2023 Legislative Session Places Counties in Strong Position to Serve North Dakota

Posted 5/15/23 (Mon)

Donnell Preskey | Government/Public Relations Specialist

The 68^th Legislative Assembly wrapped up their work after 75 days, hearing 986 bills and resolutions and approving 583 of those bills. NDACo typically tracks 60% of the bills and resolutions introduced, and this session was no different. “As we reflect on this Legislative Session, we can say overall the Legislature trusts county government to drive and implement policy to make North Dakota a great place to live and work,” said NDACo Executive Director Aaron Birst.

This is proven when you look at the testimony from county members and NDACo staff. Birst continued, “Counties had success on several fronts, not only in relation to securing funding or legislation that is beneficial to counties but also in the defeat of bills that would negatively impact counties.”

A few of the greatest “wins” for counties this session are:

• Reliable source of funding for infrastructure
• Emergency snow removal cost assistance
• Continued support for human services
• Increased funding for public health, extension, guardianships and law enforcement
• Defeat of harmful legislation related to elections, budgets and property taxes

The following are some highlights of key issues impacting counties.

 

ND PUBLIC EMPLOYEES RETIREMENT SYSTEM

One of the largest shifts in public policy this Session can be found in HB 1040, which closes a program that has been in existence for over 50 years. The public pension plan, also known as Public Employees Retirement System (PERS) provided defined benefits to both State and political subdivisions over the years. HB 1040 closes this benefit to NEW employees starting January 1, 2025 (or 2024 depending on the speed at which PERS can make the transition). Those new employees will enroll in a defined contribution plan with the employer paying 4% and the employee paying 4%. Additionally, those new employees will have the option to contribute an additional 3% with an accompanying additional 3% from the employer. However, by closing the defined benefit program, new employees will no longer be contributing funds to pay for those currently in the PERS retirement plan. This of course creates a large gap in funding which the legislature is attempting to back fund over the next 30 years. For this biennium, the Legislature appropriated around $200 million, but there will be a requirement for counties to increase their contribution by 1% per employee. With such a large change there will be continuous updates to provide counties guidance in the years to come.

 

INFRASTRUCTURE FUNDING (Click here to see a graphic summary of infrastructure funding)

The Legislature made a significant move in adopting a more permanent and stable formula for road and bridge funding for non-oil counties and townships. There are a few pieces of legislation that work together in accomplishing this: HB 1012, the Department of Transportation budget; HB 1379, the Legacy Fund Earnings or “Streams” bill; and SB 2113, which creates a state flexible transportation fund. The illustration is a good way to help understand the infrastructure package. Together, these bills will provide at least $81 million a biennium to counties, townships and cities.

• HB 1012 utilizes 50% of the revenues from the motor vehicle excise tax for road funding. This is a major shift in infrastructure funding sources. 75% of that will go to the State Department of Transportation and 25% to “non-oil” counties and townships; the local share is estimated in the next biennium at $42.8 million. These funds will be allocated by the DOT director, and the director will establish criteria for the funds. The dollars can be used for maintenance and improvements to county and township roads and bridges. Priority is to be given to roads and bridges that serve as corridors and those that need a federal match. These funds will be available August 1, 2023.
• SB 2113 establishes a new state flexible transportation fund, which is intended to increase the flexibility and availability of state funding for transportation to support building and repairing a statewide interconnected infrastructure system for all users, on and off the state highway system. The funding is included in HB 1012 which lays out that these funds can be used for matching federal grants. The $221 million will be allocated to the Department of Transportation; however, the funding may support local projects as well.
• HB 1379 establishes new buckets for appropriating a portion of the Legacy Fund earnings. $100 million of the earnings will go into the newly created Legacy Earnings Highway Distribution Fund. $28.5 million of those funds will go to counties and cities with an estimated $18.2 million of that going to counties. Townships will get $10 million. It’s important to also note that HB 1379 also distributes $225 million of the Legacy earnings into the general fund for legislative tax relief initiatives and $103 million to the Legacy Sinking and Interest Fund.

