Friday, December 14, 2018

NDACo Legislative Pre-Session Report

Actual & Anticipated County Legislative Issues


Infrastructure Funding
The “Operation Prairie Dog” bill, we expect, will be the primary road funding vehicle to be addressed by the legislature. 
Ø  For major oil producing counties, this bill would make permanent the gross production tax allocation provisions that are currently set to sunset.  The bill also redirects some of the “county” funding to hub cities and targets township funding for those experiencing production impacts. 
Ø  For non-producing and minor producing counties, the bill creates a dedicated oil tax fund that would max out at $100 million to be shared among 44 counties based on relative “need” as projected by the Upper Great Plains Transportation Institute.  Non-oil producing townships statewide would share an additional $15 million, and a separate fund of $115 million would be allocated for city infrastructure (sewer & water as well as streets).
Ø  The special funds created for local infrastructure would begin filling sometime after the beginning of the new biennium and may, or may not, be available for the 2020 construction season.
Ø  As part of the proposal, the Bank of North Dakota would be given additional authority to provide low interest loans to local government to accelerate the infrastructure investment.
Ø  Along with the creation of the dedicated funds, the proposal anticipates adequate funding for UGPTI to continue its local roads study and maintain the GRIT asset management system.

This Prairie Dog proposal has strong support in the Senate and significant support in the House, however the “fast-track” treatment previously anticipated may not result as some representatives are less enthusiastic.  This is also a different approach than proposed by the Governor.

It is anticipated that legislation to increase motor vehicle fees and fuel taxes may also be advanced this session to better address the long-term funding gap for both state and local roads. 

State Funding of Social Services ‑ Social Service Redesign
Significant legislative changes are being proposed to implement the redesign of social service delivery.  In our first review, the bill contains the following: 
Ø  The permanent elimination of the property tax levy for social services and the removal of the county obligation to fund direct social service costs, including general assistance and indigent burials.
Ø  A provision regarding the maintenance of county effort with respect to the indirect costs associated with space, utilities, payroll processing, etc., but also some allowance for the indirect cost recovery historically received.
Ø  A requirement to develop and operate social service delivery “zones” that will be multi-county in nature ‑ except for counties over 60,000, which could be stand-alone zones.
§  The zones would be created within the existing multi-county social service district statutes being used now by four multi-county districts. 
§  All zones are to be developed by Sept. 2019, for operation beginning Jan. 2020.
§  A maximum of 19 zones are proposed.
§  A multi-county "zone" board, appointed by the participating county commissioners, would approve staffing size, ensure coordination of services, review budgets and expenditures, but not set final budgets.
§  Importantly, the zone (rather than the county) would become legal custodian of children removed from the custody of their parents.
§  The State’s attorneys of the counties within the zones would be required to represent the zones as they now represent county social services.
§  It is proposed that the zone director would be a state employee, but all other zone staff would be employed by the host county of the zone.
Ø  Provisions to allow for the shifting of additional county/zone employees (up to 228) to state employment for specific services that may be more efficiently delivered on a broader scale (i.e. child care licensing, subsidized adoption).
Ø  A “grant funding” mechanism based on existing staff and benefit costs adjusted for appropriate growth and staffing changes, as well as associated direct operating costs.
It seems that the key issues will be the role and authority of zone boards, the timing for zone creation, and the employment of the zone directors.

County Extension Funding Restoration
The Extension “base” budget, as proposed by the Governor, did not include funding restoration, and in fact, is requiring a further $2 million reduction.   Their budget request does have an Optional Adjustment Request (OAR) to return the county-state cost share to its former configuration.

Property Valuation & Local Budget Growth Caps
There are indications that individual legislators will be introducing bills to create caps or limits on assessments, budgets, or taxes. Our past position, and current resolution, has been that artificial limitations on valuation growth skews the equity of the property tax system and depresses economic investment in communities, and caps on local budget growth or taxation are counter-productive, encouraging spending and increased property taxes.


