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

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