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North Dakota is providing more than half a billion dollars in tax relief to citizens while also cutting red tape and making historic investments in workforce, child care, infrastructure and other key priorities, Gov. Doug Burgum said today after the 68th Legislative Assembly adjourned its regular session sine die.
“This session, major achievements were accomplished – resolving many longstanding, seemingly intractable issues – that will now help North Dakota reach our fullest potential,” Burgum said. “From major investments in child care, education, workforce and infrastructure to cutting mountains of red tape, to pension reform, strong support for law enforcement and our active military and veterans, strengthening tribal engagement, and growing animal agriculture and value-added energy – each of these important areas saw tremendous progress.
“With these and other challenges being met head-on, and a historic $515 million income and property tax relief package that will allow North Dakota residents to keep more of their hard-earned money, our state is well-positioned to grow our economy, strengthen our communities and create a brighter future for all,” Burgum continued. “We’re grateful for the incredible work and collaboration by our Team ND members who serve citizens across North Dakota every single day, and to the members of the 68th Legislative Assembly whose hard work and passion this session supports what we strive to do in state government, which is empower people, improve lives and inspire success.”
The landmark tax relief package will provide $358 million in individual income tax relief by zeroing out the state’s bottom tax bracket and combining the top four brackets into two brackets with reduced tax rates of 1.95% or 2.5%. The remaining $157 million in the package will be available to homeowners by claiming a $500 property tax credit on their primary residence and through expanded eligibility in the state’s Homestead Property Tax Credit program for homeowners ages 65 and older.
“North Dakota can now claim the lowest income tax rates in the nation among states that have individual income tax, helping us to recruit and retain workers to address our workforce challenges,” Burgum said. “We’re grateful to our legislative partners whose thoughtful work allows North Dakotans to save more than half a billion dollars over the next two years and moves us further down the path toward becoming a zero-income tax state.”
In December, Burgum recommended a 2023-25 budget with general fund expenditures of nearly $5.9 billion and a total budget of $18.4 billion, which included a huge influx of federal and special funds, formula-driven increases and historic inflationary costs.
The legislatively approved budget contains general fund expenditures of $6.1 billion and a total budget of $19.6 billion. The record general fund budget is $6.8 billion in 2013-15, and the previous record total budget, including federal aid, was $17.8 billion for the current biennium.
Burgum had signed 538 bills through Saturday, with 45 bills awaiting action. He has 15 business days – until May 19 – to act on the remaining bills.
A severe labor shortage remains the No. 1 barrier to economic growth in North Dakota, and addressing this challenge was a top priority heading into session.
As the Department of Commerce continues to drive the state's workforce strategy, its budget bill, House Bill 1018, includes $12.5 million to sustain the Regional Workforce Impact Grant, which is currently in a pilot phase using federal dollars and has successfully supported 59 locally led workforce solutions statewide.
With more than 30,000 open jobs in North Dakota, recruiting and retaining workers continues to be a primary focus. The Legislature invested $12 million to expand Find the Good Life, a comprehensive talent attraction initiative that combines strategic marketing, connection to communities and employers, and unique tracking capabilities that quantify return on investment.
In addition to $2 million for skilled workforce training $1 million to support internships, the Legislature added $2 million for New American workforce training grants, which will play a critical role in achieving the early vision and goals of the new Office of Legal Immigration created by SB 2142.
House Bill 1382 allows state scholarship dollars for qualifying students to be used toward apprenticeship programs in North Dakota. Students who meet the requirements and are enrolled in qualifying registered apprenticeship programs would be eligible for a scholarship of $500 each term, up to $6,000.
For the first time, the Job Service North Dakota budget bill, HB 1016, includes state general fund dollars to support the H2A Visa Program for temporary agricultural workers, which has grown significantly in the last 15 years.
The Job Service budget also funds a collaborative effort with the Department of Corrections and Rehabilitation and a nonprofit entity to create a Job Placement Pilot Program that will connect recently or soon-to-be released residents with in-demand jobs in North Dakota.
SUPPORTING CHILD CARE
Also related to workforce, HB 1540 directs nearly $66 million to support child care services as a critical component in alleviating North Dakota’s labor shortage.