Special Assessment Refunds
A bill will be introduced by the interim Taxation Committee to require the calculation (by special assessing entity) to calculate individual parcel reimbursements if funds in excess of the special assessment costs are collected.  The County would then be required to credit those individual amounts on subsequent property tax statements.  While it would expand the administrative burden for counties somewhat, it would be tremendously time-consuming to credit small amounts, generally by the cities using specials.  It is also likely impossible in cases where several assessment projects are bundled into a single bond issuance.  The Cities will be strongly opposing this and have asked for county support. The Auditor’s Legislative Committee moved to oppose this legislative as well.

Special Assessment Voting
A bill that was rejected by the interim Taxation Committee will likely be introduced by an individual legislator to remove any public lands benefiting from a special assessment from joining in a protest of the assessment district.  This is to eliminate the public entities from “diluting” the private ownership percentage, but also would prohibit a local government from weighing in on an issue impacting their budget.

Election System Replacement
An appropriation bill will be introduced, probably in the neighborhood of $9 million of State funding and $3 million of federal revenues to fully fund the replacement and on-going maintenance of election equipment (scanners, ADA devices, e-pollbooks) with the counties remaining responsible for election programming and ballot printing costs. The governor included $11 million in his budget for new election equipment.

Publication Requirements 
The interim Judiciary Committee studied the various publishing requirements for state agencies and political subdivisions. NDACo identified 142 various notices which counties are required to publish. The Auditors Association identified five areas worthy of review. The committee has moved a bill draft forward that includes some of the Auditors recommendations, however the Auditors will be pursuing legislation to address areas not included. Auditors will be looking at changing the requirement to publish official election results; adjusting the requirement to apply only if the county is unable to publish the results on the county’s website. The other change relates to the listing of expenditures; auditors are seeking language to remove the listing of expenditures as part of the minutes.

Centrally Assessed Deadline
Counties, and all other taxing entities, depend on the accuracy of centrally assessed properties when computing their budgets. Therefore, it is paramount this information is complete and reported to counties in a timely manner. The Auditors Association will be seeking legislation to adopt a hard deadline for centrally assessed properties and any changes made after that date would be applied to the following year.


Decriminalization of Marijuana
It has been widely publicized that a bill will be introduced legalizing the personal use and possession of marijuana. The North Dakota Sheriff’s and Deputies Association believes this bill should only focus on personal use amounts of marijuana and possession. They will be closely monitoring the bill with particular concentration on penalties as they relate to minors and the manufacture and delivery of marijuana. NDSDA also has concerns with penalties not aligning with penalties for alcohol offenses. The draft includes a study for the 2019-20 interim to study the legalization of marijuana, specifically relating to the regulation, commercial controls, and tax implications associated with legalization. This study aligns with Resolution 2018-13.

Public Safety Radio ‑ SIRN 20/20
The Governor’s Budget includes $40 million to begin the SIRN project.  The procurement committee hasn’t yet completed its work to determine what should be the direction, but this is expected early in the Legislative session.

Measures to Promote Traffic Safety
Counties have historically supported law enforcement, the cities, and others in attempts to increase traffic fines, particularly for speeding and distracted driving.  This year we expect to see the return of similar legislation as well as a proposal for primary enforcement of seatbelt laws.

Jail & Prison Reform/Reinvestment
County officials have supported the careful review and very selective changes to our state’s sentencing practices to more appropriately address offenders’ needs, without increasing jail inmate counties. The priority must be the expansion of behavioral health services that provide more appropriate response to mental health and drug addiction factors that are driving our jail & prison inmate population. The shifts in the correction system as proposed in the governors’ budget will also be of interest.

Behavioral Health Services
Counties have expressed concern with the lack of behavioral health services across the state. The governor recognizes this state has a behavioral health crisis and has identified several new initiatives along with funding to address the needs of North Dakotan’s. His proposals include expanding community-based services through the Free Through Recovery program by extending it beyond the criminal justice system to other individuals in our communities. Programs like this will more than likely have an impact on the jail inmate population. The executive budget also proposes building a new behavioral health hospital and clinic.