 

BUCKET BILL DISCUSSIONS

Oil and gas revenues flow into a series of buckets; local (county, city and township) buckets for infrastructure funding are at the end of the line. While we were unsuccessful in removing or reducing the $400 million Strategic Investment and Improvements Fund (SIIF) bucket ahead of the “Prairie Dog” buckets, the other funding provided this Session for infrastructure provides more reliable sources of revenue. In the end, between SB 2367 and HB 1040, legislators approved a $175 million increase into state buckets ahead of the Prairie Dog buckets.

• $60 million additional into State General Fund
• $50 million additional into Social Services Fund (formally known as Property Tax Relief Fund)
• $65 million into newly created bucket for Public Employees Retirement Fund

 

EMERGENCY SNOW REMOVAL

Nearly every county has experienced a winter like none other; and because of that, the Legislature approved emergency grants to help cover extraordinary snow removal costs to local governments. “This record-setting winter has strained resources at every level of government,” said Governor Burgum at the SB 2183 bill signing. “These funds will relieve some of the burden on communities and local taxpayers.” SB 2183 provides $20 million in emergency snow removal grants; in addition, SB 2015, which was approved on the last day, added an additional $5 million for a total of $25 million for qualifying counties, cities, townships, and tribal governments. The legislation will allow for reimbursement up to 60% of costs exceeding 150% of the average of the four lowest of the last five years’ snow removal costs. Funds are available immediately and will be dispersed by June 30^th.

 

PROPERTY TAX RELATED

One of the greatest victories for the Legislature was providing a $515 million comprehensive tax relief package. Some aspects of HB 1158 should impact every North Dakota resident by reducing income taxes, providing a property tax credit and expanding the Homestead Credit.

• Income Tax Relief - $358 million
  • Compresses income tax brackets from 5 to 3
  • Zero bottom bracket
  • 3 out of 5 ND taxpayers will NOT pay state income tax
• Property Tax Credit - $103 million
  • $500 tax credit on property taxes paid on primary home
  • Credit will appear on tax statement
  • Residents required to apply to State Tax Department for credit
  • Starts in tax year 2024 for two years
• Homestead Tax Credit - $53.5 million
  • Expands eligibility requirements and maximum reduction
  • Compresses 6 brackets to 2
  • Increases income threshold:
    • Income less than $40,000: 100% reduction of taxable valuation up to $9,000
    • Income between $40,000 - $70,000: 50% reduction of taxable valuation up to $4,500.

Counties appreciate that lawmakers crafted this tax relief policy in a manner that can be easily implemented by the counties.

Other noteworthy property tax related bills that passed include:

• SB 2162 repeals the 10-mill road levy requirement for oil and gas counties to receive Gross Production Tax.
• SB 2121 requires the estimated tax notice to include last year’s special assessments. This change will need to be made for this year’s notices.
• HB 1267 proposed reverting the handling of foreclosure sale proceeds to the prior law, which allowed counties to retain those dollars to help offset reclamation costs. With a pending U.S. Supreme Court case on this issue to be decided this summer, an amended version of the bill was passed which allows counties to consider the aggregate amount of outstanding taxes and proceeds to determine the amount (if any) foreclosure proceeds will be distributed.

NDACo was successful in amending a bill that proposed a major revamp to tax statements which included a color pie chart to be printed depicting the level of taxes for each political subdivision. HB 1245 was amended to a study to include tax statement changes, chart of accounts, implementation of a statewide property tax information system. This bill also requires that boards express levies in dollars vs mills when speaking to the public and requires auditors to report General Fund and Road and Bridge funds by March 1 each year. 

