Updated State Revenue Forecast Could Impact County Road Funds

Governor Jack Dalrymple is expected to hand down an order for state agencies to make budget cuts Monday. That’s when the findings of a new state revenue forecast will be released.  State officials requested an updated forecast due to general fund revenues falling short of projections, hundreds of millions of dollars short. In order for the state to tap into the Budget Stabilization Fund to backfill for lost revenue, state agencies would first have to make across the board budget cuts of up to 2.5%. This is referred to as an allotment. 

 

So what could it mean to counties? Director of the Department of Transportation, Grant Levi tipped off county engineers that the budget cuts will more than likely result in a trimming from the “one-time” road funding non-oil producing counties are expecting to receive as a result of the passage of HB 1176.

 “The $112 million you were expecting to get February 1^st will be impacted by the General Fund reduction. What I’m hearing is not “if” but “how much”, Levi told the group at the Association of County Engineers conference.

Any adjustment made in general fund reductions will be the same percentage those 2016 road funds will be reduced. The road funds approved early in the 2015 Legislative Session, through passage of the “Surge” bill, will not be impacted because those dollars were appropriated from the Strategic Investment & Improvements Fund (SIIF).    

Levi continued, “We are coming off a period of time of historic investments. Those were needed and future expenditures are still needed.”

Counties are already seeing budget impacts due to oil, sales and fuel tax collections being down. Levi said the Highway Distribution Fund is 13-15% behind projections. Those numbers coincide with a drop in truck traffic. Traffic volumes are similar to 2011.

The expected general fund reduction could also impact other county funds as well. NDACo will attend the review of the new revenue forecast and provide updates.

Study to Review ND Correctional System

An exciting step was taken this week at the Capitol. State officials and legislators formally launched an effort to analyze North Dakota's criminal justice system. The state is partnering with the Council of State Governments (CSG) to review data as it relates to prison and jail populations. After after an in-depth study, CSG will present policy options to the Incarceration Issues Committee to review and potentially develop legislation to be considered during the 2017 Session.  North Dakota is the 25th state CSG has assisted in looking for ways to address justice reinvestment. NDACo is encouraged by the study and is working with CSG in collecting county data.

NDACo Surveys County Jails
In anticipation of the interim study, NDACo this fall conducted a survey of the 23 county jail facilities. NDACo presented our findings to the Incarceration Issues Committee. The survey proved to be very insightful, showing that counties are taking major steps to address locally one of the top issues in the state. NDACo discovered nine counties have plans to expand their correctional facilities. It’s simply the result of county jails being at or over capacity across the state. Sheriffs’ deputies are forced to drive three to six hours, across the state, to transport inmates to a facility with availability. In some cases counties have made arrangements with out-of-state facilities to take inmates. The “jail space crunch” is also felt at the state level. Shortly after the state prison expansion was complete, it was full. In response to the issue, the Legislature this interim has formed a specific committee to examine the space issues and explore reform initiatives that could result in proposals for the 2017 Session.  
 

How many are behind bars? Where?

On September 1, 2015, 3,340 people were behind bars in North Dakota. What’s striking to NDACo is that 56% of those incarcerated were sitting in county jails. There were 1,585 inmates serving sentences at the North Dakota State Penitentiary, James River Correctional Center, Missouri River Correctional Center and at the Dakota Women’s Correctional Rehabilitation Center. The number of inmates housed in county jails was 1,754; this includes some state sentenced inmates contracted to be housed in county facilities. 

North Dakota county jails consistently house a greater percentage of our state’s offenders than local jails across the country. Nationwide, local jails house 35% of the total inmates. What’s interesting is the make-up of the county jail population. Only 18% of the county inmates were serving a jail sentence on the survey date. 57% were awaiting trial, revocation or transfer to the state prison.

Data provided by DOCR to the interim committee suggests their facilities have seen a 36% increase since 2005. However, county jails have also seen significant growth in the last ten years of 82% with the most rapid growth occurring in the last couple years. 

Transporting inmates a temporary solution

North Dakota has 23 jail facilities licensed to hold prisoners more than 96 hours.  While the current capacity of all our jails is 1,747; there were 1,754 inmates in those jails on September 1^st.  In 2014, jails in Bottineau, Burleigh, McKenzie and Ward counties transported inmates every day due to the lack of beds. Three other facilities transported inmates 90 or more days last year. Those who transport the most face enormous transportation and housing costs. To give an example, Burleigh County spent more than $700,000 in 2015 housing inmates outside their facility.

Counties plan to increase jail capacity 48%

Several counties have set in motion plans to solve the crowding issues at the local level. Nine counties (Burleigh, Morton, McKenzie, Williams, Mountrail, Ward, Mercer, Bottineau and Rolette) are currently planning or in the construction phase of replacing or expanding their jail facility. In addition, Stutsman County is considering an expansion. Those expansions would increase statewide jail capacity by 840 beds or 48%. A majority of the additions would be operational in the middle of 2017.