The ND State’s Attorneys Association (NDSAA) will focus much of its efforts in 2019 engaged in legislative activities. Historically, almost a quarter of legislative bills revolve around the criminal justice system and this next legislative session looks to be no different. Significant public policy issues, such as access to mental health and chemical dependency services, must be addressed in both urban and rural counties if North Dakota truly wishes to provide meaningful criminal justice reform. Although incarceration rates seemed to have stabilized recently, without additional services, recidivism rates look to only increase.
The State’s Attorneys will be working with all the stakeholders to improve this outcome for 2019.

The State’s Attorneys will also be looking to address the DUI statutes as court cases continue to make prosecution of DUI’s difficult with so many different hoops for officers to jump through. The goal would be to streamline officer’s investigation while at the same time protecting the accused’s constitutional rights.


Public Health State Aid (SACCHO ‑ City/County Health)
Counties saw an overall decrease in state funding for public health in 2017, and the Executive Budget recommendation contains a further reduction of $525,000 (out of a $6.5 million total) The restoration of this funding is the number one priority of the health units to avoid shifting additional costs to the property tax.


Farm-Residence Exemption
We anticipate a bill draft that would:
Ø  Remove the blanket farm-residence exemption while preserving the exemption for all non-residential structures that are currently exempt.
Ø  Preserve the residence exemption for already retired farmers and surviving spouses that are getting the exemption
Ø  Create a new residence exemption for beginning farmers that is time limited (5 years?) but also exempts them from all state income tax for the period.


Snagging & Clearing of Natural Waterways.
The Water Boards have asked for county commission support on their effort to reverse a change made by the Legislature in 2017.  In 2001, the Legislature overwhelmingly passed legislation that allowed for State Water Commission cost sharing for clearing dead trees and other obstructions from natural waterways.  In 2017 the Legislature passed a bill including many other issues, but that also removed this cost-share ability.  If the SWC can’t cost share in this program, the burden falls entirely on farmers, townships, local water resource boards and county commissions. 


Guardianship/Public Administrator Funding.
Again, due to budget instructions, we don’t expect the OMB base budget to contain the necessary funding for public guardianships, but we have been informed that there is an OAR proposed for the full amount necessary for the upcoming biennium.  This may also be built into the DHS budget for long-term administration in the future.

Fire & Tornado Fund Administration
The ND Insurance Dept. budget anticipates contracting with NDIRF to administer the Fire & Tornado Fund which provides property insurance coverage for most public buildings.  This move is viewed very positively by county officials that have dealt with both administrations in the past.

There are new leaders in the House. Chet Pollert of Carrington is the new House Majority Leader and Josh Boschee from Fargo is the new Minority Leader. Several committees in both the House and Senate saw changes in leadership as well. New leaders are shown below in bold. Complete committee membership and contact information can be found at

Thursday, December 6, 2018

Governor Burgum's Budget Hits On County Priorities

Governor Burgum presented his budget recommendations to the Legislature on December 5thThe governor began the presentation with an overview indicating he is recommending a balanced budget with the dedication of $1 billion in oil tax revenues – more than the current biennium, but less than in 2015. His budget includes an overall $4.6 million in General Fund spending, with increases primarily in human services, K-12 and state salaries. He also stressed the need to replenish reserves, emphasizing how important those funds were to have in 2017 to make up for shortfalls as a result of dramatic changes in commodity prices.

“Fiscal responsibility means more than just balancing the checkbook. Given our revenues remain largely dependent on commodity prices we cannot control, we absolutely must replenish reserves,” said Governor Burgum.

Social Service Redesign
Governor Burgum kicked off his budget outlook by sharing details of county social service funding, a top priority for NDACo in the upcoming session. During the last session, the legislature approved using state funding to pay for county social services as a method to deliver property tax relief. It was approved as a two-year pilot. Burgum is recommending sustaining the project and delivering permanent property tax relief. His plan also includes an increase of $22 million for the funding of county social services, raising the total level of funding to $182 million.

“This additional funding will focus on increasing access to child and family services, particularly in behavioral health,” Burgum told lawmakers. “Combined with specific policy recommendations, this funding will come with greater flexibility to specialize services, thereby increasing efficiencies.”

