This week, as per the usual, saw your Democratic-NPL House Caucus fighting for the issues that matter, and the positions we hold on those issues could not draw a clearer contrast with our friends across the aisle. Our commitment to you, our loyal readers, is not subject to interpretation.
The House Human Services committee this week heard testimony on SB 2279, which would prohibit discrimination in housing and employment based on sexual orientation.
Unlike some of our colleagues across the aisle, we understand how SB 2279 would work, why it is so important, and that discrimination is not a North Dakota value. Whether it’s from successful small business owners, the editorial board of North Dakota’s second largest newspaper, the editorial board of North Dakota’s largest newspaper, or over 1,000 of our family, friends, and neighbors, the call for equality in North Dakota is getting ever louder. SB 2279 is good for North Dakota, good for business, and will allow employers to recruit and retain talented individuals, regardless of who they love.
Also this week we differentiated ourselves on rail safety, an issue more prevalent than ever as rail traffic increases across and through the state. That’s why, after a majority of the House voted down a bipartisan compromise bill promoting rail safety, Rep. Marie Strinden, D-Grand Forks, asked that the House reconsider the bill. After impassioned floor speeches from many members of your Democratic-NPL House Caucus—and some of our Republican counterparts as there should be, after all, bipartisan support for rail safety of all things—the majority once again voted to kill the bill, which passed the Senate by a 47-0 margin. So, rather than listening to every single Senator, every single member of our Caucus, many House Republicans, and a strong endorsement from the Fargo Forum editorial board, a majority of our Republican counterparts voted down two times in as many days a pragmatic, common sense bill
As if we didn’t stay busy enough fighting for equality and rail safety, we saw yet another example as to why Rep. Corey Mock’s, D-Grand Forks, proposed Ethics Commission is so necessary. Rep. Strinden’s brunch bill, after making it through the House, was passed by the Senate. The Democratic-NPL’s new chairwoman, Rep. Kylie Oversen, D-Grand Forks, took a few minutes out of her busy schedule—including, for example, introducing a resolution to look at sexual assaults on North Dakota’s college campuses—for this great profile piece.
Check out our Facebook page for regular updates on what we’re up to in Bismarck. We hope to see you this weekend at legislative forums across the state.
As a Capitol Letters co-author clacks out this week’s edition, he’s experiencing his 8th or 9th hour of being 36 years old (perhaps this drift towards geriatricism explains the difficulties in crafting a snappy intro). But before we head back for a corner piece of that aging birthday cake, we bring you some of the right fights our colleagues are waging on behalf of North Dakota veterans. We also blow the whistle on a train wreck of a debate in the House. All this “and many more” in this week’s Capitol Letters.
The right fights: Standing up for those who stood for us
Picture a solemn funeral on a dreary day in the beautiful, but challenged,Turtle Mountain region of North Dakota. Only a few have gathered to pay their respects. Apart from perfunctory prayers given by a stolid priest, silence pervades the short ceremony.
The man they’re taking under didn’t leave much behind, just a life that often got the best of him. Sporadic joblessness. A bitter divorce. Traumatic memories of a faraway place that sometimes could only be buried in the bottom of a bottle.
But there were good times too. Proud times. Like when he came back to Belcourt after boot camp at Parris Island, lean and fit, wearing his Marine Corps dress blues. To his young cousins, it could just as well have been shining armor.
He wanted to be buried in that uniform, but when it was his time to go there was no one around to tell. So they dressed him in a suit from Goodwill and put him in his casket — a plain, unadorned box-of-a-thing provided by the county.
“Welfare casket,” whispers one of the gathered.
This fictitious scene is not unlike any one of the numerous funerals attended by Senator Richard Marcellais, a Vietnam veteran who represents the legislative district that encompasses Turtle Mountain. Richard makes a point of being at the services of his fellow veterans, and he’s seen too many of his brothers buried in those so-called “welfare caskets.”
That’s why Richard re-introduced legislation this session to ensure any veteran — regardless of how much money they leave behind in a bank account — will be buried with honor. SB 2238 would allow for county social services boards across North Dakota to “provide for the use of a military casket or urn.” At virtually no discernable cost to taxpayers, it provides a final measure of dignity for those who served.
In addition to the casket bill, Senator Marcellais is successfully advancing legislation which would have have the state cover the costs of interring veterans’ spouses and dependents at the North Dakota Veterans’ Cemetery. He’s also a co-sponsor of a bill to assist Vietnam veterans who were exposed to agent orange.
March 29th is Vietnam Veterans’ Day. When the Senate reconvenes on Monday, Senator Marcellais will lead a floor ceremony to honor those who all too often came back from southeast Asia with not so much as a “welcome home.”
We’re looking forward to the day, but Richard’s fight for veterans continues day after day.
