funding issue in this area was the action by both houses to quietly pass and send SB 2177 to the governor.
With the fanfare of the Surge, it was almost unnoticed that this bill was approved on the same day in the House. The legislation authorized the expenditure of $48 million in federal funds and $14 million in state general funds on the replacement of the SEVEN social service eligibility computer systems with a single unified system. This is something called for in a resolution passed by the NDACo Delegates in 1997, when there were only three systems operating. County social service workers and DHS are extremely pleased that this project will now move ahead.

The Budget of the Department of Health (HB 1004) is historically the most critical piece of legislation for county public health units. This bill includes funds for immunizations, infectious disease control, contracts and grants, and, most importantly, the allocation of direct state aid to public health units. Last Session, the state aid allocation was moved from $3 million to $4 million, and an analysis and request by the health units indicated $5.9 million would be most appropriate for the upcoming biennium. The governor proposed $5 million, but the House trimmed that significantly, approving only $4.25 million. The health units also asked for the inclusion for the costs of immunization administration, local infectious disease control, environmental health inspections, and the continuation of regional health networks. All of these requests were rejected by the House, but will be proposed to the Senate when the budget is heard there.
Possibly the biggest potential “game changers” in public health funding were the two (unsuccessful) proposals to greatly increase tobacco taxation. Both the House and Senate had bills that would take the tax on a pack of cigarettes from its current 44¢/pack to either $1.56/pack (House) or $2/pack (Senate), as well as similar increases for other tobacco products. While the primary proponents, (heart, lung, medical and anti-smoking associations) were striving for the reduction in use (particularly for youth) that historically results from this sort of increase, the bills were also to distribute the new revenue (~$100 million) for public health purposes – with 25% going to counties to support their health units. A novel idea whose time apparently has not yet arrived.

Several additional funding proposals, although not as large in total dollars, are of considerable importance to counties.
The OMB budget (SB 2015) was introduced with 100% of the funding support ($1.6 million) for public guardians that has been a state/county matching program in the current biennium. NDACo analyzed the support provided over the past 18 months and realized that the proposed amount would likely run short over the next two years as the number of indigent pubic wards has been growing by 4 per month. This was presented to the Senate Appropriations Committee and they inserted an additional $280,000 to recognize the growth and also allow the public guardians a 3% annual rate increase like other human service providers.
An increase to the “senior mill-match” program was approved by the Senate in SB 2143. This bill takes the match from 85% of one mill, up to 100%. The bill was amended in the Senate to also clarify that the county only needs to supply the “equivalent” of one mill in local funding, and actually levying a mill is not required.
The Department of Emergency Services budget includes $5 million as a “down payment” of sorts for the eventual retooling of a statewide emergency radio system that is expected to cost in excess of $150 million.
Also related to DES is HB 1112, to give greater flexibility for the use of the Disaster Relief Fund in disasters that FEMA refuses to approve for federal funding.
Two bills addressing NDPERS retirement are important to those counties with employees enrolled. A proposal to move all future state employees into a defined contribution retirement program was defeated. Although this would likely reduce the state’s long-term liability, it would quickly make the current defined benefit system less sound, and trigger greater state and local government contributions.
The interim proposal to increase the NDPERS contribution level by 1% for the employer and 1% of the employee was eliminated from the NDPERS administrative bill (HB 1080). Although this will still need to be addressed at some point, the state’s fiscal uncertainty right now convinced the Legislature to put it off.

Legislators continue their commitment to providing the 12% relief residents have been seeing on their annual property taxes. However, they are focusing now on providing more accountability in the form of property taxes and transparency. Two tax notice-related bills failed, despite interest in NDACo’s alternative approach in a combined notice for political subdivisions. We expect this concept may be amended into another tax-related bill. The Senate had a close vote on whether or not to increase the training requirements for property tax assessors, in the end SB 2054 passed that body. The Senate also approved another major reform mechanism which requires elected boards to approve levies from appointed boards. NDACo was successful in convincing the House to defeat legislation that would have mandated counties display property tax information online; however, the same legislator who brought the idea forward is now proposing to study the issue. Counties were unsuccessful in killing the “Mills to Cents” proposal in the House, but we have been told the Senate may not have as many strong opinions on the issue. We will need county officials from across the state to help in defeating HB 1055.
Two state-imposed property tax exemptions were approved by the Senate that will continue and create property tax shifts across the state. One bill proposes to continue into the foreseeable future the exemption for wind turbines, and another bill creates a whole new exemption for buildings involved in “agri-tourism.” which is very poorly defined. The House may view these a bit differently.
Details of the Governor’s Property Tax Reform bill are outlined in a separate break out story in this issue of County News.