He also alluded that those efficiencies could include moving 47 independent delivery areas to no more than 19 collaborative areas. But he stressed, this move would be made while preserving all access points to service.

Regarding infrastructure, Burgum’s plan includes an investment of $1.5 billion for critical infrastructure. Burgum made reference that technology projects fall into this category of “critical infrastructure.” Governor Burgum did not reference the legislative driven infrastructure plan often referred to as “Operation Prairie Dog,” which would use oil and gas tax revenues to create a fund that would provide statewide, permanent infrastructure funding. The bill being supported by Republican legislative leaders has been drafted.

Behavioral Health
County members have repeatedly expressed concern over the lack of services available to treat individuals with behavioral health concerns. Governor Burgum highlighted several priorities he is recommending in order to address the behavioral health crisis. One of those investments includes an expansion of the Free Through Recovery program to extend it beyond the criminal justice system to other individuals in their communities across the state. Expanding behavioral health crisis services was also a priority of Burgum’s that is earmarked to receive funding.

NDACo was surprised to learn of structure shifts involving the Department of Corrections and Rehabilitation (DOCR). Burgum is proposing building a new Behavioral Health State Hospital and Clinic in Jamestown using earnings from the Legacy Fund. The existing State Hospital would be repurposed and used as a minimum-custody correctional facility for men. In turn, he proposes relocating the women’s prison from New England to the Missouri River Correctional Center south of Bismarck.

As you can see, several county-related issues were highlighted in the governor’s speech. After further review of his budget, we have identified additional items that are of county importance.
Burgum’s recommendations of county importance:
  • Funding county social services at $182 million – as compared to $160 million this biennium – to preserve access and enhance services.
  •  $2.9 million to support children in the care of tribal social services
  •  1% yearly increase for healthcare provider payments from DHS
  •  Public guardianship funding held even
  •  $19 million in new funding for behavioral health support
  •  $35 million for new state hospital in Jamestown, rehab of existing for penitentiary system use, and then moving women’s prison to Missouri River Correctional Facility
  •  $11 million for election equipment (includes $3 million federal funds already received)
  •  $40 million for Statewide Interoperable Radio Network (SIRN)
  • $55 million infrastructure revolving loan fund for political subdivisions, plus $25 million school construction revolving loan fund using Legacy Fund earnings

The Governor spent a great deal of attention in reviewing his funding plan for education, state employees and workforce development, as well as other state investments.

General highlights from Burgum’s recommendations:
  • $14.3 billion budget for 2019-2020 biennium; the largest in state history
  •   2% annual increase in support to K-12 education 
  •   Infusion of $265 million into NDPERS retirement fund, plus “policy changes” to address the unfunded liability, including increases of 1% in employee and 1% in employer contribution to NDPERS retirement
  • Annual increases of up to 4% and 4% for state employee salaries, although in the second year the agencies must find 2% within existing budgets
  • A $28/month state employee contribution for current NDPERS health plan, or two higher deductible plans with no contribution
  • Military incentives to include income tax exemption for retirement pay, fully funding      National Guard Tuition Assistance Program, expansion of training range at Camp        Grafton
  •  $50 million to build Theodore Roosevelt Presidential Library and Museum using Legacy Fund earnings
  •  $30 million statewide UAS infrastructure network using Legacy Fund earnings
  •  IT unification, aligning employees throughout state agencies into one shared IT service
  •  Investing in cybersecurity and cyber defense
  • Numerous workforce development related investments

This is the governor’s first budget address to North Dakota lawmakers. Burgum said he has had numerous working sessions with state agencies to identify cost savings, efficiencies and needs. This review process identified more than $107 million in general fund savings. That’s on top of the unprecedented $1.7 billion in savings that have been realized even after the 2017 Legislative Session.

This is also the first time a governor has recommended the use of Legacy Fund earnings. The Legacy Fund was created in 2010 and has a grown to $5.6 billion. The earnings and principal were only available for use after June 30, 2017 with a vote of at least two-thirds of each house of the legislative assembly. Burgum proposes using $300 million in earnings from the Legacy Fund for projects that would have state and national impacts. None of the Legacy Fund principal is spent in Burgum’s budget.

