Governor Vetoes Township Road Funding

After the 65^th Legislative Session adjourned, Governor Burgum vetoed SB2119 and 22 sections of eight other bills.  One of the section (or line item) vetoes was the $16.1 million appropriation for township roads in non-oil counties.  This revenue was generated partly ($8 million) by an across-the-board formula change to the gross production tax revenue going to local governments in the oil patch that increased the revenue in the Strategic Investment and Improvements Fund (SIIF). The rest of the funding ($8.1 million) came from the State’s Disaster Relief Fund (DRF).  As the veto doesn’t affect the statutory changes to the GPT  formula, it appears that the $16.1 million will remain unappropriated in those two funds.

Governor Burgum explained his reasoning for this veto, "At a time when North Dakota is dealing with an unprecedented revenue shortfall, nearly every state agency and department has made substantial cuts in budgets based upon limited reserves and/or new initiatives that streamline state government. Without demonstrated evidence of differentiated need or want, this exactly equal, across-the-board appropriation is both arbitrary and inefficient use of our scarce financial resources." 

While of little direct effect to counties, the other vetoes are an interesting reflection of the differing views the Legislature and the Governor’s Office have of the respective authorities and responsibilities of the Legislative and Executive branches – particularly in the areas of Higher Education, the Land Board, and NDPERS.

For more information on the Governor's vetoes click here: Gov. Burgum Release on Vetoes

NDACo Legislative Report

For the past four months North Dakota’s county officials and the NDACo Legislative Team have been entrenched in the 65^th Legislative Assembly. As we reflect, we feel very positive about the end result. We knew going in that this would be a difficult session, especially when it came to any funding issues. Of course, the counties greatest accomplishment is the passage of social service funding as the mechanism to deliver tax relief to North Dakota citizens. Establishing funds for a new statewide radio network was also another great achievement. But there are many other issues you need to know about. After all, your NDACo Team tracked approximately 436 of the 832 bills introduced this Session.  We were successful with 84 percent of the top priority bills we identified. Below you will find a summary of priority issues this Session.

Budget Overview

According to North Dakota Governor Doug Burgum, the $4.3 billion general fund budget for 2017-19 represents a more than 28 percent decrease from the current two-year budget cycle, which ends June 30.  The state’s overall budget, which includes substantial federal funds, will decrease from $14.2 billion to $13.6 billion.

Social Service Funding

For more than a decade, North Dakota Counties have worked on plans to transfer the cost of social services to the state. Finally, with the passage of Senate Bill 2206, this initiative is closer to being accomplished. The landmark legislation will provide the final step in funding state- and federally-mandated programs provided by counties. The funding will eliminate a counties levy authority for human services, up to 20 mills. The state will assume the costs statewide for a two-year pilot program in calendar years 2018 and 2019 and deliver local property tax relief by doing so. The total appropriation for this two-year pilot is $160.7 million.

Statewide Interoperable Radio Network 

The state took the first step in creating a statewide interoperable radio network (SIRN) by adopting HB 1178. 911 fees will increase .50 per line. In addition, legislators authorized a $15 million loan from the Bank of North Dakota to get the project jump started. Under this plan, revenues from the 911 fee will be pooled into the SIRN fund. All equipment purchased under this plan will be compatible; therefore solving many communications issues for law enforcement, fire and ambulance employees and volunteers. 

 

Transportation Issues

For the first time in several years, there was no one-time funding approved for transportation projects. That is quite a change from last session when a record $1.2 billion was allocated for state, city and county roads and bridges. 

In an effort to save $2 million, the North Dakota Department of Transportation (DOT) will close eight section shops in rural North Dakota. However, local governments have the opportunity to take over the sites and equipment in the 2017-2019 biennium.  The section shops to close are in Gackle, Courtenay, Litchville, Fessenden, Finley, New England, Mayville and Starkweather. The DOT will 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 occurs in or around a section site and a DOT crew is unable to respond.

HB 1255 directs the DOT to establish a limited transportation network of designated highways with higher truck weight limits, allowing shippers to be more efficient and make less trips.

Local road authorities will be allowed to continue to retain the fines collected for overweight trucks on their own roads. SB 2045 removed the language that would have allowed the provision to sunset June 30, 2017.

In recognition that township roads in non-oil counties have continued to struggle, the Legislature approved $10,000 for each non-oil township in the state to a total of $16 million. However, Governor Burgum vetoed this funding following the session.