The tragic school bus/train crash in Larimore prompted a look at local government liability limits, and a change has been advanced in the Senate. Since the 1980’s, local government liability has been capped by state law at $250,000/individual and $500,000/incident. The original bill proposed moving the upper limit to $3 million, but as passed in the Senate the limit would $1 million. The effect of this change on the reserves of NDIRF is unknown, but is not expected to be overly significant.

The Justice and Public safety category of bills is generally the largest group of legislation each year and this year is no different. Of particular note are a number of priority bills to the State’s Attorneys Association.
HB 1304 – Creates a process for prosecutors and courts to determine age of individuals when no clear evidence exists. This bill became necessary after a case out of Cass County when the prosecutor had conflicting reports on a defendant’s age who was not born in the United States. This bill allows the prosecutor to prove age by officially created documents but the defendant can still contest the documents if they are wrong. Passed the House unanimously
HB 1407 – Clarifies homeless sex offenders still need to register with local law enforcement even though they technically do not have a “traditional” home. Passed the House 91-2
SB 2156 – Rewrites the armed offender statute to ensure crimes committed while being armed are subjected to minimum mandatory sentences. Technically, this bill did not change the merits of the underlying statute but instead rewrote the bill to make it clearer. Passed the Senate unanimously
HB 1015 – The Department of Corrections budget contained a provision to charge certain counties for sentences to the Penitentiary. The theory was if the counties had to pay for the stay at the penitentiary, prosecutors and judges would not be so quick to sentence defendants to the Pen. The provision was debated on the house floor and ultimately removed.

At least four bills were introduced to address the thresholds at which government must hire an architect/engineer and bid construction projects. Two of these remain alive. One worked on by NDACo to clean up some of the county bidding statues, and another moving the public improvement thresholds from $100,000 to $150,000
A poorly-understood proposal to require the recording of metes and bounds descriptions when land is transferred was prompted by the variation on county practices across the state. Solid arguments against this bill by a broad range of county officials, and NDACo’s promise to work to better unify county practices have defeated this proposal – for now.
The ND Bankers Association introduced two, so far successful, bills that fall into this category. One would create a new county loan opportunity that could be accessed without citizen vote. Up to $500,000 could be on loan to a county at any one time for a maximum of five years, upon commission approval. The other bill expands the type of investments that local governments can make with public funds. The bankers sought extensive expansion of the types of investments, but the Legislature thus far has agreed with county officials on more moderate expansion.
A bill to mandate that every county have five commissioners was soundly defeated in the face of “3-commissioner testimony” explaining the simplicity of moving to five if the county voters desire that change.           
Two far-reaching study resolutions fall into this category. One proposes to look at all the reports that counties must prepare for the state with the goal of eliminating unnecessary and outdated ones. The other would examine the software needs of cities and counties to get property tax info online. Both passed their houses of introduction.
A major administrative change of county auditors would result from Senate passage of HB 1158 which the House approved unanimously. This bill would remove game and fish license vendor administration from the auditors. County auditors could still act as a vendor and sell licenses, but they would no longer have to provide the Game & Fish Department with the middle management to oversee the other vendors.

Legislators brought forward many election-related bills spurred after a problematic election involving voter identification. NDACo supported the Secretary of State’s election bill, HB 1333, to improve the voter ID law. The bill allows residents to use a bank statement or bill to prove they’ve lived at an address for 30 days prior to the election if their ID has not been updated. It also removes the use of student certificates, which is not universally supported by county auditors. However, a separate bill, SB 2330, would allow a student ID issued by the college or university to be a valid ID. Both bills are still alive. The election-related issue of most concern that has crossed-over is HB 1348 which requires that mail ballots and absentees cannot be mailed until 21 days before the election.
Several election-related studies have also been approved to move forward. They include studying voter registration, consolidating elections, and election laws.

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