(triumphant orchestral horns music)
- This is North Dakota Legislative Review.
I'm Dave Thompson thanks for joining us today.
Our first guest of the 2017 legislative session
the House Majority Leader, Al Carlson of Fargo.
Representative Carlson, thank you for being here.
- Absolutely it's good to be back
and to talking legislative action again.
- And this is going to be a different session
than we've sen over the last few because
you've got some challenges ahead.
- I always tell people it's easier to govern
when you have less money.
Because the word no comes out a little quicker.
But this is gonna be a whole session about
prioritizing our dollars.
And we're gonna try and do quite honestly what the new
governor campaigned on and that's to right size government.
- And reinvent government too. - And downsize government.
And we're in agreement with that.
That's it's time we've had quite a run
of expansion in the state.
We've had a lot of one time expenditures.
Those things aren't gonna happen this time.
There's just not gonna be revenue there for that.
Now looking at the budget situation,
I think in an earlier interview you said
North Dakota's not broke.
But there's belt-tightening that has to be done this time.
- Absolutely, we're not broke.
We're still collecting four and a half
billion dollars worth of revenue.
That's a lot of revenue.
What we need to do as we look at our whole revenue picture
is decide what kind of revenues that we have
that ongoing so that we're not moving
and spending money this time, counting on it
on general government and then have it not be able
to be replaced in the next biennium.
So there's a lot of moving parts to this budget.
We'll get it figured out.
But it is gonna require belt-tightening on the agency parts.
- So it's a lot more work for the appropriation committees.
- You know they're working hard at it.
And this time we changed our budget format
so we have a legislative budget.
And then any changes to that, it's a baseline budget.
Again it's one of those things that the governor
campaigned on was a baseline budget we have that.
The baseline is the starting point is after
we've had all of our allotments.
That's a starting point for our budget
and anything changed or add will have to be
an amendment to that budget.
It's the right way to do business.
I'm glad we're doing it.
And I think in the end it's gonna make
it a lot easier for everybody to understand
when you're attacking where you were at
and what you changed up or down.
- And this is all going to meld into your priorities.
- Absolutely and the priorities are,
you know we've always had in North Dakota since statehood
there's been a strong commitment to public education.
Now the commitment is and I do honestly think Dave
that there is gonna have to be
some serious belt-tightening in higher education.
There is a lot of concern there by the higher institutions,
but the point is that's one of the areas
we have to take a look at.
Because we have gone from 54% funding of
the cost of the share of K12 education to 82%.
And we're gonna continue to keep that.
Now are there gonna be significant increases
in the per pupil payments in the formula?
No.
But are we gonna do everything we can
to hold that even?
And the superintendents I've talked to
and we've talked to are okay with that.
'Cause we don't want this again to transfer
to the case where it becomes a higher property tax
on the people back home.
But there's only so much money in the pot.
You have the most needy of the needy to take care of.
You know those who can not take care of themselves
we have an obligation to help with that.
Those who can, we do not.
But those that can not we will prioritize that.
Public safety is always a big item.
And like I tell everybody the ates make up the budget,
educate, medicate and incarcerate.
And that's about 80% of the budget.
And when they're gone there's not a lot
of real extra money.
If you took a 10% reduction in every other budget
you could probably only round up 70 million dollars.
So and 70 million dollars isn't gonna help you
when our deficit, it's a little bit hard to define today,
but it could be 400 million dollars.
Compared to our revenue that we expect to take in,
our transfers to the dollars we're gonna spend.
And that's real money.
And we've gotta go out and find that
and still fund our priorities.
Because we will not do two things, Dave.
We will not bond and we will not raise taxes.
- You say you won't do those two things but
former Governor Dalyrmple had mentioned a couple things.
Number one taking some money out of the profits
of the bank of North Dakota.
To the tune of 200 million dollars.
Yay or nay?
- Well we're gonna take some money out of the bank.
We've already taken 100 million.
And for the last four biennums we've left
the profits in the back to build the base of the bank.
