Governor Burgum Signs County Priority Bills

Governor Burgum Signs SB 2206

(The following is a media release issued by the Governor's Office) 

Governor Doug Burgum today signed landmark legislation creating permanent, sustainable property tax relief by transitioning county social services costs to the state.

Senate Bill 2206 provides $160.7 million for a two-year pilot program that eliminates counties’ social services levy – up to 20 mills – and requires the state to pay the costs of county social services and economic assistance for 2018 and 2019. In turn, the state will discontinue its 12 percent property tax relief credit program, better known as the buydown program.

“Senate Bill 2206 gives permanency to a significant amount of property tax relief and is a more cost-effective and sustainable option than the buydown program, which lacked incentive to control local spending,” Burgum said. “Shifting the cost of social services to the state relieves counties of unfunded state and federal mandates and ensures that local taxpayers aren’t stuck footing the bill for services outside of their control.”

Under the bill, counties will be reimbursed for social services costs based on their actual caseloads. The state Department of Human Services (DHS) will analyze ways to improve the efficiency and effectiveness of social services delivery and submit a plan to the 2019 Legislature for a permanent funding formula.

The bill was approved 44-3 in the Senate and 75-15 in the House and had the support of the North Dakota Association of Counties. It’s part of more than $1.1 billion in state-funded property tax relief that will be provided in 2017-19.

“We are deeply grateful for the countless hours spent by legislators, county officials, the tax commissioner’s office, DHS staff and everyone else who worked on this historic legislation that will provide substantial relief to local property tax payers for years to come,” Burgum said.

Governor Burgum Signs Radio Network Bill into Law

Governor Burgum also signed House Bill 1178 creating the statewide interoperable radio network. This will improve the communications network used by law enforcement, fire fighters and first responders. 

 

“Responding to the Dakota Access Pipeline protests brought to light critical gaps in state communications infrastructure, with a lack of connectivity putting first responders at risk,” Burgum said. “House Bill 1178 recognizes the need for a robust communications system in our rural areas by streamlining and updating technology as part of a phased approach to ensure that help can reach North Dakotans when they need it, regardless of their location in the state.”

The network will be paid for with revenue from a .50 increase for 911 fees on phone lines. 

Lawmakers Approve Social Service Funding, Kill Caps on Property Taxes

It was a successful day for counties at the ND Legislature with the resolution of two priority bills - SB 2206 and HB 1361.

Senators voted unanimously to kill the bill to cap property taxes (HB 1361). The bill would have established a property tax cap for counties, cities and townships. Under the bill, they would not have been allowed to raise taxes more than 3%. Senator Larry Laffen told Senators they heard no evidence in committee that taxing jurisdictions were taxing to a point where caps were necessary. He voiced concern that a 3% cap would encourage political subdivisions to tax to that level regardless of the need. A reporting requirement that was included in this bill has now been added to the OMB budget bill.

North Dakota House members took final action today on Senate Bill 2206; passing this landmark legislation with a vote of 75-15. The Senate approved the measure Friday 44-3. SB 2206 will fund county social services statewide for a two-year pilot program in calendar years 2018 and 2019. The funding will cost $160.7 million and will reduce property taxes roughly 6% with the elimination of up to 20 mills from county levies for the social services.

“This issue has long been a priority for counties. The North Dakota Association of Counties has been working on transferring the cost of county social services to the state for twelve years,” said NDACo Executive Director Mark Johnson. “North Dakota counties have little to no control over social service costs or the programs as these services are state and federally mandated. This is why property taxes are a poor fit for paying for social services.”

 “We appreciate the leadership counties have provided in moving this issue forward. This is the right direction for the state in order to provide permanent, meaningful property tax relief. Funding county social services will benefit citizens across the entire state and pays for a service the state is mandating the counties deliver,” said Representative Craig Headland chairman of the House Finance and Taxation Committee. 

The funding will be provided as part of a two-year pilot program. During the interim, the Department of Human Services will work with stakeholders on analyzing opportunities for improved efficiency and enhanced service delivery.  Preservation of local access to quality services and a focus on outcomes are critical aspects of this analysis.

