Burgum: Session delivers conservative budget, funds priorities and makes strategic investments without raising taxes

BISMARCK, N.D. – North Dakota is making strategic investments in its future, funding priorities and delivering citizens a conservative balanced budget without raising taxes, Gov. Doug Burgum said today after the 66th Legislative Assembly adjourned its regular session sine die.

“Working with the Legislature, we’ve delivered a budget that makes substantial investments in education, infrastructure, behavioral health, economic diversification and other priorities, all while ensuring state government lives within its means,” Burgum said.

Coming off an unprecedented $1.7 billion decrease in the general fund budget for the current 2017-19 biennium, the $4.8 billion budget approved today for 2019-21 represents a 12 percent increase. Still, it’s nearly $2 billion less than the record budget of over $6.8 billion in 2013-15, and it provides nearly $174 million in local property tax relief through the continuation of state funding to cover the cost of county social services.

The state’s overall budget will increase from $13.6 billion this biennium to $14.7 billion in 2019-21, due to significant increases in funding for K-12 and higher education and human services.

“After weathering the storm last session, North Dakota’s future looks brighter than ever, with a healthy balance sheet thanks to a strong economy, collaboration between the executive and legislative branches and the foresight to plan for rainy days,” Burgum said. "As responsible stewards of taxpayer resources, we’re successfully balancing revenues and expenses, encouraging innovation and investing strategically – all without raising taxes."

“However, this session also saw too many missed opportunities to make additional strategic investments in workforce and other areas, to shore up reserves and the state pension fund, and to improve transparency in budgeting, as evidenced by the last-minute transfer of nearly $765 million in oil tax revenue into the general fund to balance the budget,” Burgum added.

Following is a list of some of the legislation supporting priority areas:

TAX RELIEF

• Senate Bill 2124 will provide nearly $174 million in property tax relief by continuing the state’s responsibility for funding county social services.
• House Bill 1053 exempts military retirement pay from state income tax. Benefits extend to retired military personnel and surviving spouses of retired military personnel of the U.S. Armed Forces, National Guard and Reserve, effective with the 2019 tax year. This measure, which also was included in the Governor’s executive budget recommendation, honors the courageous service of our military servicemen and women, promotes workforce participation and improves North Dakota’s competitiveness for federal military investments.
• HB 1174 provides an income tax deduction on Social Security benefits for those with federal adjusted gross income of up to $50,000 for single filers and up to $100,000 for married couples filing jointly.

K-12 AND HIGHER EDUCATION

• SB 2265 increases the per-pupil payment by 2 percent in each year – putting it above $10,000 for the first time in state history – and will allow school districts to keep more revenue from their state formula payment to help limit the cost of school construction.
• SB 2215 will create the State K-12 Coordinating Council to organize and disseminate information about innovative best practices that support teachers and students.
• Overall, state support for K-12 schools will increase by nearly $163 million, supporting teacher pay increases and helping to limit property taxes.
• Funding for the Higher Education Challenge Fund, which requires a 2-to-1 match and provides grants to support North Dakota’s public colleges and universities, primarily with scholarships, was increased to $9.4 million.
• The higher education budget also provides up to $100 million in bonding authority and nearly $50 million in direct appropriations for campus infrastructure.
• Grants for tribally controlled community colleges also were increased by $400,000 to $1 million.

MILITARY AND EMERGENCY SERVICES

• SB 2016, the Adjutant General’s budget, fully funds the National Guard Tuition Assistance Program.
• The bill provides $600,000 to purchase or secure long-term leases for land to expand the National Guard training range at Camp Grafton South, with intent language to fund the expansion next session if securing land is successful. The expansion would create long-term savings by keeping soldiers training in-state and generate revenue by bringing in out-of-state service members for training.
• The budget, which also covers the Department of Emergency Services, fully funds critical emergency services in 2019-21.