Oil Tax Distribution Changes

Lawmakers altered the formula used to distribute oil tax revenues to oil impacted communities. By changing the definition of “mining and employment,” the three communities of Dickinson, Williston and Minot will be defined as ‘hub cities’ for the 2017-2019 biennium.  Not only will fewer communities benefit from the ‘hub city’ revenue, but funding levels have also been cut. SB 2013 also includes an interim study of oil and gas tax revenue allocations to hub cities and hub city school districts. 

Corrections Reform

In response to the behavior and mental health crisis in the state, the Department of Corrections and Rehabilitation (DOCR) budget includes $7 million to provide substance abuse treatment 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 the 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 Reinvestment Initiative that was studied during the interim.

Probably one of the most concerning provisions of the Legislature, from the counties perspective, is that 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. 

Other reform bills passed with the intention of slowing the rise in prison and jail populations include:

• HB 1041 reduces the drug possession charge from a Class C felony to a Class A misdemeanor for first-time offenders. It also establishes probation as the presumptive sentence for low-level, nonviolent felonies and has other provisions designed to free up limited and costly jail and prison space.
• HB 1269 reduces the minimum mandatory penalties for drug offenses, giving the courts broader sentencing discretion that can result in more meaningful and cost-effective sentencing.

Public Safety

The Legislature responded to numerous issues that came to light as a result of protest activities related to the Dakota Access Pipeline. Several bills were proposed to assist law enforcement in responding to protest-like situations. Lawmakers enhanced penalties for riot offenses and gave law enforcement the option of issuing citations and fees for trespassing. Another bill makes it a misdemeanor crime to wear a mask while committing a crime.

Lawmakers passed “Andrew’s Law,” which establishes protections for confidential drug informants. The bill prohibits law enforcement from using a juvenile 15 years or younger as a confidential informant (CI). 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 CIs.

Legislators addressed the dangers of distracted driving by passing HB 1430. Under this bill an individual can be cited and fined $100 if he or she causes an accident or commits a traffic offense. This law expands the current texting law to include any distraction that impairs the driver from safely operating the vehicle.

There were numerous bills related to individual gun rights. Probably the most notable is the bill that will allow for North Dakotans to carry a concealed handgun without a permit. Those wishing to constitutional carry must have a North Dakota driver’s license or state ID card for at least a year. Those convicted of a felony or violent crime will not be granted this right. The law will take effect August 1.  

Medical Marijuana

While the public approved medical marijuana in the November election, lawmakers amended the initiative to correct some technical and regulation concerns. The North Dakota Department of Health will establish and implement the program; they will authorize cards for qualifying patients. The Department will also authorize and regulate those who produce and distribute medical marijuana and where those sites can be located. Under the bill, manufacturing facilities are limited to two in the state and there will be a limit of eight dispensary sites. The bill establishes how much product a patient can purchase and possess. The program is anticipated to be operational in approximately one year.

Public Health

As with all the agencies and departments, local public health experienced many changes this session. The biggest is a funding change as a result of the elimination of the Center for Tobacco Prevention and Control, or BreatheND. The local public health units will receive level funding in the 2017-19 biennium for tobacco prevention efforts. This funding, which has previously been provided from the Tobacco Prevention and Control Executive Committee, will now come through the Department of Health. All tobacco funding is from the Tobacco Prevention and Control Fund, the Community Health Trust Fund and the federal government. The local public health units will also receive an additional $1 million in state-aid funding from the Tobacco Prevention and Control Fund.

Uniform Tax Notice

In an effort to increase transparency in the budget and tax process, legislators approved a uniform tax notice. The county will send a joint notice that will include tax data from the city, schools and parks. The notice will include the hearing dates and times for each taxing jurisdiction’s budget hearing. This notice will streamline and simplify the notice process, reducing the overall cost to government, but increase the value of information provided to taxpayers. This notice will replace the current truth in taxation notice in 2018.  

New Voter ID Law

With the passage of HB 1369, if a voter's information on their ID is outdated, they will be allowed to provide other supportive documents like a current utility bill, bank statement, government-issued check, paycheck or government document to supplement the ID. For those who do not bring an ID, the voter can fill out their ballot and have it "set aside" until their eligibility is confirmed. The voter has six days to show evidence of their identification. Only then will the ballot be counted. This bill was filed in hopes of satisfying a federal court case against North Dakota’s current voter ID law.

