Legislative Report

2011 Session - A Mixed Bag For Taxpayers

The 2011 North Dakota Legislative Session followed the template set by the 2007 and 2009 sessions. With the revenue windfall created by the oil tax, the culture in Bismarck has firmly cemented itself as a “spend it while we got it” philosophy. With hundreds of millions of dollars being collected due to the oil boom, there is almost no restriction as to how fast state spending can increase.

The state’s general fund budget established by the 2005 legislature was just over $2 billion; the general fund budget approved by the 2011 legislature is now just over $4 billion - a doubling in a mere six years.

This is a trend that is simply unsustainable in the long term because it requires an irresponsible reliance on “boom time tax revenue” not long term, stable revenue sources.

The policies enacted by the last three legislative sessions, Governor Hoeven and now Governor Dalrymple have set in motion the kinds of fiscal problems that other states are seeing right now.

Due to the priority placed on spending these windfall tax revenues, it has been exceedingly difficult to drive important conservative policy reforms through the legislature. When there is so much money to be spent, the focus is on tossing money around rather than fixing the policies that would make government more affordable in the long term.

There are many legislators that have taken the lead on various segments of public policy and they deserve recognition. But of equal importance is to point out how difficult it has been to enact solid conservative reforms – despite the fact that Republican hold 3 to 1 majorities in both chambers. Republicans may be the Majority, but conservatives are a minority. For any given bill promoting conservative policies, between a dozen and two dozen Republicans can be counted on to jump ship and join the Democrats in opposing such conservative proposals.

It is not even just a matter of voting against conservative proposals, there is also a concerted effort to shout down any discussion of certain reforms to higher education reform, economic development programs, and even tax reform. There are Republican forces within the legislature that aggressively seek to quash any suggestion that pet programs created by popular governors and enacted by the legislature may not be efficiently run or even appropriate for the state government to be involved with in the first place.

Grading The Legislature

There are many ways to grade a legislative session. The common way is to look at various bills of interest and grade legislators on that basis alone. This approach by itself has limited usefulness, is generally unproductive, and in fact is often counter-productive to encouraging positive changes in voting habits.

This year, NDTA has adopted a more comprehensive approach. Instead of using an arbitrary grading matrix system and leaving it at that, we will look at the results of the session, grade the legislature as a whole on those results, and go further by spotlighting the true leaders that have carried the torch for conservatism.

This year, we had the luxury of being able to focus on bills that sought to make positive changes to policy. As a result, every major bill that NDTA tracked and lobbied on was in a supportive capacity.

MVP House Leaders

Rep. Mark Dosch
- Higher Education Reform

Rep. Jim Kasper
– Property Tax Reform

Rep. Bette Grande
– Public Pension Reform

Rep. Dan Ruby
– Personal Income Tax Reform

Rep. Kim Koppelman
– Local Government Reform

Rep. Craig Headland
- Corporate Income Tax Reform

Rep. Dwight Wrangham
– Local Government Accountability

Rep. Blair Thoreson
– Government Transparency

Rep. Larry Bellew
– Broad Conservative Philosophy

Rep. Mike Nathe
– House Floor Leadership

MVP Senate Leaders

Sen. David Hogue
– Tax Reform in General

Sen. Joe Miller
– Income Tax Reductions

Sen. Dick Dever
– Local Government Reform

Sen. Margaret Sitte
– 10th Amendment (States’ Rights)

Sen. Randy Christmann
– Higher Education Reform

Rookie of the Year

Rep. Roscoe Streyle

The Issues:
* Tax Policy
* Public Pension Reform
* Higher Education Reform
* Government Transparency
* Healthcare

Tax Policy

The driving force for all improvements to tax policy this session was on the House side, and specifically within the House Finance and Tax Committee. This can be attributed to the fact that the President of the Senate is the Lt. Governor; as such the Senate was more willing to take its cues on tax policy from Governor Dalrymple.