Last September, Burgum and lawmakers proposed a comprehensive package to address the availability, affordability and quality of child care as a barrier to workforce participation. HB 1540 funds many of those proposals, including expanding the child care assistance program to increase the number of families with children ages 0 to 3 who receive help paying for child care; incentivizing more providers to deliver child care for infants and toddlers; providing matching funds for workers whose private employers contribute money to cover their child care expenses; and providing funding for training child care workers.
GROWING ANIMAL AGRICULTURE
In his State of the State address on Jan. 3, Burgum urged the Legislature to modernize the state’s archaic “corporate farming” law as it applied to ownership of animal agriculture operations, with the goal of growing the state’s dairy, livestock, feedlot, swine and poultry production and adding value to North Dakota crops.
Lawmakers came through with HB 1371, which allows farmers and ranchers the ability to aggregate capital via an authorized livestock farm corporation or limited liability company (LLC). Burgum said the narrowly defined changes in state law will take the handcuffs off farmers and ranchers and allow capital investment to flow into the state, growing animal agriculture, adding value to crops, creating opportunities for the next generation, and helping rural communities and schools to thrive in North Dakota once again. The bill has an emergency clause, so it takes effect immediately and allows potential projects to begin construction this spring.
The governor also signed HB 1276 providing $25 million – more than double the current funding – for the state’s Agriculture Diversification and Development (ADD) Fund to provide grants for new or expanding value-added agriculture businesses as well as public infrastructure improvements to support such businesses.
BACKING THE BLUE
Burgum signed several bills to support law enforcement and show that North Dakota “Backs the Blue,” starting with HB 1279, which expands workers’ compensation coverage for full-time firefighters and law enforcement officers.
SB 2147 exempts law enforcement retirement pay from state income tax – similar to a bill passed in 2021 that exempted military retirement pay – making North Dakota more competitive with other states for peace officers considering where to work and spend their retirement years.
HB 1307 provides $3.5 million that can be used for providing hiring and retention bonuses to new and current officers, including correctional officers, and for providing tuition and fee payments on behalf of law enforcement trainees.
HB 1183 moves peace officers employed by the state to the Bureau of Criminal Investigation (BCI) retirement plan, ensuring the state’s game wardens, park rangers and parole and probation officers are on a level playing field when it comes to retirement benefits.
And HB 1309 adjusts retirement benefits for BCI agents with the goal of allowing them to retire closer to age 55, helping the agency recruit and retain the best and brightest in law enforcement and ensure appropriate succession planning.
CUTTING RED TAPE
Burgum has signed 50 of the 52 bills introduced this legislative session to change or eliminate over 400 antiquated, unnecessary and burdensome regulations and other red tape that was identified through the Red Tape Reduction Working Group created by executive order last August. The working group was tasked with identifying regulations, rules and policies that could be changed or eliminated to reduce burdens and lower costs for North Dakota citizens and the private sector and make state government more efficient, effective and nimble. The group received about 500 ideas from the public, agencies and team members. Examples of red tape that was cut can be found here.
BUILDING STRONG COMMUNITIES
In his State of the State address, Burgum called for “Renaissance Zone 2.0” legislation to refresh the successful state program that is used by more than 60 communities statewide and incentivizes smart, efficient use of existing infrastructure in community development projects.
SB 2391 expands the tax exemption benefit period for Renaissance Zone projects meeting certain criteria and allows Commerce to extend a zone’s status in increments of 10 years instead of five. By reducing red tape and barriers to having projects approved, Burgum said cities can drive private investment in areas with existing infrastructure and lower property taxes. A related bill, HB 1266, allows cities with expired Renaissance Zone areas to reapply to join the program.
In the first approved bill of the session, Burgum signed HB 1199, providing a $68 million line of credit to help finance the construction of 13 planned career academies across the state where students can pursue high-demand careers in the trades, health care, technology and other sectors to help meet workforce needs. Burgum in his State of the State address had called for the bill to be one of the first to reach his desk to ensure career academy construction could begin this spring. The Legislature had approved funding the projects, which required a local dollar-for-dollar match, in November 2021 using federal dollars, but the U.S. Department of the Treasury has yet to release the funding. The bill provides a line of credit through the Bank of North Dakota (BND) to fulfill the state’s funding obligation and appropriates money to repay any interest that accrues on funds borrowed through the line of credit.