No Funding for Election Equipment
The effort to replace failing voting equipment failed in the House, and efforts to get the equipment funded in other bills were unsuccessful. There were two separate bills for new election equipment. HB 1122 would have put electronic poll books into all counties. HB 1123 would replace the current inventory of ballot scanners and AutoMarks with new updated voting equipment. The fiscal note was $12 million for both bills. House members remarked that while this equipment may be needed in the near future, the money is not available now. Numerous counties have identified equipment failures with the current system. The equipment is wearing out and counties have been able to swap problematic equipment with spare machines or cannibalize existing equipment for working parts. Auditors feel a crisis with voting equipment is impending. 

Guardianship Funding

Since 2013, the Legislature has appropriated General Funds in the OMB budget for distribution to the private agencies and private individuals that serve as public guardians for indigent adults – relieving the counties of this statutory responsibility. The caseload for this program has grown from 160 four years ago to 320 today. NDACo requested an increase in funding in anticipation of continued growth in the coming biennium. Both of the Governors’ budgets actually reduced the current $3.8 million appropriation significantly. NDACo, with significant help from the public guardians themselves, were successful in restoring the current funding level but were unable to secure an increased appropriation. Freezing the funding will likely create a waiting list for guardians in the coming two years.

Property Tax Caps Defeated

Senators voted unanimously to kill the bill to cap property taxes (HB 1361). The bill would have automatically capped all property taxes on existing property at 3 percent growth permanently (except for schools) – unless voters allowed a time-limited increase. Our position was that this bill was unworkable. We also demonstrated that in most cases it is unnecessary. Senator Lonnie Laffen told senators they heard no evidence in committee that taxing jurisdictions were taxing to a point where caps were necessary. 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%.  A reporting requirement included in this bill was added to the Office of Management and Budget bill. Counties will report tax levy and valuation data to the State Tax Department who will prepare a statewide report to be provided to legislators. This report will ultimately show the success counties have had in controlling property taxes. This bill and others that limited valuation increases were vigorously opposed by the counties, cities and parks.

Limiting Legislative Participation

Fortunately, lawmakers defeated a bill to prohibit “public employees,” which includes locally-elected officials, from attending legislative hearings while receiving publically-funded expenses or salary. 

‘Team County Effort’

We thank you for your assistance during the past four months, whether it was traveling to Bismarck to testify, filling a committee room, or by sending an email to your Senator or Representative. Our team effort is effective and you are the reason your priority bills were, for a large majority, successful. North Dakota counties definitely made an impact on this Legislative Session.

Gov. Burgum Highlights 2017 Legislative Session

Burgum: Session funds priorities, leaves state well-positioned for the future

Thursday, April 27, 2017 - 8:30pm

BISMARCK, N.D. – North Dakota is well-positioned for the future with a leaner, more efficient state government and smaller budget that provides permanent property tax relief, fully funds K-12 education and uses innovative approaches to support other priorities, Gov. Doug Burgum said Thursday after the 65th Legislative Assembly adjourned sine die.
“Despite the unprecedented revenue shortfall we faced heading into this session, we were able to fund our priorities and balance the budget through sensible cuts, limited use of reserves and new initiatives that will streamline state government and make it more responsive to taxpayers,” Burgum said. “Over the next 20 months, our administration will work tirelessly to carry out this budget and identify ways to reinvent government and improve services to the citizens of North Dakota.”
The $4.3 billion general fund budget for 2017-19 represents a more than 28 percent decrease from the current two-year budget cycle, which ends June 30.
The budget approved Thursday contains more than $1.3 billion in local property tax relief, including $161 million in state funding to cover the cost of federally and state-mandated county social services and reduce local property tax rates.
The state’s overall budget will decrease from $14.2 billion to $13.6 billion.
“We thank the Legislature for working with the executive branch and other state agencies to curb spending and create a balanced budget,” Burgum said. “Our balance sheet remains strong and North Dakota’s future is brighter than ever.”
Following is a snapshot of some of the legislation supporting priorities:

PROPERTY TAX RELIEF

• Senate Bill 2206 transfers the funding responsibility for social services from counties to the state during a two-year pilot program, creating $161 million in permanent property tax relief while repealing the unsustainable 12 percent state-paid property tax buydown program. The bill also directs the Department of Human Services to develop a plan to look at improving the efficiency and effectiveness of how social services are delivered to clients across the state.
• The state continues to provide property tax relief through K-12 funding to reduce local mill levies, to the tune of an estimated $1.13 billion in 2017-19.
• Relief also will be provided through $14.8 million for the homestead tax credit, $8.1 million for the disabled veterans tax credit, $24.2 million in court administration costs and an undetermined amount from state administration of child support enforcement.