Personal Income Tax - (Voting Records)

SB 2178 was sponsored by Senators Dwight Cook, David Hogue, Joe Miller; Representatives Craig Headland, Roscoe Streyle, and Wes Belter. This bill was Governor Dalrymple’s proposed $50 million income tax reduction. It passed the Senate floor by a vote of 37 Yeas to 9 Nays. The House killed the bill by a vote of 24 Yeas to 67 Nays because it was not a big enough tax cut.
HB 1409 was sponsored by Representatives Dave Weiler, Jim Kasper, Roscoe Streyle, Blair Thoreson, Senator Oley Larson, and Senator Margaret Sitte and sought to completely eliminate personal income tax, corporate income tax, and the financial institution tax. This bill received 16 votes on the floor of the House.
HB 1247 was sponsored by Representatives Dan Ruby, Larry Bellew, Dave Weiler, and Senator David Hogue and intended to reduce income tax rates by 60%. This bill only received 13 votes floor of the House.
HB 1289 was sponsored by Representatives Jim Kasper, Craig Headland, Keith Kempenich, and Senator Tom Fischer and was initially designed to reduce personal income tax by 15%. The bill in that form passed on the floor of the House by a vote of 68 Yeas to 25 Nays.

--- On the Senate side, an amendment by Senator David Hogue was approved to increase the personal income tax cut from 15% to 20%, and added a 10% reduction to the corporate income tax. The Senate Appropriation Committee then further amended the bill back to the original 15% cut for personal income tax, and reduced the corporate income tax cut from 10% to 8%. This version passed the Senate by a vote of 36 Yeas to 10 Nays.

--- The Conference Committee further amended the bill to be a 17.9% reduction of personal income tax and a 19.5% reduction of the corporate income tax. The Senate failed to pass the Conference Report.

--- The provisions of the HB 1289 Conference Report were amended into the language of HB 1047.

HB 1047 ended up as the Omnibus Tax Policy Bill, it contained a 17.9% personal income tax rate reduction, was passed by both chambers and signed by Governor Dalrymple.
HB 1402 was sponsored by Representatives Jerry Kelsch, Corey Mock, Kathy Hogan; Senators Carolyn Nelson, and Mac Schneider. The bill was the Democratic alternative income tax plan involving targeted tax relief to lower income residents. NDTA supported the idea of including these features in the Omnibus Tax Policy Bill (HB 1047). It was defeated by the House on a vote of 35 Yeas to 59 Nays.

Corporate Income Tax - (Voting Records)

HB 1189 was sponsored by Representatives Craig Headland, Jim Kasper, Mike Nathe, Dave Weiler, Senator David Hogue, and Senator Joe Miller. The original intent of this bill was to reform the corporate income tax by converting it to a 5% flat tax with a $75,000 exemption. This bill overwhelmingly passed the House by a vote of 72 Yeas to 22 Nays. The Senate unanimously killed the bill opting for the corporate income tax reductions found in HB 1047.

HB 1047 ended up as the Omnibus Tax Policy Bill, it contained a 19.5% corporate income tax rate reduction, was passed by both chambers and signed by Governor Dalrymple.

Sales Tax – (Voting Records)

SB 2333 was sponsored by Senators Ryan Taylor and Senator Carolyn Nelson; and Representatives Larry Bellew, Stacy Dahl, Jerry Kelsch, and Corey Mock. This bill sought to exempt clothing from sales tax. It failed on the Senate floor by a vote of 11 Yeas to 34 Nays.

HB 1437 was sponsored by Representatives Dwight Wrangham, Wayne Trottier, and Lonny Winrich with the goal of reducing the state sales tax by ½ cent and requiring legislative approval of local sales taxes seeking to fill the void. It received 30 Yeas and 64 Nays on the floor of the House.

Property Tax Reform – (Voting Records)

HB 1293 was sponsored by Representatives Jim Kasper, Craig Headland, Todd Porter, Blair Thoreson, Dwight Wrangham, and Dave Weiler. This bill sought place a 3% limit on the property tax levied, in dollars, on each parcel of property. It failed to pass the floor by a vote of 15 Yeas to 78 Nays.