As part of ongoing efforts to make North Dakota the most military-friendly state in the nation, Burgum signed SB 2293 to exempt military pay from state income tax for active duty, National Guard and Reserve members, building on legislation signed in 2019 that exempts military retirement pay. SB 2293 is estimated to reduce North Dakota service members’ income taxes by $4 million in the 2023-25 biennium. With the bill, North Dakota joins about 20 other states that don’t tax military income, which will help the National Guard with recruiting efforts and incentivize retired veterans to stay in North Dakota.
In another effort to strengthen recruiting, Burgum signed SB 2094, which allows North Dakota National Guard members who attend college out-of-state to qualify for State Tuition Assistance, similar to how Minnesota National Guard members who attend a North Dakota college receive state tuition reimbursement from Minnesota. Currently there are more than 600 North Dakota Guard members who live in surrounding states, with about 90% of them living in Minnesota.
SB 2182 allows child care providers licensed by the U.S. Department of Defense to operate in North Dakota with their DOD license and without redundantly being licensed with the state. HB 1132 allows military-connected children the option of starting their education virtually at a North Dakota school prior to arriving or to complete the semester with a North Dakota school after their parent’s reassignment to help relieve stress and support educational success.
House Bill 1021 provides $5 million plus staffing to implement the Business Gateway, a one-stop shop for businesses interacting with state government. Business Gateway will provide a single sign-on experience for businesses in their online interactions with all state agencies, such as completing quarterly or annual filings and payments across multiple agencies such as Secretary of State, Job Service North Dakota and Workforce Safety & Insurance. It also lays the foundation for future enhancements that could provide even greater benefit to employers, such as proactively matching businesses to grant opportunities and other programs and resources to help North Dakota businesses grow and be even more successful. The Business Gateway is the first phase of a larger project to create a Citizen Gateway, a one-stop solution for citizens where they could purchase a fishing license and park pass, file a tax return, access health and human services, or check out a library book, for example.
WOMEN’S CORRECTIONAL CENTER
The budget for the Department of Corrections and Rehabilitation (DOCR) includes $131.2 million for design and construction of a new women’s correctional center in Mandan to replace the existing Dakota Women’s Correctional Rehab Center, a leased facility in New England where female DOCR residents have been housed since 2003. The bill also includes legislative intent for an additional $30 million next session to complete the project. The new facility will provide adequate, modern space and conditions for female residents and a more central location for visitation and recruiting staff.
House Bill 1286 will eliminate the state’s “trigger” tax on oil production, with the goal of encouraging more investment in North Dakota’s energy sector. Current law charges oil producers a higher tax rate if oil prices increase to a certain level – discouraging companies from investing in North Dakota over other oil-producing states with more stable tax structures. For oil wells touching the Fort Berthold Reservation, HB 1286 still gives the Mandan, Hidatsa and Arikara Nation the option of imposing the trigger tax when prices reach the threshold.
In ongoing efforts to strengthen state-tribal relationships, Burgum signed HB 1385, which allows the State Water Commission to directly enter into agreements with tribal nations for a cost-share program that provides state funding for water development projects, including water supplies, flood protection and other general water management efforts, rather than having to go through an eligible non-tribal partner.
Burgum also signed SB 2377, which allows each of the five tribal nations with whom North Dakota shares geography to enter into a tax-sharing agreement with the state on alcoholic beverages sold at the retail and wholesale levels within their respective reservations. Tribal nations that adopt the alcohol tax will keep 80% of the tax revenue, while the state’s general fund will receive 20%. Burgum said the bill creates a fair and uniform framework for taxing alcohol on reservations while ensuring that the bulk of the revenue goes to the tribes to support addiction treatment and other programs.
The Native American scholarship was nearly doubled to $1 million and grants to tribally controlled community colleges increased to $1.4 million.
SB2073 allows North Dakota Information Technology to provide IT and cybersecurity services to tribal schools and colleges should they choose to utilize the services.
