Wednesday was day 72 and every indication is that lawmakers have their sights on finishing their work either over the weekend or early next week. With that said their final days have been focused on conference committees reaching compromises and hours voting on bills. Progress has been made on several major bills of county interest.

Discussion on the Attorney General’s enhanced penalty bill, SB 2107, hit a major snag Tuesday. During discussion on the House floor of the conference committee’s report, it was apparent there was major opposition. New Representatives were assigned to the conference committee and new negotiations will begin Wednesday afternoon. There are significant differences between the house and senate versions of this bill. As it was returned to conference committee, members removed the bulk of the substance of the bill and passed out the bill that only includes a study of firearm possession. We expect this bill to be voted on Thursday.

Work continues on the Department of Health and Human Service budget, SB 2012, which includes funding for equity for human service zones. This may likely be on of the last bills passed this session as the provider rates for doctors and hospitals in the Expanded Medicaid program are in dispute. This has a huge impact on the overall general fund budget as well as on the finances of many medical providers. The “county interests” appear to be largely resolved. Both houses approved the zone funding as initially requested and incorporated the state’s 6% and 4% salary adjustments – so this has not been debated. The “equity funding” to address the disparities in overall compensation within and among zones however, was a point of contention. Ultimately it appears that between $3 and $4 million will be approved to address salary equity, but the estimated $8 million to address the differences in health insurance premiums does not seem likely. House conferees state that state employment of zones would solve that, and the variation in benefits will keep that discussion on the table. The policy section of this bill requires that a legislator be appointed to each zone board.

Progress was made on reaching a compromise on a tax relief package included in HB 1158. The $515 million tax relief package includes income and property tax relief and expansion of the homestead tax credit. The Senate and House both approved this bill Wednesday. It is now on it’s way to the Governor.

• Income Tax Relief: Compresses income tax brackets from 5 to 3. The bottom bracket is 0%. Provides $358 million in tax relief.
• Property Tax Credit: Provides $500 tax credit on property taxes for primary residences only. Residents will be required to apply to the state tax department for this credit. It will start in taxable year 2024 for two years. Provides $103 million in relief.
• Homestead Tax Credit: Expands homestead tax credit by compressing the six current brackets to two and increases the income threshold. Property owners 65 and older with an income less than $40,000 will be eligible for 100% of their taxable valuation up to $9,000 reduction. Individuals with an income between $40,000-$70,000 will be eligible for a 50% reduction of their taxable valuation up to $4,500. This expansion will provide $53.5 million in relief.
• In response to the House and Senate passing HB 1158, independent tax relief bills related to income (HB 1118), property tax (SB 2066) and homestead (SB 2136) were defeated.

The Legislature made a significant move in adopting a permanent funding formula for road and bridge funding for non-oil counties and townships. There are a few pieces of legislation that work together in accomplishing this: HB 1012 the Department of Transportation budget, HB 1379 the Legacy Fund Earnings or “Streams” bill and SB 2113 which creates a state flexible transportation fund. The illustration is a good way to help understand the infrastructure package (you can click on the image to see it full screen). Together, these bills will provide $81 million to counties, townships and cities and again it will be permanent funding.

Here are the highlights of the infrastructure package:

• HB 1012 utilizes revenues from the motor vehicle excise tax for road funding. 75% of it will go to the State Department of Transportation and 25% to “non-oil” counties and townships. It is estimated in the next biennium that will be $42.8 million. These funds will be allocated by the DOT director, the director will establish criteria for the funds. The dollars can be used for maintenance and improvements to county and township roads and bridges. Priority is to be given to roads and bridges that serve as corridors and those that need a federal match. These funds will be available August 1st, 2023.
• SB 2113 establishes a new state flexible transportation fund, which is intended to increase the flexibility and availability of state funding for transportation to support building and repairing a statewide interconnected infrastructure system for all users, on and off the state highway system. The funding is included in HB 1012 which lays out that these funds can be used for matching federal grants. The $221 million will be allocated to the Department of Transportation, however, the funding may support local projects as well.
• HB 1379 establishes new buckets for appropriating a portion of the Legacy Fund Earnings. 7% of the earnings from the legacy fund goes into the Legacy Fund earnings for this biennium that is expected to be $486 million with $100 million to the newly created Legacy Earnings Highway Distribution Fund. $28.5 of those funds will go to counties ($18.2 million), cities ($10.3 million) and townships ($10 million). It’s important to also note that HB 1379 will distribute $225 million will go into the general fund for legislative tax relief initiatives and $103 million to the Legacy Sinking & Interest Fund. (HB 1379 is scheduled to be voted on in Senate Thursday)

Other bills finalized worth noting include:

• HB 1225 Online Property Tax Portal – grant dollars available for counties willing to participate
• HB 1341 Study of Weapons – Required study of restrictions on carrying firearms and dangerous weapons
• HB 1447 Creates Opioid Settlement Fund – Political subdivisions that have received funds from the litigation may deposit them into the state fund. Representatives from ND Association of Counties & ND State Association of City and County Health Officials to serve on the committee assigned to address spending recommendations. (needs House approval)
• HB 1508 State Auditor’s Duties – Increases transparency in billing processes and procedures, requires quarterly reports of state Auditor to the legislative audit and fiscal review committee (LAFRC).
• SB 2248 – Distribution of Drugs Leading to Death – Class A Felony for causing death or injury by distributing illegal drugs. The bill also includes a requirement to report deaths associated with fentanyl and a fentanyl awareness campaign.