There’s no legislator who is more dedicated when it comes to standing up for those who served. We’re grateful for his service to our country. We’re proud to call him a colleague. And we’re certain he’s fighting right fights for North Dakota.
Headshaker of the week: Off the rails on rail safety
If you were watching the news on December 30, 2013, you remember full well the derailment of a train carrying North Dakota crude oil that turned rural Cass County into a scene from a Jerry Bruckheimer movie.
That near disaster sparked (so to speak) a discussion of the need to improve rail safety, and not just within North Dakota’s borders. Minnesota, for example, undertook a comprehensive study of “rail lines carrying Bakken crude oil[.]” More recently, Minnesota Governor Mark Dayton unveiled a “railway safety proposal [that] would invest $330 million over the next ten years in the construction of safer railroad crossings across Minnesota[.]”
On the west side of the Red River, Senator George Sinner — whose hometown of Casselton experienced that fiery close-call over a year ago — introduced SB 2293. This sensible, non-alarmist legislation sought to identify rail safety needs and fund improvements using existing diesel fuel tax revenue.
As noted by the Fargo Forum’s editorial board, Senator Sinner reluctantly “agreed to amend the bill from calling for a funded rail safety committee to requiring the state Department of Transportation and Public Service Commission to report regularly on a rail safety plan.” In that amended form, the bill passed the Senate unanimously and even garnered a bipartisan 10-2 do pass recommendation by a House committee.
But then the bill was considered by the full House. Instead of taking the layup pun and telling you the House debate got seriously off track, we’ll let the Forum editorial take it from here:
“[F]or nutty theater of the absurd, the comments of Rep. Dan Ruby, R-Minot, win the Oscar. In opposing the bill Ruby said, ‘Yeah, we’ve heard some instances where there’s been some disasters dealing with railroads. But there’s been disasters dealing with semis and with motorcycles and with vehicles all over this state. Why are we putting the spotlight on railroads and making them to be like they’re some major issue?’”
We here at Capitol Letters think it’s hardly a slippery slope from studying rail safety to utilizing state resources to guard against disasters caused by Vespa scooters. So what is the real reason the House rejected Senator Sinner’s bill?
In a well-written opinion piece published in the Grand Forks Herald, George ventured a guess. “[I]t appears that partisan politics ruled the day. When House Majority Leader Al Carlson, R-Fargo, stated that there will be no bills from George Sinner passing his body, his message apparently did not fall on deaf ears.”
Here’s the thing about the House’s partisan approach: It doesn’t hurt Senator Sinner. It hurts North Dakota. George’s legislation was the only bill remaining this session that sought to comprehensively address rail safety.
As George noted, “[t]he majority should not put politics above public safety. I promise to keep working in a bipartisan way to improve the safety of our railways. Do we have to wait for another tragedy before . . . this Legislature will accept some responsibility for the safety of our communities?”
Let’s hope the answer to that question is a head-shaking no.
We appreciate your faithful reading and strong support. We’ll be back for more on Monday as we head into the home stretch of the session. Until then, keep the faith, keep up the fight, and like us on Facebook.
Dem-NPL legislators will lead effort to reconsider legislation, push rail safety study in Public Service Commission budget
(BISMARCK, N.D.) – In response to a largely party line vote Monday in the North Dakota House of Representatives to defeat legislation to improve rail safety, Democratic-NPL legislators announced an effort to reconsider the bill on the House floor. SB 2293, sponsored by Senator George Sinner, D-Fargo, would direct the North Dakota Department of Transportation to report to an interim legislative committee on railroad crossings, emergency response procedures, tank car specifications, and other issues affecting rail safety in North Dakota.
Representative Marie Strinden, D-Grand Forks, intends to bring back the legislation during floor session today.
“The House majority’s vote to defeat this modest step towards improving the safety of our rails and communities was extraordinarily myopic,” said Representative Kenton Onstad of Parshall, the House Minority Leader “There is plainly no good reason to reject comprehensive consideration of the risks and needs regarding rail safety in North Dakota. On the other hand, we have every reason to want to improve the safety of our communities. On balance, it’s not even a close call.”
Monday’s 55-34 vote to defeat the rail safety bill was a sharp departure from the bipartisan support the bill previously received throughout the legislative process this session. For instance, the legislation garnered unanimous support when considered by the Senate on February 13 and came to the House floor after receiving a 10 to 2 “do pass” recommendation from the House Political Subdivisions Committee on March 13.
“While we are appreciative of the Republicans who supported this legislation in the Senate and at the committee level in the House, Monday’s floor vote reeks of partisanship,” added Representative Corey Mock, the Dem-NPL Assistant Leader. “If yesterday’s no vote by the majority was about the sponsors of the bill, they certainly picked an unfortunate issue with which to play politics. Rail safety is bigger than personality or partisanship, and I look forward to working with members of the majority in good faith to reconsider this bill during floor session today.”