Burgum signed legislation that provides emergency grants to help cover extraordinary snow removal costs for local governments whose budget were challenged by a record-breaking winter. SB 2183 appropriates $20 million for emergency snow removal grants to eligible tribal governments, counties, cities and townships. In addition, Senate Bill 2015 added $5 million for emergency snow removal grants from the State Disaster Relief fund for a total of $25 million.
GROWING ENERGY SECTOR
HB1014, the Industrial Commission budget, provides for a $140 million expansion to the existing $250 million line of credit to support loans or loan guarantees issued from the Clean Sustainable Energy fund, increasing the total program $390 million. In addition, the bill includes $30 million for clean sustainable energy fund grants.
The Industrial Commission’s budget, HB 1014, also contains $3 million for the Intelligent Pipeline Integrity Program (iPIPE) to continue the development of world-class pipeline safety technology through innovation.
Lawmakers also advanced legislative intent for the North Dakota Pipeline Authority to commit $30 million a year to partner with private industry to build additional natural gas takeaway capacity to support the oil and gas industry and provide additional natural gas for value-added agriculture development in eastern North Dakota.
HB 1170 provides a property tax exemption for natural gas pipeline projects which will supply gas to communities without a current gas supply.
HB 1272 will allow Bakken producers to apply to the Industrial Commission to place uneconomic producing wells into a “enhanced oil recovery” state to be used again with future development of the CO2 enhanced oil recovery industry.
HB 1511 creates economic incentives for value-added uses of coal such as critical mineral and rare earth mineral processing, plastics, building materials and aggregates for road construction. The bill also incentivizes investment in North Dakota coal country through an exemption in sales and use tax to build a processing facility for value-added uses of lignite and through a coal severance tax exemption for the first million tons of coal used at one of these facilities.
The Industrial Commission budget, HB 1014, includes a study on the “Lignite Plant of the Future,” working with the Energy & Environmental Research Center in Grand Forks to gauge the demand forecast for dispatchable electricity generation and the regulatory environment for future lignite generation facilities, as well as their economic impact and potential value-added products that may result. The bill also includes $3 million for lignite litigation to help industry push back against federal regulatory overreach, including attempts to prematurely shut down dispatchable baseload resources.
K-12 AND HIGHER EDUCATION
North Dakota became the first state in the nation to approve legislation requiring cybersecurity education with the governor’s signing of HB 1398, which requires the teaching of computer science and cybersecurity and the integration of these content standards into school coursework from kindergarten through 12th grade. EduTech, a division of North Dakota Information Technology that provides information technology support and professional development for K-12 educators, will be developing examples of cybersecurity and computer science education integration plans that may be used to assist local schools develop their own plans.
Senate Bill 2284 appropriates $6 million to provide free meals to K-12 students from families whose income is between 130% and 200% of the federal poverty level, helping to ensure all students have nutritionally balanced meals as they engage in learning. Students from families with income below 130% of the federal poverty level already can receive free meals through a federally funded program.
House Bill 1020 provides $87 million from state sources and $10 million from other sources to replace Waldron Hall at North Dakota State University. The new facility will create a world-class research and study space to continue the state’s leadership in the advancement of agriculture.
As inflation impacts families across the country, tuition is continuing to become an even greater burden. Through HB 1003, North Dakota is once again putting students and families first by freezing tuition for residents over the 2023-24 and 2024-25 academic years.
House Bill 1003 also increases the higher education challenge grant to $20 million, which will result in at least $60 million from public and private sources to advance scholarships, endowed chairs, research and education technology.
The state continues to prioritize investments in its surface transportation system with over $1 billion of state and federal resources allocated for road and bridge improvements.
With the passage of SB 2113, $222.5 million will be appropriated to the newly created Flexible Transportation Fund, which will prioritize projects that leverage federal funding and corridor improvements on county and township roadways. This landmark legislation will allow the North Dakota Department of Transportation to fund critical projects off the state highway system for the first time, representing a shift from historical funding limitations to a more flexible approach that considers all roads as part of an integrated system.
The Department of Water Resources budget includes $780 million for water projects across the state, including $368 million for municipal and rural water supply grants, $116 million for flood control and $9 million in discretionary funding.