Click here to download the NDACo County Jail Presentation

Social Service Working Group Meets

NDACo President, Steve Reiser and Governor Dalrymple during Social Service Working Group Meeting

We captured this great moment during the Social Service Working Group meeting. NDACo President, Steve Reiser and Governor Dalrymple are preparing to go over details of the proposal to shift the funding of county social services to the state revenue sources.

Formula to Fund Social Services Pitched to Lawmakers

Legislators got a first glimpse of a formula that could be used to fund social services. The Interim Political Subdivision Taxation Committee is studying the possibility of transferring the cost of social services from counties to the state; taking over the entire 20-mill social services levy. It is this committee that will move forward any proposed legislation or recommendations to the 2017 Legislative Session. Governor Jack Dalrymple, along with Deputy Tax Director Joe Morrissette, presented the proposed formula for state reimbursement of county social service costs to the committee.

“We have been gathering a tremendous amount of data. There has never been this kind of comprehensive look at what counties pay for social services,” Governor Jack Dalrymple told committee members.

The formula is based on the caseloads for each economic assistance and social service program in each county. There are many factors included in the formula including an inflationary adjustment and adjustments for counties at the high and low end of the caseload spectrum.  The intention of the model is to make sure counties are reimbursed for all their social service costs. Program costs associated with local-option services, not mandated by the state, are also included in the base costs.

Dalrymple added, “It looks promising. The cost to transition is affordable.”

The total cost of the transfer is estimated to be $130 million. The Governor has reiterated the motivation for this action is to provide significant property tax relief. He emphasized that this would be a $130 million savings statewide to property tax payers.

The idea does have support from many committee members, many referring to the fact that property taxes are a poor funding source for social services. Social service programs and services have nothing to do with a property’s value - unlike other services funded by property taxes like roads, parks, and law enforcement. In addition, counties have very little control over social service costs due to the numerous federal and state mandates.

“Justification to do this is on the table. We just have to find the right way to do it,” said Senator Dwight Cook.

Steve Reiser provides testimony to committee

NDACo Board President and Dakota Central Social Services Director Steve Reiser, Traill County Social Service Director Kim Jacobson, Wells County Commissioner Randi Suckut and NDACo Assistant Director Terry Traynor also testified to the committee. They illustrated ways counties are already sharing numerous services and, in some cases, have found efficiencies by forming social service districts. They also addressed some of the unique services they provide in their county.

The legislature actually began the reduction in property tax by assuming $23 million in county costs during the 2015 Legislative Session.  Senate Bill 2206, which prompted the larger study, shifted certain “program” or service costs that prior to January 2016 were billed to the county by the State.  NDACo Assistant Director, Terry Traynor shared preliminary data that reflects that counties were able to reduce their social service levies by an average of 2.83 mills, or an 18% reduction. That legislation has already led to lower property taxes as intended.

“This exceeds our initial projections. It is reflective of what happens when the state cuts costs, the levies will go down,” Traynor added.

Governor Dalrymple met with Social Service Directors during a separate meeting. He provided insight into the formula and answered any questions they had related to the funding plan. He reassured them the plan is to have staff stay 100% county employees, that the county will deliver 100% of the services and that the formula is designed to allow for fluctuations in cases.

“It is our intent the funding mechanism will cover all the costs and the formula will self-adjust.” Dalrymple continued by thanking Social Service Directors for the job they do every week. “You have a difficult job that works with various technical aspects. We want to make sure you have the resources you need to do your job.”

Interim Committee to Consider Changing State Law to Reflect Same-Sex Marriage Ruling

NDACo provided information to the Interim Judiciary Committee regarding the impact of the U.S. Supreme Court Ruling to allow for same sex marriages. North Dakota counties have complied with the high-court's ruling. No couples have been refused a marriage license based on their gender. The ruling has had minimal impact on the county offices who issue licenses and conduct marriages. In 2015, there were 66 marriage licenses issued to same sex couples in North Dakota, that's out of 4,707 total. 16 counties have issued same-sex marriage licenses. 20 were in Cass County, 12 in Grand Forks, 11 in Ward, 6 in Burleigh and the remaining counties had 1 to 3.

This data does not include the first couple weeks after the court ruling. The County Recorders Association estimates approximately 10 marriage licenses were issued to same-sex couples in that time frame. Those marriages were not tracked as such because a new application form had to be developed and distributed to include a check-box to reflect the gender of the applicants.

In counties where a county employee has had personal conflicts with issuing same-sex marriage licenses, the county commission has appointed or transferred those duties to other staff members. There have been three counties who have found alternative employees to assume the responsibility.

NDACo drew committee member's attention to section of state law that defines and refers to marriage as a contract between "one man and one woman" and areas were spouse refers to "a person of the opposite sex". These are areas of the code, lawmakers will need to decide if they should change to reflect the new Constitutional right. Doug Bahr, litigation director for the state Attorney General's office said it could cause confusion for political subdivisions, as well as the state, with regards to taxes, licensing and other types of issues if the Legislature does not make changes to the state statutes that make reference to "husband" and "wife".

The Interim Judiciary Committee took no action during this hearing. They plan to do more research into what other states are doing. Any recommendations for changes would be presented during the 2017 Legislative Session.