As originally introduced by Senator Sinner, SB 2293 would have created a rail safety committee to comprehensively identify statewide needs and risks and also sought to establish a rail safety fund financed through existing taxes on diesel fuel. In its amended form, the bill resembled an initiative by the Minnesota Department of Public Safety to assess that state’s preparedness for a rail safety incident. Since the results of that assessment were released on January 15, Minnesota lawmakers and Governor Mark Dayton have identified and discussed proposals to improve rail safety and ensure preparedness.
“Being prepared starts with identifying risks and ways to improve,” Senator Sinner said. “This was the only bill that comprehensively dealt with rail safety this session. Even though the legislation was pared back through the amendment process more than I would have liked, it at the very least would serve as a starting point from which to improve rail safety in North Dakota.”
This is not the first time the House majority has defeated efforts to improve rail safety this session. On February 25, the House rejected HB 1357, the so-called “two man crew” bill that would have required at least two individuals on any train operating in North Dakota.
Even if the effort to reconsider SB 2293 is unsuccessful, the Dem-NPL legislators pledged to continue efforts to improve rail safety and emergency preparedness through the appropriations process.
“The need for a rail safety plan won’t go away with the defeat of any given bill,” added Representative Ron Guggisberg, a member of the House Appropriations. “We can learn the hard way or the easy way when it comes to rail safety. It shouldn’t take a tragedy to start to plan.”
March 20th marks the start of spring here in the state capitol and elsewhere in the northern hemisphere. As you take advantage of the vernal equinox by, say, balancing an egg on its vertical axis, know that your Dem-NPL legislators are working for a balanced response to the latest state revenue forecasts. We also found a colleague shelling out some questionable reasoning when it comes to the need for an ethics commission. All this and more as we march on with week 11 of Capitol Letters, your three-minute update on the happenings of the 64th North Dakota Legislative Assembly.
The right fights: Preparing for anything rather than playing Carnac the Magnificent in response to revenue projections
“Forecast drops N.D. oil tax revenue another $1 billion.” That was the Fargo Forum headline that greeted legislators as they arrived at their desks in the capitol on Wednesday. And while GOP lawmakers marked their newspapers with a spattering of briefly-sipped Taster’s Choice in response to the revised revenue forecast by Moody’s Analytics, your Dem-NPL legislators reacted with the coolness of an iced Americano.
Representative Roscoe Streyle, for instance, chose to nip at the presenter of the forecast. He declared to the Bismarck Tribune, with no small amount of incredulity, that predicted sales tax revenue could “not even” be “close to as rosy as you say[.]” Considering Representative Streyle is a senior economist who focuses on fiscal policy and regional economic research at a globally-respected firm that is paid $68,210 by the state of North Dakota to make revenue predictions on which two-year state spending decisions are based, we probably should listen to him. Right?
Maybe not. Because when we said “Representative Streyle” in the preceding sentence, we actually meant Dan White, economist at Moody’s Analytics. According to Mr. White, “the forecast was as conservative as he felt it could be” considering stuff like, you know, his training as an economist and desire to adhere to professional ethics.
House Majority Leader Al Carlson also played Monday morning economist, asking Mr. White — we hope rhetorically — “How in the world [he] can come up with these kind of assumptions?” For good measure, Representative Carlson professed a belief that Moody’s was “missing the sales tax boat by a mile.” (We feel no need to point out that the idiomatic expression “missing the boat” typically involves a unit of time rather than distance.)
So while our friends in the majority sought to pessimistically attack the messenger, we delivered our message: “What we should be focused on is a plan for whatever revenues we collect in reality,” said a Capitol Letters co author to the Tribune. That means “build[ing] contingencies into the budget[.]”
That’s exactly what Senator Tim Mathern is doing with a delayed bill that would advance widely-agreed upon construction projects if revenue projections prove conservative. On the other hand, if revenues are indeed down as predicted by Moody’s (or Carlson or Streyle, for that matter), the bill would take advantage of low rates and utilize bonds to finance these projects and save North Dakota money in the long run.
As Senator Mathern noted to KX News, if revenue is “over what we anticipate by ten percent, that’s $500 million, these buildings get built. And it further says if that is not the case that we would bond for the buildings and go forward[.]”
In other words, Senator Mathern’s bill is a “contingency within a contingency,” as a Capitol Letters co-author told Prairie Public Radio. We believe this “ready-for-anything” approach is much preferable to that of Representative Carlson, who remarked to the Fargo Forum — with what we assume was an audible “period” to emphasize finality — that “proposed building projects will take the biggest hit in the budget.”
In addition to budget contingencies, we’re also keying in on our tax relief priorities with renewed focus. That means extending the 12% state-paid property tax credit and scrapping the GOP proposals to cut corporate and personal income taxes by over $100 million.