“We should strive to set the bar high in this first class of Legacy projects, and dream of what they can mean to the future of the state,” said Burgum.

Overall, the governor’s budget is a starting point for legislators. Legislative leadership has indicated they will refer to the governor’s recommendations but plan to move ahead with their own budget and bills. Lawmakers will surely be making adjustments to the budget as they prepare for the 2019 Legislative Session, which begins January 3rd.

Click here to view more details of Governor Burgum’s 2019-2021 Executive Budget.

ND Budget Forecast Looking Strong

Two years ago when North Dakota lawmakers were gearing up for the Legislative Session, they were focused on the bleak revenue forecast and the hit the state economy had taken from a dramatic dip in commodity prices. This week, lawmakers received an update on the forecast, which is looking strong for 2019 but experts expect a flatter forecast in 2020.

Individual income and corporate income tax revenues along with fees from mineral rights are ahead of forecast. In total, the General Fund is about $178 million ahead of forecast. Pursuant to North Dakota Century Code, any biennium balance in excess of $65 million must be transferred to the Budget Stabilization Fund. Therefore, an estimated $312 million will be transferred to the Budget Stabilization Fund June 30, 2019.

Sales tax revenues are also rebounding slowly. The state had record sales tax collections in 2014 and 2015 but fell dramatically in ’16 hitting a low in 2017. Currently, sales tax revenues are about $40 million ahead of forecast.

The Strategic Investment and Improvement Fund, which had been drained last session, has rebounded to nearly $384 million; although $247 million has been committed. It’s also important to note that the Tax Relief fund includes $200 million. Last session, the funding for county social services came from the Tax Relief fund.

Oil and Gas Revenues are 45% above forecast with $1.4 billion in additional revenues. Moving into the next biennium, the revenue forecast will be based on oil prices ranging from $46-$50 per barrel and production increasing from 1.3 million barrels per day to 1.35 million by the end of the 2019-2021 biennium. These are conservative figures as North Dakota produced nearly 1.36 million barrels of oil per day in September. Our current biennium oil and gas revenue forecast was based on $55 per barrel decreasing to $46 per barrel, however the average price has been $49.75.

Monday, September 10, 2018

Counties Join in Opposing Legalization of Recreational Marijuana

North Dakota Association of Counties (NDACo) is part of a newly formed statewide group assembled to fight passage of recreational marijuana in the fall election. The board of directors of the North Dakota County Commissioners Association (NDCCA) and the NDACo Board both adopted resolutions to oppose Measure 3. Their action follows the North Dakota Sheriffs & Deputies Association. NDACo delegates will discuss this issue at the NDACo Annual Conference.

The committee, North Dakotans Against the Legalization of Recreational Marijuana, announced its formation Thursday, September 6th in Fargo and Bismarck. The committee is made up of representatives from business, health and law enforcement organizations. Former District Judge and Attorney General Bob Wefald is the chairman of the committee.

“We intend to do everything we can to educate North Dakota voters as to the many problems this measure will bring to our beloved state of North Dakota. Most importantly the measure to allow recreational marijuana will create bad law,” said Wefald.

“If you read and analyze the measure, as it is written, you will understand that if it passes it would make North Dakota the most liberal state for the regulation and control of marijuana,” commented Attorney General Wayne Stenehjem.

Five of the top concerns if Measure 3 passes are:

  • Laws prohibiting smoking marijuana in public places would be repealed. Therefore, marijuana could be used anywhere including: places of business, parks, and public buildings.  
  • Measure 3 does not restrict where or how much marijuana can be grown or where it can be sold.  Your neighbor could grow pot in their entire yard. A marijuana shop could sell near a school.
  • Measure 3 makes no mention of any special tax, therefore the sale of marijuana would only be subject to normal sales tax. There would be no tax structure to address the potential impact to county government.
  • Measure 3 requires expungement of marijuana-related records. This would be a massive, time consuming project for the state and local government at the property tax payers expense.
  • Legalization will lead to an increase in impaired drivers.