WORKFORCE

• In an effort to address the state’s workforce shortage, HB 1171 provides $3 million in skilled workforce scholarships and $3 million in student loan repayments to incentivize college graduates with high-demand degrees to stay in North Dakota. The scholarships were recommended by the state’s Workforce Development Council (WDC), which was revitalized by Burgum and produced a report with recommendations based on a statewide survey of workforce needs.
• HB 1040 provides $2 million for an automation tax credit as an incentive for businesses to adopt automated manufacturing processes that improve job quality and increase productivity. This also was recommended by the WDC.
• SB 2306 provides occupation license reciprocity for eligible trailing spouses of military personnel, which also was a WDC recommendation.
• HB 1073 allows Workforce Safety & Insurance (WSI) to establish pilot programs to assess alternative forms of dispute resolution with the goal of reducing the overall cost burden of litigation and establishing a more efficient dispute resolution process.
• HB 1188 expands benefits for select injured workers that reapply for benefits post-retirement.
• For state employees, the budget provides performance-based compensation increases of between $120 and $200 per month in the first year of the biennium and an average increase of 2.5 percent the second year.

HEALTH, HUMAN SERVICES AND ENVIRONMENT

• As proposed in the governor’s executive budget, Senate Bill 2124 will reorganize the current system of 47 county social service units into no more than 19 zones, while maintaining all current access points and allowing the state to respond more efficiently to social service needs.
• SB 2012, the Department of Human Services Budget, includes health care provider reimbursement increases of 2 percent in the first year of the biennium and 2.5 percent in the second year, with other changes in reimbursement structure to provide additional assistance to long-term care providers.
• The DHS budget also increases funding for home and community-based services by $7.7 million – $1 million more than recommended in the executive budget – while calling for a study of revised payment methodology for long-term care providers.
• SB 2347 establishes a Medicaid Fraud Control Unit for the first time in North Dakota, making it a division of the Attorney General’s Office.
• The North Dakota Medical Marijuana Program had a number of significant changes beneficial for qualifying patients under House Bills 1283, 1417, 1519 and SB 2210.
  • Physician assistants were added to the list of health care providers who can complete written certifications.
  • The requirement that a health care provider express an opinion regarding the benefit to the patient was eliminated, alleviating a concern identified by the medical community.
  • Twelve conditions were added to the list of debilitating medical conditions. Patients 19 and over are authorized to purchase up to 2.5 ounces of dried leaves or flowers in a 30-day period without special authorization from their medical provider.
  • In lieu of a written certification, a veteran receiving treatment from a federal VA entity may submit a copy of their medical records.
  • A manufacturing facility may grow more than 1,000 plants to sufficiently meet the demand.
• HB 1477 prohibits the sale of flavored e-liquid to minors and increases the fine for selling these products.
• SB 2196 establishes the panel members and roles of a drug fatality review panel. The panel will examine deaths due to drugs to better understand root-cause issues related to drug fatalities and other substance abuse disorders.
• SB 2094 ensures that physicians can use telemedicine for FDA-approved opioid prescribing medication-assisted treatment (MAT), an important tool in a rural state like North Dakota where MAT programs are being launched.

• The Legislature approved the first budget for the newly created North Dakota Department of Environmental Quality, HB 1024, including the resources necessary for DEQ to pursue state primacy over federal air quality standards.

INFRASTRUCTURE

• HB 1066, nicknamed “Operation Prairie Dog,” passed with broad bipartisan support. The bill changes the distribution of oil and gas tax revenues, creating new “buckets” to set aside revenue for counties, cities and townships in non-oil producing areas to pay for essential infrastructure projects related to water, roads and bridges, electricity and natural gas transmission, airports and communications. Starting in the 2021-23 biennium, the bill will direct $115 million to cities, $115 million to counties and townships, and $20 million for an airport infrastructure fund. The law also preserves allocations for oil-producing areas and removes the sunset on the “hub city” designation that directs additional oil tax revenue to Dickinson, Minot and Williston.
• SB 2020, the State Water Commission budget, provides $82.5 million for Mouse River flood control in the Minot area and $66.5 million for Fargo-area flood control including the Fargo-Moorhead Area Diversion Project, along with hundreds of millions of dollars for water supply and other flood control projects.