The good news is that idea is getting some traction. As Senate Majority Leader Rich Wardner told KX News in response to our proposals yesterday, “income taxes will need another look after [this week’s] forecast.”
When it comes to budget uncertainty, your Dem-NPL legislators aren’t concerned about predicting the future. We’re busy preparing for it. Cool headedness.Contingency planning. Creative ways to finance critical projects. That’s how we fight the right fights for North Dakota.
Headshaker of the week: “Eh”-thics
This week’s headshaker involves our True North neighboring country and whether lawmakers can identify true north when it comes to lawful campaign contributions. As reported in the Grand Forks Herald, Senator Lonnie Laffen (R – Grand Forks) “reported a campaign contribution from a Canadian businessman during the last election cycle, a disclosure that was mentioned on the House floor Monday during a discussion of ethics.”
We here at Capitol Letters have the greatest appreciation for our country’s friendship with Canada and deeply respect its people and their culture. That’s why we’re not exactly ready to decry the corrupting influence of Loonies and Toonies on North Dakota politics. But Laffen’s justification for accepting a $1,945 contribution (perhaps it was $2,000 CDN before application of the exchange rate?) from the maple leaf millionaire owner of Canad Inns while opposing formation of an ethics commission does have us shaking our heads.
Laffen told the Herald the contribution was “perfectly legal” and that “the North Dakota Secretary of State” told him there was “nothing wrong with accepting donations from any country.” A spokesperson for the Canadian businessman backed Laffen, noting with admirable Canadian politeness that the contribution is “quite allowed[.]”
Secretary of State Al Jaeger seemed to provide a more lawyerly explanation, however, when he told the Herald he was “not aware of anything in state law that would prevent a legislator from accepting a foreign contribution.”
We here at Capitol Letters have learned that one other prominent source of law is federal law. We also came to understand that the arm of the federal government charged with enforcing federal laws and regulations relating to elections is the Federal Election Commission. Here’s what the FEC says about contributions and donations by foreign nationals:
“Contributions and donations may not be solicited, accepted, or received from, or made directly or indirectly by, foreign nationals who do not have permanent residence in the United States (i.e., those without green cards). This prohibition encompasses all US elections; including federal, state and local elections.”
That summation comes from 11 CFR 110.20(b), in case you want to pull out your Code of Federal Regulations and read on.
We’re not accusing a colleague of violating federal election law just because he accepted a sizable “contribution” from a Canadian citizen (i.e., a “foreign national”) while a candidate for office during a “US election[.]” Never, never. As Representative Corey Mock told the Herald, the Canadian contributor might have dual citizenship, which “may” make him “exempt from the federal law.” Likewise, the preferred pancake topping of the majority of our friends to the north might be blueberry syrup and the national sport “may” actually be beach volleyball.
While we’ll leave the resolution of the last two issues to professional geographers, we believe an ethics commission could help resolve the matter of the Canadian contribution. Unfortunately, Senator Lafeen disagrees. “That would be the problem with an ethics commission, is looking for wrongdoing,” Laffen said to the Herald.
We here at Capitol Letters see a different problem: Without an ethics commission “looking for wrongdoing,” wrongdoing might never be found — even in cases where wrongdoing exists.
In the absence of an ethics commission, we’re going to look for more answers on the issue of whether state legislative candidates can lawfully accept foreign contributions. So stay tuned. Because when it comes to ensuring our lawmakers follow the law, we stand on guard for thee.
More next week:
We’re headed home for legislative forums across the state. We hope we’ll see you there or out in the community enjoying spring. In case we miss you, keep the faith, keep up the fight, and like us on Facebook.
In response to revenue forecast Dem-NPL legislators emphasize property tax relief, set forth contingency plan for funding capital project
House-passed proposal to take $712 million off the books this biennium “flawed,” Dems say
(BISMARCK, N.D.) – On the heels of the March revenue forecast by Moody’s Analytics yesterday, Dem-NPL legislative leaders and appropriators called for prioritization of property tax relief over proposed cuts to the corporate and personal income tax and also set forth a contingency budgeting bill to fund key capital construction projects. The legislators further called on the Senate to scrap a House proposal that would create a new fund in 2017, thereby taking $712 million off the books this biennium.
“The sky isn’t falling in North Dakota, but we nevertheless have to prioritize if we are going to properly fund state government for the next two years,” said Representative Ron Guggisberg. “The people want property tax relief, and we have the means to give it to them. But to do that and balance the budget, we should set aside the GOP proposals to cut corporate and personal income taxes.”
The Dem-NPL legislators specifically pointed to the need to continue the 12 percent property tax credit established last session and renewed pledges to deepen this relief through state funding of county social services. Earlier this session, GOP senators pared back the 12 percent property tax credit to 11 percent, which would offset any property tax relief realized through local county social services savings.