We'd like to see, or the House for sure,
and we're in discussion with the Senate at all times,
we'd like to see about 125 million instead of 200 million.
Because once you throw that into the mix
you're saying you're gonna take 125 million dollars
every biennium.
And then once you do that you better be prepared
to make sure that money is there.
And if you take 200 I'm not so sure it will
be there next time.
And what we can do is build a budget
that's not sustainable with our revenues
in the next biennium.
- And I'm thinking the Bank of North Dakota
is doing very well right now,
but things are cyclical and who knows
what's going to happen.
- We're an Ag commodity based state, Ag and oil.
And coal and those kind of things.
You've got to be very careful in a commodity based economy.
We've seen what happens when oil prices go down
and we lose a couple million,
a couple billion dollars basically in sales tax revenue
over what you anticipated.
That's real money.
So you've gotta be careful on the commodity based market
and the Ag prices even though the crops
in most cases were pretty good, the prices were not.
You know so they need big crops to pay off
their lines of credit and to stay in business
and that doesn't leave a lot of profit
that is collecting taxes on and extra spending.
- And it's also a potential gamble in a way because
you'll never know what the weather's going to do.
If all of a sudden North Dakota goes into drought,
it becomes a more serious problem.
- And this winter we've got extraordinary
expenses on snow removal.
You know so these counties are facing
an increased tightened budget just like we are.
And then they their expenses haven't gone down.
So there's a lot of challenges,
but those challenges can create opportunities.
It can force us to look at the way
we provide government to the citizens.
And we've heard a lot from the governor
in terms of general statements we haven't heard
a lot of specifics yet.
But on the other hand he's been on the job a month.
I mean I can't expect him to digest
a 13 billion dollar budget in a month.
We had the same situation when I came in
and Ed Schafer was there and we had
George Sinner's budget.
It's a transition period.
We're gonna continue doing our business
we're gonna lay out our priorities as a legislature
and as a government, governor starts
to feed these things in.
Hopefully they mesh real well with that.
- If I remember correctly after George Sinner left office
and Ed Schafer took over,
Schafer did have a budget address later on.
Which is a little bit unusual.
Am I correct on that?
- I recollect him talking about his budget priorities
and I remember at that point in time
the Senate was Democratic, the House was Republican control.
And it was kind of an interesting session
as a freshman because whatever we passed
they tried to kill and whatever they passed
we tried to kill.
And we didn't make a lot of headway.
But in the end we did end up working
off of Schafer's priorities.
- It always comes down to that.
Because you've got a constitutional responsibility
to balance the budget. - Yup.
And it's our job as only branch of government
that could spend money or pass laws and that's us.
And we need to sharpen our pencil,
we need to make sure we do the job
that's been given to us and we will.
- I haven't heard a lot of talk recently about
maybe using the
earnings from the legacy fund.
Which was a possibility that was raised a couple of times.
What's going to happen there do you think?
- There's about 160 million dollars
that can be transferred over.
And the constitutional measure does say that
the earnings shall be transferred to the general fund
after the given date which would be 2017.
And right now it looks like we're gonna have to do that.
I would have preferred not 'cause I think that
that's a future fund and it should be used for
special projects, special things to help
build the future of the state.
But I'm not so sure that we're gonna be able to
not address that this time by taking some of that
to the general fund.
- Okay.
Well since you talked about priorities and
we've mentioned K12.
I understand property tax has been kind of a priority
but it's an interesting relationship
that the legislature has with property tax.
You don't levy property taxes except for the 1%,
for the medical school, yet we've looked
to the legislature to kind of solve
the property tax dilemma.
- You know we first of all started with a crazy
income tax formula that somehow your income tax
was tied to the property tax relief.
And then we moved into the funding of K12 education
and saying that when we give you this money
you have to lower your mils to this level.
That has worked fairly well but now we have
switched it all to the general fund saying
this is our commitment to K12 education.
It's about 84% of the cost of K12 education.
And then we have this 12% buy down.