This legislation becomes part of $1.3 billion in state funding for local services that is used to reduce the burden of property taxes.

View a video statement from Johnson on the passage of SB 2206 here: https://youtu.be/iod0DVMddx4

The Last? Weekly Report

As reported on the statewide news, the Legislature will not adjourn this week as hoped.  The target is now next Tuesday, or the 75th legislative day.  This would leave 5 days in the "bank" for the future.  Some however are less optimistic. Right now the most significant log jam is the Dept. of Human Services Budget.  The  House and Senate conferees are quite far apart on funding and on staffing.

Other budgets with disagreements include the Industrial Commission, NDPERS, and the Extension Service.  Working toward resolution is the Land Dept. Budget and some adjustments to the GPT formula for local distributions.  And the OMB Budget, which historically contains all last minute compromises and appropriations hasn't yet been addressed by the Senate for the first time - so all in all, there is plenty of work left.

Two policy bills of county interest also remain in conference. 

After numerous meetings with no headway, the Senate conferees agreed to take the House version of HB1361 - the Property Tax Cap bill - to the Senate floor for a vote.  This bill, if passed would automatically cap all property taxes on existing property at 3% growth permanently (except for schools) - unless the voters allowed a time-limited increase.  As we have argued before, this is unworkable.  We have also demonstrated that in most cases it is unnecessary.  While some years a county or city may need to increase taxes at a higher rate to recover from snow or flooding emergencies or specific needs, the average increase for most jurisdictions is less than 3%.  As this bill was passed overwhelmingly in the House, our best hope is for the Senate to kill this bill.  The Senate defeated a milder version of this (5-42) several weeks ago, so we are very hopeful they will do so again - but please urge your Senators to vote to kill HB1361.

The Social Service Funding bill - SB2206 has also had a difficult time making it out of conference committee.  It was voted out this morning (Thursday) but then was returned for some corrective action later in the day.  If you recall from last week we were looking for a number of specific improvements to the House version of the bill, and we were successful on some, but not all.

The House proposal calls for the state to fund county social services statewide for a two year pilot program in calendar years 2018 and 2019. The payment rates to counties would be based on individual counties' CY2015 cases and costs, now adjusted to CY2016 caseload. Weighting factors and inflators that were in the original bill were removed. The amendment keeps the original intent of SB2206 with state funding county social services and the elimination of the 20 mill levy for social services.

As this is a two year pilot program, the Department of Human Services is tasked with submitting a plan to the 2019 Legislative Assembly for the permanent implementation of state funding of county social services. The plan is to include any recommendations regarding efficiencies in the delivery of social services.

Efforts were made to make improvements to the bill in three areas.  1) Inflate the cost figures to recognize salary, benefit, and caseload increases incurred since 2015; 2) Allow for enhanced funding if caseload increases in 2017 and 2018; and 3) make the interim study language more balanced and more focused on adequate service delivery.  Items #2, and #3 were addressed by the committee in today's action, but item 1 was only addressed to the extend that 2016 caseloads are now incorporated.  In addition the conference committee established thresholds for social service ending fund balances. $100,000 in counties with budgets less than $2 million and $500,000 in counties with budgets greater than $2 million.  Any funds in excess of those are to be transferred to the County General Fund on January 1, 2018 to lower county general fund levies. 

As the $160 million appropriated in this bill for payments to counties is the most the Legislature has determined can be spent for property tax relief, the "taxpayer hold harmless" provision of the original Senate bill has been left out.  This results in about a 6% property tax reduction on average, although the county level impacts vary with each county's social service costs.  


This bill will be addressed again in conference on Friday morning, with floor action sometime after that.

We will keep blogging to the end to keep you up to date on this developing issue, as well as everything else that happens. 