In contrast to the Dem-NPL focus on property tax relief, the GOP majority in the legislature has advanced various bills to reduce corporate and personal income taxes. For instance HB 1223, currently before the Senate Finance and Taxation committee, would reduce these taxes by $152 million. SB 2349, which is presently in the House Finance and Taxation Committee, would likewise cut corporate and personal income taxes by $125 million. Importantly, the budget conclusions set forth by Moody’s Analytics during yesterday’s revenue projection presume no further corporate or personal income tax reductions by the legislature.
Following through on promises to budget for contingencies in light of shifting revenue forecasts, Senator Tim Mathern of Fargo, a member of the Senate Appropriations Committee, today unveiled a delayed bill to advance key capital construction projects, including Dunbar Hall at North Dakota State University, if certain contingencies materialize.
As set forth in the bill, “if the office of management and budget determines that actual general fund revenues for the period” of July 1, 2015 through June 30, 2016 exceed estimates at the end of the 2015 session by ten percent, the construction projects would be funded through an appropriation. Even if revenues fail to improve beyond estimates, the bill takes advantage of low interest rates by providing for bonding authority as a way to finance these projects.
“This bill outlines construction projects that are widely recognized as priorities,” Mathern said. “If the funds are there, this bill permits the projects to go forward. If the funds are not sufficient for an appropriation, the bill allows for the possibility of bonding as a way to advance these projects.”
Mathern clarified that while the bill identifies many critical construction projects, the Legislature need not take an all or nothing approach with regard to these projects. “I’m hoping this bill will be the start of a conversation on creative ways we can finance construction priorities in a time of uncertain budgets.”
Senate Assistant Minority Leader, Joan Heckaman of New Rockford, took issue with a House proposal to create a so-called “next biennium K-12 education fund.” As set forth in HB 1337, the fund would be established by taking $712 million in revenue from this biennium and establishing a fund, ostensibly for K-12 education, that could not be touched until the 2017 biennium.
“We’re all about investing in education, but taking over $700 million dollars off the books this biennium is flawed and unnecessary,” Heckaman said. “We’ve worked hard to fund K-12 education and continue property tax relief through ongoing revenues, and there is nothing in the latest revenue projection that indicates we will be unable to continue that approach. Walling off hundreds of millions of dollars this session is like weathering the storm by drilling holes in the roof, and we will be working with our Senate colleagues to turn back that unsound approach.”
The appropriators also said they will continue to work with their colleagues in the House and Senate to put together contingent budgets agency by agency.
“When it comes to planning for contingencies, we’ve got our work cut out for us in the coming weeks,” Guggisberg concluded. “But engaging in that kind of careful planning is much better than leaving town only to watch red ink pool up or, alternatively, see important needs go unmet.”
North Dakota Democratic lawmakers were encouraged by the news from Moody’s that the state continues to be an attractive destination for workers.
“The increase in public and private investment in our state continues to attract more workers than any state in the nation. This is not the time to reverse course by discontinuing investing in our state,” Guggisberg added. “North Dakota weathered the recession with a strong energy sector that created jobs, raised wages and increased revenue to our state and we continue to buck the trend because of our investments in other sectors. We can’t stop this work due to a one-time forecast, now is the time to invest in the education and infrastructure needed to train tomorrow’s workforce in the energy sector and beyond.”
(BISMARCK, N.D.) – Following the presentation of the March revenue forecast by Moody’s Analytics, Dem-NPL leadership Senator Mac Schneider, D-Grand Forks, and Representative Kenton Onstad, D-Parshall, released the following statement:
“The bottom line is that this is something we can weather with the right planning,” said Senator Mac Schneider. “On the one hand, general fund revenue projections are actually a bit rosier than in January. On the other hand, political subdivisions will be receiving substantially less in oil tax revenue than predicted two months ago. Important funds — like the Resources Trust Fund — also take a significant hit.”
“With the March revenue projection behind us, the job of funding state government for the next two years is in front of us,” Schneider added. “That means we will have to focus even more squarely on our priorities and utilize contingency budgeting to guard against both overspending and leaving critical needs unmet should projections prove conservative.”
“Our state cannot control decisions made in places like Riyadh, but we can control how we react to those decisions,” noted Representative Onstad. “We will place a premium on maintaining property tax relief and helping political subdivisions, including those in western North Dakota which will sustain a loss of oil revenue during this downturn in the market. In the long term, North Dakota’s economic future is bright and will be even brighter with continued diversification of our economy.”