GROWING AND DIVERSIFYING OUR ECONOMY

• In one of the centerpiece proposals from the governor’s executive budget, HB 1018, the Department of Commerce budget, provides $28 million to create a statewide infrastructure network to support the operation of unmanned aircraft systems (UAS) beyond visual line of sight, or without a chase plane. The bill also provides $2 million to the Northern Plains UAS Test Site in Grand Forks and $3 million for an enhanced-use lease grant with the Grand Sky UAS business park located at Grand Forks Air Force Base.
• SB 2001 represents a significant boost to North Dakota’s tourism industry by creating a $50 million endowment for the proposed Theodore Roosevelt Presidential Library and Museum in Medora if $100 million in private donations is first raised for construction of the facility on the doorstep to Theodore Roosevelt National Park. The $50 million endowment will be managed by the state Department of Trust Lands. Earnings from the endowment will be used for operations and maintenance of the library and museum, which has the support of the Roosevelt family.
• HB 1097 repeals the statewide ban on Sunday morning shopping. On August 1, 2019, many retailers will have the ability to decide whether or not to sell to customers on Sunday mornings.

CORRECTIONS REFORM

• HB 1015, the Department of Corrections and Rehabilitation budget, provides an additional $7 million to expand Free Through Recovery, a community-based behavioral health program designed to increase recovery support services for individuals involved with the criminal justice system who have behavioral health concerns. The additional money will allow for expanding the program to youth under the care of DOCR and those who have completed probation until they no longer require services. An additional $4 million for the program in the Department of Human Services budget will expand the program beyond corrections.
• The budget bill also includes $755,000 for a pretrial services pilot program in three judicial districts, designed to reduce the need for incarceration during the pretrial phase through greater focus on risk assessment and supervision.

• Legislative Management also will conduct a comprehensive study of DOCR’s adult and youth corrections systems, including an assessment of facilities and preferred locations for incarcerated men and women, with findings and recommendations to be reported to the 2021 Legislature.

PUBLIC SAFETY AND SECURITY

• The first bill signed in the 2019 legislative session, HB 1183, removes mandatory minimum sentences for certain drug-related offenses. Removing mandatory minimum sentences for certain offenses gives the legal system more room to apply appropriate methods of justice.
• The cybersecurity strategy bill, SB 2110, makes North Dakota the first state to authorize a central, shared service approach to cybersecurity across all aspects of state government. The state network has 252,000 daily users and over 400 entities, and this milestone legislation will help defend against 5.6 million cyberattacks per month. More than $15 million was also invested to enhance the state’s cybersecurity software and initiatives.

TRIBAL PARTNERSHIPS

• SB 2312 ratified a historic compact the governor signed with Mandan, Hidatsa and Arikara Nation Chairman Mark Fox in February to change how the state and tribes share tax revenue from new oil and gas activity on trust and fee lands. The bill resulted from nearly two years of dialogue and work by the interim Tribal Taxation Issues Committee, which was created by the 2017 Legislature and chaired by Burgum.
• SB 2257 enables tax agreements to be signed by a tribe and the governor for a per capita distribution of alcoholic beverages wholesale tax, tobacco wholesale tax and alcoholic beverages gross receipts.
• SB 2258 authorizes the governor to enter state-tribal agreements for sales, use and gross receipts taxes.

AGRICULTURE, ENERGY AND NATURAL RESOURCES

• HB 1439 provides an economic incentive to use carbon dioxide captured from North Dakota’s coal-fired power plans for enhanced oil recovery by injecting the carbon dioxide underground. This will support innovative projects such as Project Tundra by transforming emissions into a valuable commodity, extending the viability of North Dakota’s important lignite coal industry and strengthening the state’s economy.
• SB 2037 provides a framework for disposal of high-level radioactive waste, prohibits high-level radioactive waste unless superseded by the federal government and provides for local input in the permitting process.
• HB 1014, the North Dakota Industrial Commission budget, includes a pilot project for underground gas storage and a study of produced water recycling.
• HB 1388 allows the formation of extended family partnerships and LLCs for farming and ranching to include second cousins.
• HB 1202 provides a framework for public input when a waterbody is determined to be navigable.
• HB 1020 includes $1.1 million for an agribiome initiative to enhance crop and livestock production.