DOT Budget Closes Rural Shops with Option for Counties to Take Over

In an effort to save $2 million; the Department of Transportation will close eight section shops in rural North Dakota. However, the NDDOT budget bill (SB2012) gives local governments the opportunity to take over the sites and equipment in the 2017-2019 biennnium.  The section shops are in Gackle, Courtenay, Litchville, Fessenden, Finley, New England, Mayville and Starkweather. The bill aurhorizes DOT to negotiate a lease with either the county, city or township, in that order.  The political subdivision may also have the opportunity to buy the DOT snowplow if it is one that the department intends to dispose of. Under the bill, if the local government does lease the building it would be required to assist the DOT if an emergency occurse in or around a section site and a DOT crew is unable to respond. Unlike in recent legislative sessions there is no one-time state funding for the 17-19 biennium for road projects.

Legislature Finalizes Radio Funding, Voter ID, and DOCR budget

Lawmakers Pass Interoperable Radio Funding
Legislators approved an across the board increase 911fees .50 per line. This is the first step in ugrading to an interoperable radio system statewide. HB 1178 authorizes a $15 million loan from the Bank of North Dakota to get the project jump started. Under this plan the revenues from the 911 fee will be pooled into the Statewide Interoperable Radio Network (SIRN) fund. When purchasing equipment for the SIRN the equipment must be compatible with the trunk system.

ND Legislature Approves New Voter ID Law Allows for Set Aside Ballots
After having North Dakota's current voter ID law challenged in court, the 65th Legislative Assembly passed a bill that will hopefully appease the Court. Last year, Judge Hoveland issued a temporary injunction - reverting ND's voter ID laws back to to 2013 status. With the passage of House Bill 1369, if a voter's information on their ID is outdated, they will be allowed to provide other supportive documents to show they live in that precinct or that they have changed their name. For those who do not have the supportive documents or a current ID, the voter can fill out their ballot and have it "set aside" until a voter's eligibility is confirmed. The voter has six days to show evidence of their identification. It is only at that time when the ballot will be counted.

This last election, affidavits were used to allow voters who couldn't provide a valid form of ID. 16,000 North Dakotan's voted using affidavits in the November General Election. County auditors were tasked with verifying those affidavits. Many counties were unable to validate many of the affidavits, regardless all ballots were counted on Election Day. 

DOCR Budget Includes Funding for Community Based Programs
In response to the behavior and mental health crisis in the state, the DOCR budget includes $7 million to provide services across the state. The goal here is to address these needs and provide treatment options outside of prison. The overarching message this session has been that prison should be for violent offenders. The community based programs will be established in partnership with Department of Human Services in hopes of reducing the number of inmates with behavior health issues who are sentenced to prison because there are few other options. This is a major piece of the Justice Reinvention initiative that was studied during the interim.
SB 2015 authorizes DOCR to refuse inmates sentenced to prison if the prison is at capacity. Counties expect this to impact their jails as inmates may be held there until space is realized. DOCR will develop a prioritization of admissions based on sentence. The DOCR budget also allows correctional facilities including county jails to adopt an inmate population management plan and to provide alternatives to jail time. 

Confidential Informant Bill Passes
The house and senate have passed a bill that establishes protections for confidential drug informants. The bill has been refered to as "Andrew's Law" and was brought forward by the family of Andrew Sadek. Sadek was found dead in the Red River three years ago. At the time Sadek was a confidential informant.
The bill prohibits law enforcement from using a juvenille 15 years or younger as a confidential informant. For those over 15 but under the age of 18 may also not be used except under special exemptions highlighted in the bill. The bill also sets forward training requirements for law enforcement who wish to use CI's.

Legislative Days are Numbered

Friday is day 68 for Legislators in the 65th Legislative Assembly. The goal of a 70 day session is unrealistic, and it is anyone's guess as to when lawmakers will finish their work.This week has been primarily dedicated to conference committee work.

The medical marijuana bill (SB 2344) has passed and has gone to the Governor. This bill was necessary in response to voters approving the initiated measure in November legalizing the use of medical marijuana. The bill allows for 8 distribution centers and 4 manufacturing centers in the state.