(BISMARCK, N.D.) – Following North Dakota House passage of SB 2351, the corporate farming bill, 56-37, Dem-NPL leadership Senator Mac Schneider, D-Grand Forks and Representative Kenton Onstad, D-Parshall released the following statements:
“North Dakota’s agricultural success can be attributed to many things, but we would be remiss if we did not consider the strong connection between family farmers and the land; a fact that wasn’t lost on the people of North Dakota when over 83 years ago they passed an initiated measure to ban corporate farming in the state. ” Onstad said. “The passage of SB 2351 disregards that history and widens the disconnect between consumers and producers.”
“This bill takes a step away from the foundation of production agriculture in North Dakota, the family farm,” Schneider noted. “While we should always look for ways to help our producers become more competitive, the bill fails to strike the right balance between attracting new opportunities and ensuring North Dakota families will be in control of the land and the agricultural economy now and into the future.”
As we close the books on week 10 of the 64th Legislative Assembly, we here at Captiol Letters are dispensing with our regular format with hopes of bringing you a conversational guide to an issue you’ll hear much about between now and the end of May: The oil tax “trigger” and its potential impact on state revenues.
But don’t think this format change means Dem-NPL legislators took the week off from fighting the right fights. We discuss below the fight to ensure ethical behavior by lawmakers (following a whimsical discussion of some really interesting actuarial tables).
So as we somewhat anxiously await next week’s big revenue forecast, we hope you’ll join us in taping up the bridge of your glasses, pulling out your slide rule, cracking open a bottle of Maalox, and enjoying this week’s Capitol Letters.
Trigger Talk: Or How I Learned to Stop Worrying and Love the Price of West Texas Intermediate Crude [-$2.50]
Each week in Capitol Letters, we aim to inform and entertain as we discuss the issues facing the North Dakota Legislature. Given that the following paragraphs use words like “analytics” and “tax triggers,” please forgive us if we’re a little light in the entertainment department.
Next week, the Legislature will receive the much-anticipated revenue forecast from Moody’s Analytics, the green-eyeshade folks who crunch numbers and make predictions about our state’s economy and tax collections.
This is a big deal for many reasons, mainly because the decisions we make in the coming weeks will determine how state government is funded for the next two years. Considering our last two revenue projections were about seven weeks — and $4 billion — apart, the only thing that is certain is uncertainty.
Your Dem-NPL legislators have advocated for contingency budgeting in the face of fluctuating forecasts, and we’ll have much more on that between now and when we gavel out sine die. But for now, we want to educate you — a sophisticated consumer of news affecting fiscal policy — about something that has been on the Legislature’s collective mind (?) nearly every day this session: The “oil tax triggers.”
There are various triggers, but for the sake of brevity (and mercy) we’ll focus only on the so-called “large” trigger. Forthwith:
The gist: If oil prices are low for a long time, tax incentives are “triggered” into effect. Basically, the state significantly reduces taxes on oil extraction during sustained downturns in the market to encourage continued drilling and production.
The weeds: The trigger price is set by statute and indexed for inflation. For 2015, the trigger price is $52.59. But keep in mind that different kinds of oil have different prices. West Texas Intermediate (WTI) is the relevant price for purposes of calculating the trigger. If the WTI monthly average — minus $2.50 — is less than $52.59 for five consecutive months,“the the large trigger kicks in and provides an exemption from the oil extraction tax for the first 24 months of production[,]” as succinctly stated by the Fargo Forum.
The Capitol Letters trigger workaround:
The trigger seemed confusing, so we here at Capitol Letters had some C-level mathematics students develop the following workaround:
1) Just say the trigger price is $55.09. If your spouse or someone at a local bar calls you on it, tell them “you got me” and confess that the trigger price is actually as stated in the above paragraph.
2) If the price of WTI averages $55.09 or less for a month, the trigger “clock” starts ticking.
3) If, during each of the next three months (including March), the price of WTI averages $55.09 or less, the trigger will be pulled. If it doesn’t during each month, it won’t. To be clear, WTI could average $1.00 per barrel for January, February, March, and April, but if the price rose to an average of $55.10 for the month of May, the trigger would not be pulled.
4) If the trigger is pulled, newly-producing wells receive an exemption from the 6.5% extraction tax (but not the 5% production tax) for up to the first 24 months of production. But see 5) below.
5) To “un-trigger” and put the bullet back in the chamber, so to speak, the opposite must occur: Prices must average above $55.09 for each month during a five month consecutive period. Those newly-producing wells that became operational after the trigger was pulled would continue to benefit from the up-to-24-month exemption from the extraction tax, but only until the end of the five month consecutive period when the trigger provisions are no longer effective.
The trigger in real life:
WTI averaged below $55.09 in January and February. March is looking to be a trigger-y month as well. Thus, there is a very real possibility that the trigger gets pulled when we turn the page of the calendar from May to June. Keep in mind, however, that if the monthly average in either April or May (we’ll write off March) is more than $55.09, no trigger.