There were numerous bills related to tax exemptions. HB 1247 requires a study of the impact of exempting privately owned farm structures in city limits used to store ag products. A similar bill to allow the exemptions was defeated. HB 1365 exempts ambulance operation areas from the ambulance district’s tax levy if they do not receive emergency services from the ambulance district. HB 1438 expands and clarifies the public charity exemption to include up to 50 acres of undeveloped land and land under construction for hospital or nursing homes to be exempt for 10 years. 

Several bills were defeated in the 68^th Legislative Session that would have capped values, budgets or mill levies. Caps negatively impact the discretion and control at the local level to fund the services our taxpayers have asked for. There was also success in defeating legislation for unfunded exemptions by educating legislators on how unfunded exemptions shift the tax liability to those who don’t receive the exemption. A resolution to abolish property taxes without a clear plan on how the funding would be replaced was passed out by the House Finance and Tax Committee but soundly defeated on the floor.

 

 

 

ELECTIONS

The success on election issues can also be tied to the defeat of concerning bills that would have dramatically changed our election process, including prohibiting use of ballot drop boxes, prohibiting electronic poll books on election day, eliminating mail ballots, requiring manual counting of ballots and printing full constitutional measures on the ballot. Auditors provided an election demonstration to show lawmakers the equipment and explain the election process, which was incredibly helpful in educating legislators. The Legislature did approve SB 2292 which was brought forward by auditors to include a penalty for those who disrupt polling locations and provides protections for election workers. HB 1431 was also approved, which establishes a process for individuals who have non-citizen IDs to prove their citizenship and vote using a set-a-side ballot.

 

GUARDIANSHIP FUNDING

Within one of the largest bills contained a significant accomplishment which will have lasting impact on the most vulnerable of North Dakota citizens. SB 2015 (also known as the OMB Budget bill) contained an increase in spending for those organizations that provide guardianship services to those without the means to provide for themselves. Lawmakers raised the appropriation from $2.4 million to $7.1 million. These dollars will continue to flow from OMB to NDACo to the ultimate service provider who have been appointed by the district court. Although this is an increase in direct spending, there certainly is a tax saving to ensure those who end up in medical facilities are moved to the least restrictive and less expensive facilities. But even more importantly, having a strong guardianship program ensures those who are unable to care for themselves continue to have someone looking out for their best interest.

 

HUMAN SERVICE ZONES

North Dakota Human Service Zones experienced another busy session tracking, educating and testifying. Many bills related to human service programming and zone operations touch many aspects of life for citizens from birth to grave. There were several legislative wins this session. Zones were able to successfully advocate for a new level of foster care licensing. This allows for a nimbler way of initially becoming a foster parent. This should help increase the number of available foster homes across the state. Financing for Human Service Zone budgets is included in SB 2012 – DHHS Budget. Zone budgets were fully appropriated for the next biennium at $200M and an additional $3.75M to address zone salary equity. Late in the Session, there was a failed amendment that would have unilaterally transitioned all human service zone team members to state employment. This major proposed change was convincingly defeated. The ND Human Service Zone Director Association did not support this amendment, citing concerns for loss of local service and responsiveness, lack of transparency, the continued expectation for counties to pay for human service zone indirect costs even under a state administration delivery model, and lack of full analysis of benefit/risk. Lawmakers also approved a requirement for at least one legislator to serve on each human service zone board. This move will hopefully provide for greater understanding by the legislative body of human service zones, local services, and the collaborative efforts to serve vulnerable North Dakotans.

 

PUBLIC HEALTH

The Public Health Division of the Department of Health and Human Services budget bill, HB 1004, included an increase of State Aid Funding to the 28 local public health units. This funding is extremely important since it is the only funding not tied to a specific grant or program. Examples of uses range from school health and home visits to environmental health and emergency preparedness and response – all which provide community-based services as needed. The SACCHO team of local public health administrators worked throughout the interim to garnish support for an increase of $2,750,000 from the last two biennia, bringing the total state aid funding to $8,000,000.