Counties will also now have the ability to regulate high grade radioactive waste and where that waste is stored after the House and Senate approved SB2156.

The House also approved the Senate version of SB2045, removing the sunset from the retention of overweight civil penalties by local road authorities.

The conference committee on the Department of Corrections and Rehabilitation budget (HB 2015) wrapped up. Their budget includes funding for a new program to address the rising behavior health crisis in North Dakota; $7 million will go towards providing community-based services through a collaborative effort with the department of human services.  The budget bill includes language that allows DOCR to refuse inmates sentenced to prison if the facility is at capacity and to prioritize admissions based on sentences. Their budget also has language to encourage alternative options to manage inmates at local correctional facilities and the state prison.

The conference committee on the Department of Transportation Budget (HB 2012) finished it's work Friday on the bill. Unlike in recent years, there is no funding for one-time road projects. The budget also includes discontinuing operation of eight maintenance section sites in the rural part of the state. They are in New England, Starkweather, Fessenden, Courtenay, Gackle, Litchville, Finley and Mayville. The bill allows for the DOT to negotiate with political subdivisions; counties, cities and townships in that order, for use of the shops and for assisting DOT in emergency situations. This is for the 2017-19 biennium only.

Friday, conference committees met for the first time on 911 radio network (HB 1178), social service funding (SB 2206) and the Cap bill (HB 1361). HB 1178 was kicked out of committee and will be voted on next week. The house and senate have very different levels of acceptance for property tax caps; work will continue on that bill next week. But it was very evident by the vote this week on the bill in the Senate that they are not supportive of caps. No work was done on SB 2206 in conference committee, but they discuss that amendments would be offered. We are working with conference committee members to further improve the bill. We wrote more in-depth on these three bills in the previous blog.

Lawmakers Vote on Social Service Funding, Radio funding and Caps

It was a busy afternoon in the House and Senate chambers with lawmakers voting on three of our top priority bills. We are pleased with how the bills moved out of the two chambers. But with these three bills, they will more than likely head to conference committees.
House Passes SB 2206 (Social Service Funding)
Representatives passed SB 2206 with a vote of 75-15. But that was following a lengthy political debate focused on the loss of the 12% property tax buy-down. Monday's blog post has more details about the amendments to SB2206. Essentially, it the bill authorized $161 million to fund county social services as part of a statewide two year pilot program. The payments are based on 2015 caseloads.The amendment removed inflators and weighting factors. It also repealed the 12% property tax buy-down. By doing that, it also changed the formula as initially proposed so that the "taxpayer equity"was eliminated from the bill. Property taxes will decrease based on what the county levies for social services. Under this bill, up to 20 mills are completely removed from the county's levy authority for county social services. This bill will be moving to conference committee this week.
Senate Approves 911 Tax to Fund Radios in HB1178
Senators voted 31-16 to approve HB1178 which will increase 9-1-1 taxes per line .50 in order to fund a new statewide interoperable radio network (SIRN) for law enforcement and first responders. The bill was amended that clarifies where the money goes and what it is to be used for. It also authorizes a loan from the Bank of North Dakota to be used to get the project started using revenues from the fee.
Senate Kills "Caps"Amendments, Approves Reporting Requirement in HB1361
The Senate passed HB1361 but not before dividing sections of the bill on the floor and defeating sections of the bill most concerning to local governments. Senators killed the amendments that would have created a citizen petition for a vote on "capping"the growth of property taxes levied by a taxing district to 3%. They also shot down the section that would have made the amendment effective this year. What stays in the bill, is the requirement for counties to forward certain property tax data from taxing districts to the State Tax Department, so that they can prepare an annual statewide report on property tax increases.

Social Service Funding Bill Returned to Committee

Representatives sent SB 2206 back to the House Finance and Tax committee Monday morning after recognizing the amendment to simply study the social service funding concept for two years was facing strong opposition in that chamber.

House Majority Leader Al Carlson offered a new amendment to the committee which was adopted after good committee discussion.

