NFIB/North Dakota End-of-Session Report

Date: June 19, 2017

Defeat of bad minimum-wage proposal, passage of UI electronic filing highlight victories for small businesses

NFIB/North Dakota State Director Raeann Kelsch reports on the small-business agenda at the April 27, 2017, end of the 65th Legislature

There was a flurry of activity during the 2017 legislative session. And while there was much less money to work with, the sky still isn’t falling on North Dakota.

NFIB worked diligently to ensure that the 2017-19 state budget would be balanced without tax increases or new taxes. Due to the foresight of the people of North Dakota and their Legislature, rainy day funds were set up to address deficits if the state experienced an economic downturn, which is where the state is currently. Those funds, coupled with across-the-board cuts, were enough to balance the budget.

Although the state budget was foremost in everyone’s mind, NFIB also succeeded in achieving the following for North Dakota small businesses.

Won Property Tax Relief

NFIB lobbied for the successful passage of Senate Bill 2206, which eliminates a sizable portion of county levy authority for human services (up to 20 “mills”) to provide property tax relief.

Over the last several biennia, lawmakers have been looking to identify areas for permanent property tax reform. Former Gov. Jack Dalrymple worked to push more state money into school districts to provide property tax relief. 

In addition, legislative leaders have looked into options to transfer the cost of social services from the counties to the state. With the passage of Senate Bill 2206, the state will assume costs statewide under a two-year pilot program in 2018 and 2019. Total appropriation for the two-year pilot is $160.7 million.

Defeated Minimum-Wage Increase

A perennial effort by cause groups or well-meaning lawmakers to raise the minimum wage occurs in every state legislature in the nation. A bid to not only increase North Dakota’s minimum-wage rate, but also empower the state labor commissioner to set future rates as he or she wanted, surfaced in the 2017 session of the Legislature.

NFIB/North Dakota helped defeat this bad idea by reminding lawmakers of what the minimum wage is and who it affects and doesn’t affect.

The minimum wage is earned by just 2.7 percent of the nation’s workers, according to the U.S. Bureau of Labor Statistics, and most of them “tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 10 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and older.”

In short, the minimum wage is an entry level wage earned mostly by teenagers and young adults still living at home. Increases in the minimum wage have only one major effect—eliminating entry-level jobs. Despite these facts, proponents of ever-increasing rates wrongly argue that they’re needed to lift people out of poverty, even though little to no evidence back it up.

Smoothed Unemployment Insurance Filings

NFIB/North Dakota helped pass a measure allowing for the electronic filing of employer unemployment contribution and wage reports, making this a much more effective and efficient process for all.

Streamlined Definition of a Primary Sector Business

For both employers and the government, a primary sector business is needed for tax and regulatory compliance, but North Dakota had a crazy quilt of definitions. With support from NFIB, legislation clarifying the definition of a primary sector business passed.

Protected Private Property Rights

The Fifth Amendment of the U.S. Constitution allows government to take private property for public use, but only with payment of “just compensation.” But in 2005 the U.S. Supreme Court issued a controversial decision, in Kelo v. City of New London, which held that local governments can use eminent domain to take private property—even if they simply intend to hand the land over to private developers, seeking to advance private profit interests.

In a 5-4 decision, the Kelo court ruled in favor of the City of New London; however, the states still retain the prerogative to provide added protections for landowners against these sort of “redevelopment” takings, whether by statute or through enforcement of more protective state constitutional standards. NFIB/North Dakota worked diligently for a new law that limits local water-resource districts from abusing their eminent domain privilege by requiring county commissions, as well, to approve property takings. That way, elected officials share in the decision made by the unelected appointees of various governmental bodies.

State Budget

Lawmakers were forced to prioritize, make cuts, eliminate inefficiencies, and find more cost-effective ways to run government. They finalized a slimmed-down budget on Day 77 of the 2017 legislative session to adjourn sine die, working in the aftermath of an interim plagued by bleak revenue news. In the end, lawmakers departed the legislative session leaving a 2017-19 budget of $13.6 billion, of which $4.3 billion is in general fund spending. 

This was a decline in spending from a record $14.4 billion total budget approved last session for the 2015-17 biennium, which contained $6 billion in general fund spending. This budget is a 36 percent decrease from the peak spending levels in 2013-15, and a 28 percent decrease from the 2015-17 budget.

The 2017-19 budget was crafted with an estimated general fund ending balance of approximately $50 million. And that is not much considering that monthly shortfalls have averaged between $12-18 million each month in the last two years.

Human services, K-12 and higher education were among the largest budgets passed. A record $3.77 billion Department of Human Services Budget was passed, of which nearly $1.34 billion was general fund dollars. K-12 and higher education also both had large spending, which was also a key priority for lawmakers.

For higher education, a total of $2.66 billion was approved with general fund spending of $625 million. In K-12 education, total spending was $2.33 billion, of which $1.44 billion was general fund spending. Virtually no budget beyond human services and K-12 education were spared in cuts.

In the year prior to the session, more than $1.4 billion was sliced out of generally funded state agencies during two rounds of budget cuts ordered to address projected shortfalls. A lack of revenue due to plummeting commodity prices in oil and agricultural products led to a sharp reduction in dollars coming in to the state’s coffers.

This session was the shortest since the 76-day sessions held in 2003 and 2005. Every session since 2007 has been 78 days or longer, with lawmakers using their full 80-day constitutional limit for the first and only time in state history in 2013.

New Faces, New Opportunities

New faces appeared at the State Capitol in January. Newly elected Gov. Doug Burgum and Lt. Gov. Brent Sanford were joined by 26 new House members and 11 new senators. Despite their learning curve, the good news was the continued support for small business that lawmakers showed in their diligent work against over-reaching regulations and mandates.

With the state’s budget stabilized, thanks to prior prudence, Governor Burgum can move more quickly on his goal of diversifying the North Dakota economy, creating jobs, and revitalizing our Main Streets. This will go hand-in-glove with his other interest in innovating the classroom by helping kids to achieve in non-traditional ways.

Follow North Dakota Small Business

To best follow the small-business agenda in North Dakota:

  • make a regular habit of checking the NFIB/North Dakota webpage at www.nfib.com/north-dakota
  • follow us on Twitter at @NFIB_ND
  • be sure and vote your NFIB Member State Ballot when it arrives later this year.

Not a member? See sidebar story to your right on how to become one. Also check out the ‘Would You Like To Be A Small Business Leader?’ story on the NFIB/North Dakota webpage.

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