K-12 AND HIGHER EDUCATION

• The “innovative education” bill, SB 2186, empowers local school districts to better shape educational delivery to meet the needs of the 21st century by allowing schools to submit a request to waive sections of law related to K-12 education, provided their plan improves the delivery or administration of education, increases educational opportunities or improves students’ academic success.
• Thanks largely to $110 million from the Foundation Aid Stabilization Fund, K-12 funding through the per-pupil student payment in HB 1013 was held harmless, ensuring that students and teachers are protected from the economic downturn facing the state. Special education grants also were increased by $2 million.
• The North Dakota University System’s budget includes a Shared Campus Services Line with $500,000 for open educational resources and a system-wide shared services review to find efficiencies between campuses and throughout the entire system.
• The UND School of Medicine and Health Sciences will receive $15.2 million for the student residency program, while the Education Challenge Grants program will receive $2 million.

GROWING OUR ECONOMY AND JOBS

• The Department of Commerce budget bill, SB 2018, contains funding to help diversify our economy and foster job creation, including $3 million for further development of the Grand Sky unmanned aircraft systems (UAS) business and technology park in Grand Forks and $2 million for Northern Plains UAS Test Site operations.
• HB 1035 ensures the angel fund program can continue its important role of encouraging capital formation and building investment capacity for new and expanding businesses in North Dakota and beyond.
• HB 1296 eliminates unemployment insurance paper reporting for businesses. Electronic reporting is more efficient for both North Dakota Job Service and employers, and eliminating paper reporting will save money and time while improving customer service. 
• Legislation provides grant funding of $35 million to the Williston airport and $5 million to the Dickinson airport, supporting economic activity.

CORRECTIONS REFORM: The governor signed a package of bills that aim to reduce spending on corrections while moving funding upstream to provide additional support for people dealing with behavioral health and substance abuse issues and avoid additional future costs in health care and the criminal justice system.

• SB 2015, the Department of Corrections and Rehabilitation budget, redirects $7 million to improve access to effective, community-based substance abuse treatment and an additional $500,000 to develop a network of treatment providers to serve people in the criminal justice system and reduce recidivism.
• Justice reinvestment legislation, HB 1041, reduces the drug possession charge level, establishes probation as the presumptive sentence for low-level, nonviolent felonies and has other provisions designed to free up limited and costly jail and prison space.
• Legislation was approved prioritizing prison space for people convicted of serious and violent offenses, while HB 1269 reduces the minimum mandatory penalties for offenses involving a controlled substance or analog, giving the courts broader sentencing discretion that can result in more meaningful and cost-effective sentencing.

PUBLIC SAFETY AND SECURITY

• To improve communications capabilities for law enforcement, ambulance services and other first responders, HB 1178 authorizes the creation of a statewide interoperable radio network.
• In response to the Dakota Access Pipeline protests, the governor signed legislation designed to protect landowner rights, deter criminal activity and aid law enforcement.
• HB 1430 addresses the dangers of numerous distracting behaviors while driving, beyond texting while driving.
• HB 1359 creates a Silver Alert Notification System that allows for a notification – similar to an Amber Alert – when a disabled adult, vulnerable elderly adults or minor with a development disability is reported missing to law enforcement.
• Together, HB 1104, HB 1106 and SB 2110 allow the state to work with critical infrastructure owners and providers to understand cyber threats, to be proactive in supporting lifeline service providers when under threat or attack by cyber events, and to use National Guard cyber protection and defense assets as they’re developed.
• SB 2322 gives financial industry professionals, our state Securities Commissioner, and our Aging Services professionals new tools to help detect and prevent financial exploitation of seniors and vulnerable adults. 

HEALTH AND ENVIRONMENT

• SB 2344 establishes a medical marijuana program to be administered by the North Dakota Department of Health, with a $1.56 million budget and six FTE positions, with about half the budget coming from patient, caregiver, grower and seller fees and the other half coming from the general fund.
• The bill remedies some of the challenges posed by last year’s Measure 5, including adding decriminalization language and adding terminal illness to the list of more than a dozen qualifying debilitating medical conditions included in the original measure.
• SB 2327 will create a new, standalone Department of Environmental Quality by July 1, 2019, by separating the Environmental Health Section from the Department of Health. This will enable the state to better address environmental needs and increase the visibility of this important work by elevating the DEQ to a cabinet-level agency.
• As recommended by the governor, the Legislature repealed BreatheND and moved all tobacco prevention and control activities to the Department of Health, boosting efficiency by centralizing efforts to prevent and reduce tobacco use among youths and adults into one agency.