NDACo believes this is a reasonable compromise. There is a lot of merit to the new amendment and we are appreciative of the time key legislators have put into this amendment to move this bill in the right direction. 

The new proposal calls for the state to fund county social services statewide for a two year pilot program in calendar years 2018 and 2019. The payment rates to counties would be based on individual counties' CY2015 cases and costs. Weighting factors and inflators that were in the original bill were removed. The amendment keeps the original intent of SB 2206 with funding county social services and by eliminating a counties levy authority of 20 mills to provide the social services.

Under this plan, the level of property tax relief to citizens will decrease from its current level. The 12% property tax buy-down will be repealed. Legislators have commented the current level of property tax relief can not be sustained this session. The option to fund county social services alone is  expected to cost $161 million. It will reduce oversll property taxes roughly 6% a year with the elimination of the county social service levy.  

Since this is a two year pilot program, the Department of Human Services is tasked with submitting a plan to the 2019 Legislative Assembly for the permanent implementation of state funding of county social services. The plan is to include any recommendations regarding efficiencies in the delivery of social services.

 "Counties believe there could be a few minor improvements to this bill. Essentially linking future  funding of county social services to 2015 expenditures is problematic for our counties," said NDACo's Terry Traynor. "For example, in 2015 the legislature raised state employee salaries, triggering increases to social service salaries in 2016 and 2017 that would  not be recognized. Ignoring this inflation is problematic and could result in impacting services and/or some counties using property taxes to some degree."

The amendment will now go before the House for it's approval. Since the House and Senate versions vary significantly, SB 2206 is expected to head into a conference committee where three members of each chamber will work out their differences in the bill. 

The assumption of county social service costs is one of a number of efforts by the state to provide state-paid property tax relief to the citizens of North Dakota. In the 2017-2019 biennium it is estimated the state will be delivering $1.1 billion in property tax relief as shown here.

NDACo Legislative Report #15

You are probably wondering: “Why didn’t I get this report yesterday?”  Well, as so little progress was made on the remaining county issues in the first four days of the week, and there was an expectation that two big bills would see action on Friday, we waited. 

Guess what! Nothing happened on Friday.  Once again, the House delayed action on SB2206 – Social Service Funding, three conference committees met without agreeing, and HB1361 – Revised cap bill, was delayed until next week.

So maybe we could tell you to read last week’s report again, but we won’t.  We can actually talk more in depth about why nothing appeared to happen.

We have reported that SB2206 was amended in the House Finance & Taxation Committee to turn it into another two-year study of the issue. In most instances, the entire House adopts all committee amendments without debate.  There was notice given that this was not “most instances” and a request would be made to separately debate that amendment.  Both the bill’s supporters, and those not wishing to deliver property tax relief in this manner, started working hard to see who they could convince to vote their way.  As the week dragged on, it became obvious that those supporting the study amendment were in the minority.

If the amendment to SB2206 was defeated, the House would immediately have the bill as passed by the Senate and if that then was passed, there could be no conference committee and no further deliberations.  The opponents of the concept have (apparently) decided the safer course is to take the bill back into committee and amend the bill in a manner that will allow it to go forward – however we are unsure what those amendments might all include, so Monday may be a very important day for this bill.

HB1361, the “cap bill” has also had an interesting week.  As reported in our earlier blog post, a “hog-house” amendment turned the bill into something quite different.  The amendment included additional data elements that counties would have to report to the Tax Dept. and in turn, the Tax Dept. would turn into an annual report on property tax increases by jurisdiction.  The other part of amendment was a provision allowing citizens to petition onto a June ballot a one-year, 3% property tax freeze for a county, a city or a park district (but not schools).  Apparently this has been finding resistance within the Senate, as it was send back (rereferred) to the Senate Finance and Taxation Committee for further work at Friday’s floor session.

The Senate Finance & Taxation Committee finished its work on HB1178, the only remaining bill to address SIRN 20/20 (radio) costs.  This 50-cent fee on phone service, previously approved by the Senate, was amended to “sunset” after six years, add two legislators to the oversight committee, and provide additional restrictions on the use of the funds.