What pulling the trigger would mean:
The Legislative Council has estimated that pulling the trigger would cost the state approximately $883 million in revenue based on the January 2015 revised revenue forecast. Here’s why: Newly-producing wells, like those that could receive a 24 month exemption from the extraction tax if the trigger is pulled, account for about “70 percent of the state’s oil production,” as stated by the Tax Department in the Forum.
Ideas for talking with your friends and family about the trigger: Dem-NPL senators and every member of the GOP majority in the Senate voted to eliminate the triggers last session. You can view the vote for yourself here. What always confounded your Capitol Letters co-authors, however, was why the GOP-sponsored bill to eliminate the triggers was fused together prominently with an all-day, everyday, forever-and-all-time, whopping 30% cut to the oil extraction tax. Permanently trading 30% of oil extraction revenue over the life of the Bakken in exchange for getting rid of the triggers, which can cause significant — but temporary — loss of revenue, was not a good deal for the state. When it came to a vote to take it or leave it, we said leave it. And an interesting thing happened: The majority agreed with us.
We are more than willing to work with our friends in the GOP to enact a mechanism that incentivizes the oil industry to continue investing in North Dakota during downturns in the market while being less disruptive to our two-year budget. But if someone says that Dem-NPL legislators opposed efforts to get rid of the triggers, tell them they don’t know WTI they are talking about.
The right fights: Ethics
North Dakota prides itself on honest, open government run by elected officials who are citizens first. The gold standard is exemplified by servants like Art Link, who humbly and squarely focused on the best interests of the state and future generations of North Dakotans.
That’s a legacy we should zealously preserve in the face of a changing North Dakota. Even as we warmly welcome honest newcomers seeking better lives in our state, we can make clear to the less scrupulous that we expect our politicians to look out for for the public good rather than get while the getting is good.
That was the goal of Representative Corey Mock, the House Assistant Dem-NPL Leader from Grand Forks, who introduced a constitutional resolution to create an ethics commission in North Dakota.
Corey has many strengths, not the least of which is persistence. This is his third run at creating an ethics commission, and the plan this time was to gain legislative approval of a constitutional resolution and ultimately let the people decide whether to establish a panel that has the “authority to address unethical conduct of legislators [and] elected and appointed statewide officials[,]” as the Bismarck Tribune reported.
The Tribune added, “[l]awmakers in opposition argued whether a problem exists in the state that warrants the creation of” an ethics commission. This gets the inquiry backwards, as Corey aptly noted to the Tribune. “The lack of” an ethics commission itself “leaves those questions hanging[.]”
Further, consider section 12.1-21-04 of the Century Code, which makes it a crime to cause a “catastrophe.” Catastrophe is a legal term of art meaning “serious bodily injury to ten or more people or substantial damage to ten or more separate habitations or structures or property loss in excess of five hundred thousand dollars.”
These “catastrophes” don’t exactly happen every day. Hopefully not ever. But we still have laws on the books showing state disapproval of such behavior. And it would be a catastrophe of another feather if some seamy outside interest group were to surreptitiously infiltrate our lawmaking process through graft and nobody knew about it due to lack of oversight.
At the very least, creating an ethics commission would help avert “the perception that unethical conduct could occur.” In that regard, it could only help. The worst that could happen is that the ethics commission becomes the equivalent of a group of Maytag repairmen, lacking work as honest North Dakota lawmakers mind their scruples.
In the end, the committee vote was 10-4 to not pass the resolution. It wasn’t a winning fight this time, but that doesn’t change the fact that it was the right fight for North Dakota. And when it comes to those fights, Dem-NPL legislators like Corey never quit.
Thanks for allowing us to get heavy on the policy this week. We’ll be back Monday for what is shaping up to be the most pivotal week so far this session. Until then, keep the faith, keep up the fight, and like us on Facebook.
It’s been some time since your Democratic-NPL House Caucus put together a Caucus Talk, but we’re confident that Capitol Letters—a joint venture with our Senate colleagues from across the hall—has kept your thirst for legislative updates adequately satiated. Well, now that we’re back after our crossover break and the pace of things is starting to pick up again around the Capitol, so too are our weekly updates. And with that disclaimer out of the way . . .
Since we last spoke, our very own Rep. Kylie Oversen, D-Grand Forks, was elected chairwoman of the North Dakota Democratic-NPL. Because simply taking on a task is not really in Rep. Oversen’s repertoire, she continues her already-accomplished track record as first this, or youngest that, becoming the youngest state party chairperson in the nation from either major political party.