HB 1272 was sponsored by Representatives Kim Koppelman, Joe Heilman, Mark Owens, Dan Ruby, Senator David Hogue, and Senator Margaret Sitte. The bill was similar to HB 1293. It received 12 Yeas and 82 Nays.

HB 1194 was sponsored by Representatives Todd Porter, Wes Belter, Rae Ann Kelsch; and Senators Dwight Cook, Tom Fischer, and David Hogue. The intention of the bill was to require a vote by local government entities on revenue to approve budget increases by reducing the mill levy by the same percentage as the increase in cumulative property values. The bill went through many variations, many of which weakened the force of the bill from the original intentions. The bill first failed in the House by a vote of 46 Yeas to 47 Nays, but passed the House the next day by a vote of 57 Yeas to 36 Nay. It later passed the Senate by a vote of 29 Yeas to 18 Nays. Both chambers concurred to a Conference Committee Report that further weakened the enactment of the bill.

HB 1253 was sponsored by Representatives Kim Koppelman, Dan Ruby, Larry Bellew, Mark Owens, Senator David Hogue, and Senator Spencer Barry. The intent of the bill was to create a mechanism to rectify a variation in assessed value and purchase price of recently transacted properties. The bill was defeated on the floor of the House by a vote of 23 Yeas to 69 Nays.

HB 1342 was sponsored by Representatives Larry Bellew, Dave Weiler, Dwight Wrangham, and Jeff Delzer. The intent of the measure was to expand the timeline for local budgeting and incorporate new requirements in the hope of increasing local voter and taxpayer involvement in local budgeting. Local government lobbyists opposed the bill and it failed in the House by a vote of 22 Yeas to 71 Nays.

Property Tax Relief –

The legislature extended the previously enacted property tax relief (tax shift). The first two years of the program had a price tag of $300 million, the 3rd and 4th years will have a combined cost of at least $341 million, with the price tag continuing to grow roughly 6% each year. NDTA does not consider this to be a tax cut as it is simply a shifting of state tax dollars to local government with no guarantee that the program will be permanent.

Tax Increase Limitation - (Voting Records)

HCR 3023 was sponsored by Representatives Wes Belter, Al Carlson, Craig Headland; Senators Bob Stenehjem, Dwight Cook, and Randy Christmann. This bill would have placed a constitutional measure on the 2012 ballot to raise the vote requirement to a 60% majority for the legislature to enact any tax increases. The bill failed the floor of the House by a vote of 35 Yeas to 57 Nays.

Public Pension Reform - (Voting Records)

One of the most contentious issues of the 2011 Legislative Session was the issue of Public Pension Reform. Prior to the session, the Associated Press took a survey of legislators and found that 70% of legislators were open to do the idea of dramatically reforming the public pension system in North Dakota.

Unfortunately, the events in Wisconsin regarding their budget crisis and fight with the unions casted a shadow over the discussion of the need for pension reform in North Dakota.

HB 1228 was sponsored by Representatives Bette Grande, Don Vigessa, Robin Weisz; and Senators John Andrist, Tony Grindberg, and Joe Miller. The intent of the bill was to close enrollment in the state’s defined benefit retirement program and require all new state employees to be entered into a defined contribution plan. The bill was given a DO PASS recommendation by the committee but failed to obtain a constitutional majority (48 votes) on the House floor receiving 47 Yeas and 46 Nays.

HB 1258 was sponsored by Representatives Bette Grande, Craig Headland, Scott Louser; and Senators John Andrist, Gary Lee, and Dave Oehlke. The purpose of the bill was identical to that of HB 1258, but applied to new teachers rather than state employees. The bill failed on the floor by a vote of 36 Yeas and 56 Nays.

Special credit on this issue needs to be given to Representative Bette Grande and Mike Nathe for headlining the issue of pension reform.

The supporters of these reforms were hamstrung by members of their own party who were not being honest about where they stood on the bills. As Caucus Leader, Representative Mike Nathe was put in a very tough situation when upwards of a half-dozen of his own caucus members were not being fully honest about their voting intentions.