SB 2153 codifies basic public health core functions for all health units. This bill was brought forward by the local public health units to ensure that all North Dakota citizens receive the same basic services throughout the state. These minimum requirements are already being provided by each health unit but are now formalized into ND Century Code.

An opioid settlement fund was created, and an opioid settlement advisory committee formed in HB 1447. The bill directs monies recovered by the state as a result of opioid litigation to be deposited in the opioid settlement fund. Political subdivisions may deposit proceeds they have separately received to this fund for the purpose of aggregating resources, but they are still free to expend those resources themselves as long as they comply with the underlying settlement agreement. Money in the fund may be used in compliance with any court-ordered restrictions and as authorized by legislative appropriation not to exceed eight million dollars in a biennium. Composition of the advisory committee along with duties related to recommendations to the Department of Health and Human Services on spending decisions is also outlined.

Two competing bills related to septic systems were introduced this session with respect to the ongoing efforts of the onsite wastewater recycling technical committee established last session. Much work had been done over the interim; but ultimately both bills, SB 2253 and SB 2256, failed so nothing changed and the committee will continue its work. The Department of Environmental Quality (DEQ) is expected to assist with the progress during the upcoming interim.

 

LAW ENFORCEMENT

Several bills addressed law enforcement recruitment and retention. The greatest accomplishment in this area is the passage of HB 1307 which provides “Back the Blue” grants to local law enforcement departments. $3.5 million will be distributed to local sheriff’s offices and police departments based on the number of licensed officers for use in hiring and/or retention bonuses. The dollars are also available to correctional officers. Lawmakers had a desire to dedicate a higher amount to smaller departments; therefore, $750,000 of the $3.5 million is dedicated to agencies with ten or fewer employees. On average, the Back the Blue grants provides $1,500 / per officer. The use of these dollars will be at the discretion of the local agency administrator. Lawmakers also approved HB 1279 which expands workers’ compensation coverage for firefighters and law enforcement officers and SB 2147 that will allow for law enforcement retirement income to be tax exempt.

A few state agency budgets include a number of items that will support local law enforcement. The Attorney General’s budget includes funding for thirteen new positions, most of them in the State Crime Lab and $400,000 for a law enforcement wellness program. An effort to move the State Crime Lab under the Attorney General failed. The DOCR budget includes funding to construct a new women’s prison in Mandan and the Department of Health and Human Services budget includes $2.65 million for a new telehealth initiative to support sheriffs and jails.

The Attorney General’s bill, SB 2107, to enhance penalties for crimes involving guns and crimes against law enforcement failed after numerous amendments and being highly debated in the House. A couple other penalty bills were successful. HB 1378 enhances the penalty for trespassing during a riot and SB 2248 makes delivering drugs that lead to death an “A felony.” Many gun bills were introduced in the end. Lawmakers turned one of them, HB 1341, into a comprehensive study of firearm carry locations.

A huge success was achieved in the area of traffic safety with the passage of SB 2362, strengthening the state’s seat belt law. Starting August 1, every individual in a vehicle will be required to fasten their seat belt.

A major change in how roads can be closed was also approved. If a road is publicly announced, it is determined to be closed. SB 2189 did not address a change in the fee for entering closed roads.

 

WHAT’S NEXT?

Obviously, as you can see from this article, there are many bills and issues that touch county government; and this is just skimming the surface. NDACo has much more to do to dive into the policy and work with our partners on implementation. Most of the bills take effect August 1^st. If they have an emergency clause, once signed, they take effect immediately. Bills that include studies or that were turned into studies will be reviewed by a group of lawmakers making up Legislative Management. They will select the studies for committees to focus on in between now and the 2025 Legislative Session.

“Finally, thank you to all the county members who traveled to Bismarck to testify on important issues and those of you who contacted your legislators. Lawmakers trust and listen to you. The success counties have during a legislative session hinges on your involvement,” commented Birst.