HUMAN SERVICES

• HB 1040 provides additional funding for behavioral health services and creates an evidence-based alcohol and drug education program to educate minors about alcohol and substance abuse.
• HB 1038 supports the establishment of a caregiver resource center website, providing easy access to caregiver information in a centralized location for caregivers and the general public.
• HB 1136 puts the substance use disorder treatment voucher system into state law.
• SB 2088 broadens the scope of work for addiction counselors to include nicotine and problem gambling and reduces barriers to licensing to support workforce development.
• SB 2251 will provide early support and interventions to keep substance-exposed infants in their homes while their parents receive treatment, reducing the likelihood that these families will continue to rely extensively on government services in the future.
• SB 2342 creates a 10-member, multi-disciplinary task force to study the prevention of sexual abuse of children and provide recommendations including policy changes, training for school personnel, educational information for parents and counseling and resources for students affected by this type of trauma.

TRANSPORTATION

• SB 2012, the North Dakota Department of Transportation (NDDOT) budget bill, optimizes the department’s 67 maintenance sections by consolidating eight smaller, outdated section shops into larger service areas. This allows the NDDOT to realize technological advances in snow removal equipment and recognizes the state’s changing demographics and traffic. The bill also allows the NDDOT to work with political subdivisions to lease the buildings and transfer used snow plows, if requested.
• SB 2012 also optimizes NDDOT driver’s license sites, moving services from nine satellite sites to the main driver’s license sites, resulting in a cost savings and a net increase in counter hours and driving tests available.
• HB 1299 allows for online renewal of driver’s licenses. Noncommercial drivers can apply by mail or electronically for renewal of a license during every other renewal cycle. Those under 65 will only need to visit a driver’s license office once every 12 years for renewal.
• HB 1255 directs the North Dakota Department of Transportation (NDDOT) to establish a limited transportation network of designated highways with higher truck weight limits, allowing shippers to be more efficient and make less trips.
• HB 1202 requires the NDDOT to study the use of autonomous vehicles on state highways and report the findings to the 66th Legislative Assembly.

WATER PROJECTS AND FLOOD PROTECTION

• HB 1020 contains $298.8 million in new funding for water projects across the state.
• The bill also contains legislative intent to provide up to $193 million for flood control projects in Minot over the course of the next four biennia and up to $30 million in 2017-19 for the Red River Valley Water Supply Project for planning, permitting, and construction-related expenses.
• HB 1374 also provides intent for the State Water Commission to have its seven members be appointed from areas of the state that represent each of the state’s seven major drainage basins and limits development downstream of dams within breach inundation zones.

ENERGY, NATURAL RESOURCES AND AGRICULTURE

• HB 1336 provides for oil and gas operators to conduct voluntary environmental health and safety audits to find and fix potential violations of state laws, free from threat of civil penalties if certain conditions are met. This concept is modeled after states like Texas, South Dakota, Wyoming and Oklahoma.
• HB 1347 increases the appropriation to the Abandoned Well Oil and Gas Site Plugging Restoration Fund Legacy program to remediate old oilfield issues where there’s no responsible party under law. It also continues studies on brine pond remediation and conducts a study on pipeline risk assessment and leak detection technology.
• HB 1257 decreases the minimum royalty owner and working interest owner consent needed to form a unit from 60 percent to 55 percent, allowing for greater possibility of unitization in the future for increased oil recovery and footprint reduction.
• SB 2134 establishes state policy for definition of mineral ownership under the Missouri River and provides due process to those who wish to challenge the presumptive ordinary high water mark. This bill sets a statute of limitations for court challenges of North Dakota Industrial Commission ordinary high water mark determinations and establishes a timeline for distributing lease and mineral revenue to the rightful owners.
• HB 1433 will make it easier for food producers to sell directly to consumers.
• HB 1204 reduces the age to qualify for an apprentice hunter validation license from 16 to 12 years old, and allows youths who turn 11 before the end of the calendar year to receive a whitetail doe license valid for only the youth hunting season.
• HB 1419 appropriates $250,000 to the Game and Fish Department to establish and administer a shooting sports grant program, which may be made available to schools, clubs and organized youth groups in the state. 
• HB 1207 allows the Game and Fish Department to seize tangible property presumed abandoned on state game refuges and streamlines the process for auctioning the property to benefit the Report All Poachers rewards fund.