Higher Education Reform - (Voting Records)

Higher Education is the 3rd rail of North Dakota politics. If you criticize any facet of North Dakota’s higher education system you are deemed to be anti-education. It is also the preferred vehicle for “pork” at the state level. It is the most difficult issue to tackle because even suggesting there are problems will get you shouted down by members of your own party if you are a Republican.

HB 1369 was sponsored by Representatives Mark Dosch, Keith Kempenich, and Mike Nathe. The bill would have added specific reporting requirements to the Higher Education Accountability report with regard to student funding. It passed the floor of the House by a vote of 64 Yeas to 28 Nays, but was killed on the floor of the Senate by a vote of 21 Yeas to 26 Nays.

HB 1444 and HB 1445 were sponsored by Representatives Mark Dosch and Mike Nathe. The intent of both bills was to create a discussion of the long taboo subject regarding the subsidization of out-of-state students in the higher education system. Both bills were killed on the floor of the House. HB 1444 failed by a vote of 15 Yeas to 77 Yeas, and HB 1445 failed by a vote of 38 Yeas to 55 Nays.

HB 1470 was sponsored by Representatives Larry Bellew, Brenda Heller, David Rust, Mark Dosch, and Senator Joe Miller. This bill would have returned final say for tuition increases to the legislature. The bill failed on the floor of the House by a vote of 41 Yeas to 51 Nays.

Government Transparency - (Voting Records)

Government transparency is a basic principle that should not be a partisan issue. Unfortunately, bureaucrats do not like the idea of having their spending itemized and published online for the world to see.

HB 1449 was sponsored by Representatives Blair Thoreson, Brenda Heller, Dave Weiler, Jim Kasper, Larry Bellew, and Senator Joe Miller. The bill’s intent was to add local government spending to the recently developed state government transparency website. Lobbyists for local government hoodwinked legislators into thinking this was not technologically possible. The bill failed on the floor of the House by a vote of 37 Yeas to 56 Nays.

SB 2327 was sponsored by Senators Dick Dever, Jim Dotzenrod, Judy Lee, Terry Wanzek, Representative Dave Weiler, and Representative Kim Koppelman. The bill prohibited the use of public resources to support or oppose initiated measures at the state and local level. The bill passed the Senate by a vote of 37 Yeas to 8 Nays, and passed the House by a vote of 68 Yeas to 24 Nays, and the governor signed the bill.

Healthcare - (Voting Records)

The dangers of the Federal Government’s actions are clear to everyone. ObamaCare cost a lot of Democrats, including Earl Pomeroy, their jobs. A legislature dominated with a 75% Republican Majority should have no problem passing legislation to protect North Dakotans from the over-reach of the Feds on the issue of healthcare. They shouldn’t have any problem, but somehow they did anyways.

HCR 3014 was sponsored by Representatives Jim Kasper, Craig Headland, Dan Ruby, George Keiser, Senator Jerry Klein, and Senator Rich Wardner. This bill would have put a constitutional measure on the 2012 to establish a constitutional protection against the individual mandate to purchase health insurance that was created by ObamaCare. It failed to pass the floor of the House by a vote of 39 Yeas to 54 Nays.

SB 2309 was sponsored by Senators Margaret Sitte, Dick Dever, Spencer Barry; Representatives Dan Ruby, George Keiser, and Jim Kasper. This bill sought to nullify ObamaCare. It passed the Senate by a vote of 27 Yeas to 19 Nays, and it passed the House by a vote of 65 Yeas to 25 Nays, and was signed by the governor.

HB 1291 was sponsored by Representatives Jim Kasper, Blair Thoreson, Craig Headland, Dave Weiler, Senator Rich Wardner, and Senator Jerry Klein. The bill sought to allow North Dakota to enter into a muti-state healthcare compact as a means of protecting North Dakotans from the burdens of ObamaCare. The bill failed on the House floor by a vote of 36 Yeas to 56 Nays.