Also noted in an earlier blog post was recent activity on some of the bigger agency budgets.  Although there was considerable discontent about most of them in both chambers, they ultimately were passed to get them into conference committees for final negotiations. Budgets yet to be acted on (in the Senate) include HB1012-DHS and (in the House) SB2006 – Health Dept.  Significant changes make these almost surely candidates for conference as well.

Although there are no “regular” hearings next week, several of the conference committees meeting on county bills that have scheduled, and these are below.  These change hourly, and many more will be added during the week – particularly Tuesday, which will be devoted to conferences as there will be no floor session.

Time	Bill	Comment	Room
04/10/2017 09:30 AM	SB 2015	DOCR Budget - amendment to allows refusal of inmates	Harvest
04/10/2017 10:00 AM	SB 2200	Expands county 10-mill capital levy for airports	Lewis and Clark
04/10/2017 10:30 AM	HB 1341	Changes to drug delivery, manufacturing penalties	Prairie
04/10/2017 10:30 AM	SB 2224	Restores $500,000 to community service fund	Sheyenne River
04/10/2017 11:30 AM	SB 2090	Child care licensing enhancements-	Fort Lincoln
04/10/2017 03:00 PM	SB 2045	Remove Sunset on civil penalties for "fat" trucks	Lewis and Clark
04/11/2017 09:00 AM	HB 1041	Sentence reduction, medical paroles, good time, drug offenses	Prairie
04/11/2017 09:00 AM	SB 2012	DOT Budget - proposed closure of 8 section shops	Harvest
04/11/2017 09:30 AM	HB 1269	Adjustments to mandatory drug sentences  Bottom of Form	Prairie

House Approves State Budget Bills

Representatives have picked up the pace this week in getting through state agency  budget bills. 

The Department of Transportation budget includes the closure of eight rural maintance section sites and a number of rural drivers license sites. The bill authorizes DOT to negotiate with counties to lease the 8 shops. The shops to be closed are located in New England, Starkweather, Fessenden, Courtenay, Gackle, Litchville, Finley and Mayville.
On top of the major reduction of employees, there are zero dollars for one time funding for 2017-2019 biennium. In total, the budget decreases from $2.7 billion to $1.2 billion.

Another budget bill with county implications is the Department of Corrections and Rehabilitation budget. Their budget includes provisions that are recommendations from the Justice Reinvention study done during the interim. Six behavior health specialists will be added to develop community based programs. Representative Jon Nelson told fellow House members that 75% of inmates at the state pen need behavioral health services. 

The bill also allows options to the Prison and local correctional facilities to better manage their inmate population. This would allow facilities to prioritize their population and consider programs for alternatives to housing inmates in the jail or prison. 

Probably one of the most concerning provisions, from the counties perspective, is the prioritization of the admission of inmates to DOCR. DOCR may refuse to admit inmates sentenced to DOCR when they are at capacity. This means that even though the inmate has been sentenced to the prison, they will continue to be held at the county or regional jail. 

Senate Finance and Tax Amends Cap Bill

The threat of capping local governments drew in officals representing cities, cointies, parks and schools to testify in opposition to HB 1361.

The Senate Finance and Tax committee took action on the bill today after amending the bill. While the amended bill is an improvement, it still is of significant concern. It removes the flat, across the board cap that limits taxing districts to raise taxes no more than 3% without a vote - replacing it with a citizen petition process that would institute a 3% cap (in a county, city, or park district) approved by the voters in a June election.

This petition would require signatures equal to 10% of the votes cast in that jurisdiction at the last general election, and if approved, the property taxes for that jurisdiction would be capped for one year.

Additionally, counties will be required to report additional information to the tax department from which they will prepare a jurisdiction-level report on annual tax increases.

This bill - HB1361 - may be on the Senate floor as early as Tuesday.

Feel free to contact your Senators to tell them how this would negatively impact your county.