If you recall, the House passed overwhelmingly Rep. Pamela Anderson’s, D-Fargo, bill that would require doctors to inform a woman if a mammogram reveals dense breast tissue. Recently, the bill was, for some reason, voted out of the relevant Senate committee with a do not pass recommendation by a 4-2 margin. Cindy Eggl, a breast cancer survivor from Fargo, said recently, “. . . There are two others ladies that wanted to stand up with me to get this legislation passed, and Senator Anderson. They are not living anymore, they died from their breast cancer . . .” That is why Rep. Anderson held this week a bipartisan press conference to discuss the importance of the bill. We were pleased to see the press conference so well attended by a group from WE Rise Women’s Day at the Capitol.
Rep. Corey Mock, D-Grand Forks, pushed for a constitutional amendment calling for an ethics commission that would investigate “violations of campaign conduct and campaign finance laws, lobbying laws and violations of other ethical standards.” It’s quite perplexing to us why our colleagues on the other side of the aisle are so strongly opposed to enacting laws that promote good government, but to each their own, we suppose. The Dem-NPL is proud to be the one party in the state that believes in more transparency and accountability in the way our government operates, and we will continue fighting for as much.
In other Dem-NPL House Caucus goings-on, Rep. Ron Guggisberg, D-Fargo, talked about the importance of common sense protections for North Dakota’s university foundations and the great work they do in their respective communities. Rep. Guggisberg also joined Rep. Alisa Mitskog, D-Wahpeton, and Senators Mac Schneider, D-Grand Forks, and Tim Mathern, D-Fargo, to discuss a cap on rising tuition and restoring the widely-agreed upon funding formula previously adopted by the legislature.
Until next time, check out our Facebook page for updates throughout the next week. We hope to see you this weekend as many of our members take part in forums in their respective home districts.
Dem-NPL legislators: To strengthen higher education, cap tuition increases and restore 2013 funding formula
Dems also call on maintaining internal auditors, university system attorneys
(BISMARCK, N.D.) – Ahead of Senate consideration of HB 1003, the North Dakota University System budget, Dem-NPL legislators today announced they will introduce amendments to cap rising tuition and restore the widely-agreed upon funding formula for higher education adopted during the 2013 legislative session. The legislative Democrats also called for maintaining internal auditor and attorney positions within the university system rather than moving these personnel to other agencies.
“When it comes to higher education, the first consideration should be our students,” said Senate Dem-NPL Leader Mac Schneider of Grand Forks, who represents the legislative district that encompasses the University of North Dakota. “The House made many substantive changes to the higher ed bill that will require close scrutiny, but we do know there is no limitation on increases in tuition at present. We aim to change that by amending HB 1003 to limit tuition increases by 2.5 percent or less during the next two years.”
The proposed amendments to HB 1003, which will be offered by Fargo Senator Tim Mathern in the Senate Appropriations Committee, would both cap tuition increases at 2.5% per year for four-year institutions and freeze tuition at two year schools. The amendments also provide a modest appropriation to soften the loss of tuition revenue. A North Dakota University System analysis shows that if the House-passed version of HB 1003 were to be enacted as is, students are likely to be faced with tuition increases that vary by institution. For instance, even a 3.8 percent increase in tuition would leave UND approximately $5 million short of meeting costs to continue under the House bill.
An amendment will also be offered to restore the higher education funding formula enacted last biennium and adopted in the 2015 executive budget. Continuing with this formula will allow campuses to engage in long-term planning.
“Institutions like the North Dakota State College of Science are providing critical skills training to our young people and helping solve our state’s critical workforce needs,” said Representative Alisa Mitskog, D-Wahpeton. “In order to continue this important work, campus leaders need stability in terms of funding. That’s what the existing formula provides and that’s what I’ll be working with my Senate colleagues to restore.”
Aware that next week’s revenue projections could have an impact on higher education funding this session, the legislators stressed that restoration of the formula is independent of the size of the appropriation that will ultimately be made to the university system this session. “The 2013 higher ed formula is about fairly dividing the pie,” added Senator Mathern. “While we hope revenue projections return to previous levels, the formula is equitable regardless of how big the pie is.”
Representative Ron Guggisberg, a House Appropriations member from Fargo, stressed the importance of accountability in the administration of higher education and intends to work with Senate appropriators to maintain the university system’s internal auditors and in-house legal counsel. As passed by the House, HB 1003 would move the auditors under the purview of the office of the state auditor and the staff attorneys into the attorney general’s office. The bill would also reduce the number of attorneys from eight to six.
“A shift away from internal auditors — who can help avert misfeasance and root out problems before they get out of hand — towards external auditors under the supervision of a separate state agency is a big change,” said Guggisberg. “The goal is accountability of our institutions and taxpayer funds, and we believe that goal is most likely to be met by continuing with internal auditors and maintaining the university system counsel approach that was advanced last session.”
HB 1003 was received by the Senate on February 26 and was referred to the Senate Appropriations Committee. A hearing on the bill has not yet been scheduled.