House Bill 1004 dedicates $55 million in federal funds to the Department of Health and Human Services to replace the existing public health lab built in 1974 with a state-of-the-art lab that will be better able to respond to changing demands and emergencies. The Legislature previously approved $15 million for the new lab during its special session in November 2021.
Tourism in North Dakota will receive a boost with $25 million in the Commerce budget for destination development, to be awarded through a competitive grant process capped at $5 million per project.
The State Historical Society Budget, SB 2018, includes a $20 million line of credit from the Bank of North Dakota to help pay for construction of a North Dakota Military Museum, which Burgum included in his executive budget proposal. The North Dakota National Guard is leading the effort to create the museum as an addition to the North Dakota Heritage Center and a place where current and future generations can learn about and reflect upon the incredible legacy of the men and women from North Dakota who courageously served their country in the military.
PARKS AND RECREATION
The Parks and Recreation Department budget, SB 2019, includes $27 million from the Strategic Investment and Improvements Fund to enhance parks across the state. The funding includes $6 million for a new campground at Pembina Gorge, $2.4 million for cabin construction and $10 million for deferred maintenance and capital projects.
SUPPORTING CHILDREN AND FAMILIES
In addition to the nearly $66 million child care package, a number of bills were passed aimed at supporting children and families.
SB 2181 includes about $2 million to increase the Medicaid eligibility limit for pregnant women and codify the expectation that Medicaid will provide assistance for the duration of the pregnancy and 12 months postpartum.
SB 2012 provides $1.6 million for a Pregnant Parenting Women program, $3.5 million for school behavioral health grants, a $2.5 million increase for Children’s Advocacy Centers and an additional $1.4 million to support unlicensed relative caregivers, also known as “kinship care.” And HB 1177 exempts diapers from sales tax.
BEHAVIORAL HEALTH AND RECOVERY
The budget provides roughly an additional $15 million to fully fund Free Through Recovery, a community-based behavioral health program designed to increase recovery support services to individuals involved with the criminal justice system, and the Community Connect program for behavioral health services. It also expands the Recovery Housing Program and provides funding to support individuals needing psychiatric services in jails.
SB 2012 also includes $12.5 million for the design of a new State Hospital project to be shovel-ready by the 2025 legislative session, as well as grants for 10-bed inpatient behavioral health services in Dickinson and Williston.
The budget also includes $8 million for projects funded with opioid settlement funds, at least 20% of which will address opioid abuse prevention.
The Legislature invested $39 million in HB 1018 to support and advance North Dakota’s status and strategy as a leader in unmanned aircraft systems (UAS), closely aligned with the governor’s budget request. Of the $39 million, $26 million will go toward continuing the buildout of the Vantis network, the nation’s first beyond visual line of sight (BVLOS) network for UAS operations. Lawmakers provided $10 million for continued development of the Grand Sky aviation park, which is home to tenants such as Northrop Grumman and General Atomics. Grand Sky is a flagship example of world-class infrastructure on the ground enabling world-class operations in the air, providing a major competitive advantage for North Dakota. The remaining $3 million is for the Northern Plains UAS Test Site, one of seven federally recognized test sites in the nation. Together, this trio of investments will continue to cement North Dakota’s status as the leader in UAS technology and operations.
TEAM MEMBER COMPENSATION
The Legislature approved average compensation increases of 6% during the first year of the biennium and 4% the second year as Burgum had recommended to attract and retain state team members in an increasingly competitive job market and at a time of high inflation. The Legislature also approved $82 million in equity funding to bring targeted agency salaries, including higher education, closer in line with the overall market.
Burgum signed HB 1040, a major pension reform bill that protects the retirement benefits for existing public employees and retirees and also protects taxpayers in the long-term by addressing a $1.9 billion unfunded liability in the North Dakota Public Employees Retirement System (NDPERS). The bill closes the state’s existing defined benefit plan, increases the employer contribution rate by 1% in 2024 and injects $200 million into NDPERS to reduce the $1.9 billion unfunded liability, helping to ensure the state can meet its future obligations to more than 53,000 employees and retirees from state government and local governments enrolled in the plan. The bill also shifts new hires to a generous defined contribution plan, similar to 401(k) plans offered to employees in the private sector.