“Our role as law enforcement is to educate the public who count on us to protect them,” said Cass County Sheriff Paul Laney. “I encourage you to research this measure and be educated on it, because it should scare anyone that reads the information it contains.” Listen to Laney's comments in full here:

For more information on this issue visit

Tuesday, September 4, 2018

ND County Commissioners and Sheriffs Attend White House Meeting

North Dakota county officials took part in an unprecedented meeting at the White House. Six County Commissioners and seven County Sheriffs were invited to a meeting Thursday, August 29th.

North Dakota mayors along with city and county leaders from South Dakota and Wyoming were also invited to the White House event. The group heard from eight high ranking cabinet officials including Counselor to the White House Kellyanne Conway, U.S. Labor Secretary Alexander Acosta and U.S. Department of Energy Under Secretary Mark Menezes. The attendees were invited to a White House tour prior to the meeting.

The event was part of a series of meetings the White House has been holding for more than a year with county-level officials from around the country, state-by-state. President Trump started these meetings in an effort to strengthen relationships between counties and the federal government.

“By the end of the year, every county commissioner in the nation will have been invited to the White House. These meetings are unprecedented, never before has a President held such events. Thirty-four states have now been represented at the meetings,” said Deputy Assistant to the President and Director of Intergovernmental Affairs Douglas Hoelscher. “The President wants to do everything possible to push decisions back to county and city leaders. He wants to make this an ongoing dialog.”

Not only did attendees receive information from cabinet officials but they were given direct contact information for access to the various federal offices and encouraged to reach out regarding projects and issues. “It is up to us as county officials to continue and maintain the line of communication with these high-ranking individuals,” commented Cass County Commissioner Chad Peterson.

“It appears this administration is really trying to improve on relations with local government to make sure our needs and concerns are addressed on the federal level. Billings County has a lot of federal lands, so whether it be funding for PILT, roads and bridges or search and rescue we need to have the ability to make our concerns known to the top federal officials,” said Billings County Sheriff Pat Rummel.

“I am proud and humbled to be part of this discussion with high ranking cabinet members. Having an administration that will talk with us and not just at us is very important,” said Morton County Commissioner Cody Schulz. “We had the opportunity to visit about infrastructure, energy and agriculture policy. We need to stress that in a state like North Dakota, infrastructure is vital. We feed, fuel and heat this country. We need infrastructure to get our products to market, not just traditional infrastructure like roads and bridges but pipelines, transmission lines and broadband are important.” 
Under Secretary of Energy Menezes highlighted numerous efforts made by the Trump

administration to increase energy production in the U.S. He stressed that the President supports expanding energy infrastructure in energy states in order to become more energy prosperous.

Kellyanne Conway addressed the opioid crisis, announcing additional federal funding that will be provided to states to combat the opioid problem. She highlighted the success of the National Prescription Drug Take Back Days, which was responsible in collecting nearly one million pounds of pills on the most recent Take Back Day. She also addressed the importance of law enforcement seizures in attacking drug trafficking. She said in 2017 ICE officers intercepted fentanyl at a level that could have killed all of America.

“The cabinet officials we met with made it clear, this administration is about helping counties serve their citizens, not hinder them,” said Peterson. “We are already seeing how under President Trump’s leadership the United States Government is rolling back regulations and requirements that in the past had been placed on counties.”

Six County Commissioners and seven County Sheriffs attended the meeting. Commissioners attending the meeting were: Chad Peterson, Mary Scherling, Rick Steen all of Cass County; Nathan Berseth, Richland; Cody Schulz, Morton; and Cynthia Pic, Grand Forks. Sheriffs attending the meeting were Pat Rummel, Billings; Clayton Coker, Dunn; Sarah Warner, Hettinger; Gary Schwartzenberger, McKenzie; Steve Nelson, Ramsey; Terry Oestreich, Stark; and Chad Kaiser, Stutsman. North Dakota Association of Counties Government Affairs Specialist Donnell Preskey Hushka accompanied the group.  

Pictures from White House Visit available at this link: