Wednesday, July 29, 2020

Governor Proposes Release of CARES Funds to Counties & Cities

Consistent with U.S. Treasury CARES Act guidance, the Governor is taking a proposal to the Emergency Commission this coming Monday to reimburse counties and cities for “law enforcement first responder payroll costs” for the first 7 months of the pandemic (March - Sept.).  If approved by the EC and the Budget Section, counties will simply submit their total payroll costs for sworn officers for March through July – for immediate reimbursement.  August and September payroll amounts will be submitted and reimbursed later, once they are incurred.

This concept will get much needed revenue (~$59 million) to counties and cities quickly and efficiently.  This will constitute the jurisdiction’s entire allocation, and any previously reimbursed amounts will be deducted from the total payroll costs.  County estimates based on averages are included in the attached presentation, however reimbursements will be based on actual payroll costs (salary and benefits) paid.   The proposal was announced today at the Auditor’s Conference. Your county auditor will be bringing more specific information back from that presentation.  We will also follow up with OMB instructions once formal approval is achieved. You can view the presentation with the proposal here:

"This is the result of a concerted effort by NDACo and the ND League of Cities, and tremendous support from OMB, the Governor’s Office and Legislative Leadership. We are extremely grateful to them for their understanding and dedicated effort on behalf of local government," said NDACo Executive Director Terry Traynor. "I personally would also like to thank all of our county auditors, their payroll and HR staff, and those law enforcement leaders that have helped provide the data necessary to make this case."

Monday, June 1, 2020

Counties Provide Frontline Services During Pandemic

Federal funding critical to assist counties in providing public health and emergency response during COVID-19 
North Dakota county employees are on the front lines of the response to the coronavirus pandemic. The services of county public health, corrections, human services, law enforcement, elections and general government have all been impacted and most of those impacts have a significant fiscal component.

CARES Act Reimbursement to Counties County officials are pleased that the Governor’s Office, through OMB and DES, is providing an avenue for these costs to be addressed by the Emergency Commission and Budget Section. County emergency managers and county auditors are working feverishly to get all costs incurred from March 1st through May 31st submitted into the FEMA grants system as well as the newly created OMB-Cares Act portal, in anticipation of the mid-June Emergency Commission meeting. County costs include staff overtime, PPE, sanitization of jails and other facilities, telework facilitation, secure ballot boxes and so much more.

Some costs associated with specific state agencies are being handled through state requests – notably public health support by Department of Health, human service overtime by Department of Human Services, and the holding of state prisoners in county jails by Department of Corrections and Rehabilitation. Reimbursing these unforeseen costs is so critical at a time when each county, like the state, is already experiencing revenue reductions due to the pandemic. Long-term, the reductions in State Aid Distribution, Highway Distribution, and Gross Production Tax (GPT) revenues will be devastating to the county services on which our citizens rely.

Below is an overview of some of the pressing county issues and activities related to COVID-19.
Local Public Health Staff Play Key Role in Community Testing and Contact Tracing During this unprecedented public health emergency, our local public health units have been working in cooperation with the state to mitigate COVID-19. Local public health staff play a vital role in contact tracing in the state as well as coordinate and assist with mass COVID-19 testing events. They are working with local leaders and businesses to meet the Governor’s Smart Restart guidelines by providing recommended guidance to those in their communities. Like many others, local health units have had to purchase additional equipment. Due to the concentration on conducting testing events and contact tracing, local public health is seeing additional costs for overtime, while foregoing much of their usual fee revenue from services they have been forced to suspend.

State Inmates Overcrowding County Jails
The North Dakota Department of Corrections and Rehabilitation suspended admissions of inmates on March 13th, which led to local facilities holding state-sentenced inmates who would normally be transferred to DOCR. Since this closure, local jail facilities have housed 134 state-sentenced inmates. The state has approved CARES funding for DOCR to reimburse counties for their cost to hold these inmates, which totals approximately $590,000. But the real issue is how the DOCR closure of admissions has put a strain on the operations of our local facilities and made it difficult for them to have the space necessary to segregate inmates. The COVID-19 threat is even greater for our jails as they continue to have new arrests brought into the facility. Counties have taken actions to reduce population to allow for isolation of new inmates and have changed their policies and procedures to ensure the safety of officers and inmates. NDACo has worked with jail administrators in holding meetings with DOCR on this issue to urge the reopening of admissions. DOCR has scheduled to transfer some of the inmates starting the first week in June. NDACo is currently working with jail administrators, local public health administrators and state partners in scheduling COVID testing at all local jail facilities.

Vote by Mail Only for June Election
To best protect voters and election workers, the June election will be Vote by Mail only. At the request of the North Dakota County Auditors Association, Governor Doug Burgum issued Executive Order 2020-13 on March 26th, which allows counties to authorize Vote by Mail only. This order suspended the requirement for counties to have at least one physical polling location. Counties in all 53 counties adopted Vote by Mail as the only method to conduct the June election. NDACo has worked closely with auditors on an outreach plan. We encourage you to check out NDACo’s Facebook page and share the election materials. The key message is to get voters to return their ballots. As of May 29th, only 40% of the 178,000 ballots sent to voters have been returned.

Courthouse Access The important work of our counties continued during the pandemic. However, every county restricted public access to the courthouse. Many implemented by-appointment-only entry, with individuals entering being screened. In response to CDC recommendations, counties also used alternative methods for their commission meetings, such as conference calls and/or web-based applications. Several counties have decided to continue with restricting access through the June 9th election to best protect county employees focused on the election work. We expect our counties to be reevaluating their access during their June meetings.

Friday, May 15, 2020

Budget Section Approves Additional CARES funds for ND and Provides General Fund Update

The North Dakota Legislature's Budget Section today approved sending out more than $500 million in federal funds to state agencies; which a portion of those funds will go to county government in a few specific areas.
"It should be noted that, although counties didn’t get our direct reimbursement request addressed, three very important county costs were approved, said NDACo Executive Director Terry Traynor. Those items are:
  • DOH received $20 million for public health district estimated costs through December 30, 2020
  • DOCR received $880,202 to reimburse county jails for expenses incurred housing DOCR sentenced inmates through July 2020
  • DHS received $285,000 for human service zone direct expenses estimated through mid-September.
The Budget Section will meet again in June 25, to look at additional distributions of the federal funds. 

Joe Morrissette, Director of North Dakota Office of Management and Budget also provided an update on the status of the state budget. General Fund reviews for the month of April are $40 million short of the Legislative forecast. However, because revenues have tracked ahead of forecast prior to the COVID-19 pandemic, revenues overall are still ahead of forecast by $81 million. The ending fund balance of the state's general fund is expected to be $126 million June 2021. 

Thursday, April 9, 2020

Budget Section Approves CARES Act Funding

It was an unusual sight in the Senate Chambers this week. The Budget Section met virtually with legislative members joining via phone and only a handful of state agency representatives physically being in the chamber. 

The meeting needed to be held to get the Legislature's approval for state agencies to accept federal funding. This is in response to the $2.2 trillion CARES Act federal economic rescue package, to respond to the coronavirus pandemic. North Dakota will be receiving $133.5 million to support rural transportation, K-12 education, child care, Medicaid and other assistance to provide services to North Dakota citizens. The Budget Section approved the following transactions: 
  • Department of Transportation - $18 million
    • Federal Transit Administration to support the Formula Grants for Rural Areas Program. 
    • ND would receive a 280% increase in these funds through the CARES Act. 
    • Program is one of the major funding sources that enable North Dakota rural communities to maintain a viable network of public transportation between those communities and larger communities which is essential for rural residents to get access to health services and shopping.  
    • There is no state or local match required.
  • Department of Public Instruction - $36.6 million
    • Grants to assist school districts in providing services and continue educating students during the COVID-19 pandemic. 
    • Funds will be distributed to school districts in proportion to what they receive in Title 1 funds.
  • Department of Human Services - $42.7 million
    • Grants to support increases to Medicaid FMAP, LIHEAP, Child Care Existing programs including grants for medical assistance including Medicaid and home and community based services. 
    • DHS reports they are experiencing an increase in requests for Medicaid assistance with the COVID-19 pandemic.
    • Nutritional services (Senior Centers & Meals on Wheels)
  • Department of Human Services - $36 million
    • Childcare Emergency Operation Grant to childcare providers as a result of the COVID-19 pandemic.  
  • State Library - $200,000 
In addition, Office of Management and Budget Director Joe Morrissette, provided limited information related to revenues and the budget. "We are continually monitoring this fluid situation with the drop in oil prices and the evolving situation; that none of us have been through before with business closures," said Morrissette. He told lawmakers that it is difficult to summarize the impacts at this point as there is very little data collected and the duration of the pandemic is unknown. 
"We are working with Moody’s Analytics to use their best estimates and incorporate their estimates into models for North Dakota." Morrissette explained how the data from sales tax collections that will illustrate the impacts of business closures won't be collected until the end of April.  Morrissette also said the move to shift the income tax deadline to July 15th shouldn't have a negative impact on the state's budget. 

Wednesday, March 11, 2020

March 2020 Interim Legislative Hearing Schedule

List of legislative interim hearings for March 2020

3/12  Human Services Committee
3/16  Information Technology Committee
3/18  Health Care Committee
3/18  Legislative Procedure and Arrangements Committee
3/19  Budget Section
3/24  Judiciary Committee
3/25  Water Topics Overview

Follow this link for the interactive legislative calendar where you can click on meetings to see individual agendas:

Monday, March 9, 2020

'Prairie Dog' Infrastructure Funds on Pace for 2021 Construction Season for Counties

There are many watchful eyes on the progress of the buckets that need to fill to distribute $250 million in infrastructure funding to counties, townships, cities and airports. The timing of when these funds will be available to local governments has been the focus of many commission planning and budget discussions. And there’s great news; those buckets are filling up ahead of schedule by about 4%. This means local governments will more than likely see funds sooner. Large cities may receive funds by the end of 2020. But a large $400 million Strategic Investment and Infrastructure will need to fill next before dollars trickle into the bucket for counties, townships and other cities.

“Tracking ahead of forecast is always a good thing. But at this point, it’s not a great enough lead for us to change our expectations. We should still anticipate the funds for counties and townships to be available in the spring or early summer of 2021,” said NDACo Executive Director Terry Traynor.

The 2019 Legislature approved House Bill 1066, often referred to as “Operation Prairie Dog.” This reallocates up to $250 million of North Dakota’s oil and gas extraction tax to non-oil producing counties, townships and municipalities. It is intended to be a permanent formula for continued distributions for local government infrastructure projects. The municipal and county/township buckets will receive funds after state budgetary buckets are filled to statutory limits. Because the funds are based on oil and gas revenues, revenue will vary from biennium to biennium. If there is not enough revenue to fill the bucket, the funds will be distributed on a pro-rated basis at the end of a biennium.

Oil production and the price of oil factor into how fast or slow the buckets fill. The State Treasurers Office has placed a chart on their website which will be updated monthly to show the progress of revenues filling up the various buckets. The new formula went into effect August 1st and as the chart illustrates in the first five months, two buckets are full and funds are now filling up the third bucket.

Here is a quick summary of the Prairie Dog funding:

$250 million allocated to infrastructure funds
  • $20 million for airports
  • $115 million to cities
  • $115 million to non-oil producing Counties and Townships
    • $100,050,000 will go to the non-oil producing counties (based on UGPTI needs study)
    • $14,950,000 will be divided equally to townships in non-oil producing counties
    • $9,300 to each township
      • Those funds will be distributed to the county for allocation to organized townships 
  • Current forecasts show distribution of funding to counties will happen the second quarter of 2021
  • Funding intended to be a continuing appropriation
  • Eligible projects for counties: Prairie Dog funds are to specifically be used for road and bridge infrastructure (paved or unpaved, new, repair, maintenance or replacement)
  • Counties able to “carry over” prairie dog funds from year to year to use for a large project 
  • Counties to report by 11/30/22 to State Treasurer on use of Prairie Dog funds 
  • There will be a method to indicate if carrying over funds 
  • No reporting requirement for Townships
  • The nine large oil-producing counties will not receive funds through the County and Township Infrastructure Fund; however, they will continue to receive a direct monthly allocation through the gross production tax formula 
  • Large cities could possibly receive funds by the end of 2020 
  • Graph on State Treasurer’s website tracks progress of Prairie Dog funds

Friday, March 6, 2020

Counties Gathering Input on Legacy Fund Earnings

Perhaps the greatest discussion being had during the Interim is over the use of the Legacy Fund earnings. The Legacy Fund is expected to turn out $500 million in earnings available for use in the next biennium. The Legacy Fund Earnings Interim Committee has held two hearings so far, and they plan to have two additional meetings to gather input from citizens on how they would like to see this fund used.

County leaders will also be involved in this discussion. The NDACo Board of Directors recently approved a motion that a “county recommendation for the use of Legacy Fund dollars” be developed for discussion at the next Board meeting. A preliminary discussion between the Executive Board and NDACo legislative staff has taken place.

“It is critical that the “county voice” be heard on this issue, although it may be as challenging for NDACo, as it is for the Legislature, to reach consensus,” said NDACo Executive Director Terry Traynor. “Certainly, this funding could be applied to many significant needs and wants that would benefit our citizens. The questions then become: which are the most strategic, and which have broad county official support?”

Executive Board members emphasized the importance of using the earnings for one-time projects rather than investments that would increase the reliance on long-term funding from the state. Several general concepts were outlined; many of them are similar ideas, which citizens have shared at the two prior legislative hearings on the matter. Their preliminary discussion centered around a few key areas:
  • Funding for infrastructure by enhancing contributions to the highway trust fund
  • Community improvement grants for major projects
  • Social programs to address homelessness, mental health and behavioral health
  • Grants for tourism development
  • Commissioner Trudy Ruland testifies before interim legacy fund earnings committee
  • Assistance for public ambulance services
Mountrail County Commissioner Trudy Ruland testified at the Interim Legacy Fund Earnings Committee meeting in Watford City. Ruland stressed how roads and bridges have been impacted by the oil development. Recognizing the past state funding, Ruland said counties in the west are having an impossible time keeping up with road maintenance and construction needs.

“The Prairie Dog bill/GPT formula is providing revenue to the counties and townships. But the funding is falling short,” said Ruland. “A portion of the Legacy Fund earnings should be used for direct funding and to develop grants and loan programs for the counties and townships. Our goal should be the modernization and improvement of our road and bridge infrastructure, not just maintaining the status quo.” 

Several cities and schools testified on the need for construction grants for school buildings, citing the difficulty schools are having in getting bond issues passed in their communities by the majority required and their struggles over adequate space due to the growth in students.

Perhaps the greatest quote to come from the recent Interim Legacy Fund Earnings Committee meeting came from Senator Dale Patten of McKenzie County. “The Legacy Fund gives us the opportunity to say “yes” to some things that were only a dream in the past.”

Deciding what to say “yes” to will most definitely be a daunting task for legislators, as will deciding if they should re-invest a portion of the earnings back into the Legacy Fund, and how much. This maneuver would give the Legacy Fund even greater potential when oil revenues plateau and taper off. The Committee discussed having a bill drafted that would reinvest a percentage of the earnings, but a figure was not discussed.

History of Legacy Fund
The Legacy Fund at the end of 2019 was $6.86 billion, including principal of $5.94 billion and $.92 billion in earnings. North Dakota voters approved a constitutional amendment in 2010 to establish the Legacy Fund. 30% of all oil and gas tax revenue goes into the fund and becomes the principle. The revenue in the Fund is invested in various ways, and the earnings from those investments are identified separately. After 2017, the earnings from the Legacy Fund automatically transfer to the State General Fund at the end of each biennium for legislative allocation. As the earnings are based on investment returns, the amount available for each biennium may vary. $460 million was available at the end of the last biennium.

Any expenditure of the principle would need a 2/3 vote of the Legislature and would be limited to 15% of the principle. Legislative leadership has repeatedly stated they don’t believe the principle should be accessed at any level at this time.

Legacy Fund Projections The projections reflect oil and gas tax revenue deposits of $660 million per year, the same as the 2019 legislative revenue forecast for the 2019-21 biennium. Projections show $16 billion in the Fund with earnings topping $1 billion in 2030. Those projections are without reinvesting the earnings back into the Legacy Fund.