And obviously that's a 300 million dollar
pool of money sitting there that everybody wants.
The governor dissolved that and put that
into the general fund.
I'm willing to discuss the usage of that
300 million dollars as long as we get
property tax reform.
And if you remember the governor's speech,
he spent a lot of time talking about property tax reform.
I have a property tax reform bill.
It's rather complicated.
You and I can talk about that at a future time
when I introduce it, but it's time.
Time for us to get out of the business
as long as we reform and engage the voters back home
to be involved in the budgets
at the local subdivision level.
- Yeah, reform has been talked about more now.
You have started talking about that two years ago.
- [Al] Yup.
- We heard some things about reform.
There were some, I guess you could call
baby steps toward reform.
- They were tweaks is all they were.
- They were tweaks. - Yeah, they didn't do much.
- Now you're talking about something that
really has to have some major changes.
- Well there's gonna be a whole lot of people
from the political subdivisions come in and scream foul.
But it's gonna put the burden back on them
and it's gonna start removing the state
from a tax we do not either assess or collect.
- What about the plan that was talked about
that was forwarded in, to have the state take over
social service funding?
- You know I'm not a supporter of that
because there's too many loopholes.
I don't think it's the right time to do that.
They were not going to be our employees,
they were still gonna be county employees.
There was gonna be hold harmless to counties
that didn't get as much as they should of.
And other counties were getting more
than they should have.
So there was a lot, in my opinion,
a lot of flaws in that bill even though they thought
it was a perfect solution.
The governor was really bought into it,
Governor Dalyrmple.
And I don't support it.
I don't think it's the right time, it's the right place.
'Cause I'm convinced.
We took over the judges a number of years ago
and that was gonna save a lot of tax money
and there would be lower property taxes at home
and I want you to show me where that's at.
Because is the answer is it's not there.
- There are a lot, as you mentioned,
moving parts to this budget.
Here's an oddball question.
How do you keep all these things straight?
- You know I've got some, there's some really
good people that we have up in our
legislative counsel staff.
Our fiscal analysts are all CPAs and they
understand the budget inside and out.
I'm not sure how they sleep at night
trying to figure it all out, but they do.
Plus we have Representative Dalser
who I consider just to be a genius on the budget.
And he does an excellent job.
And his other chairman, you know Representative Pollet,
Representative Bradenburg.
Let me see I'm forgetting one of my subsections.
Pollet, Brandenburg and
Munson. - Munson.
- Do an excellent job.
Those guys really dig into these budgets
and they know it.
And any good leader will rely on smart people
and surround himself with those to make sure
he's getting the good advice and he's getting
the good accurate figures.
And they have a real handle on it.
Are they scratching their head this year?
Absolutely because the numbers don't match.
And it's gonna take some serious work
between the House and the Senate to make
those numbers balance at the end of the session
without raising taxes.
- Since you talked about committee structure,
something really interesting has happened this year.
Because you have a super, super majority of Republicans
in both the House and Senate.
We've had less Democrats on committees.
And then you've had leadership people
who have had to step into committees.
As a matter of fact in the House
the minority leader Cory Mock is on two committees.
In the Senate the minority leader is on one committee.
- [Al] Yup.
- And you know looking down the road
when you get to conference committees,
is that going to be an issue?
- No it's not because if you look at
the conference committee rules it never
has required a minority party member to be part of it.
It's always been a courtesy.
We'll attempt to extend that courtesy
wherever possible, but when it comes to moving
the session along if their people are stretched too thin,
because there's so few of them we will add
our other people.
And obviously they have to support the,
they had to have supported the bill
as it goes forward in conference committees.
And if they didn't support it they weren't
going to be on it anyway.
So if the two of them, on our committees
we have two Democrats on each committee
and we have between 12 and 13 Republicans
in each committee.
So we'll move the process.
It's all about moving the process along.
We'll try and include them wherever possible.
- Still looking to hope for a 70 day session?
- You know a 70 day session would be good, Dave
and it would be good for a couple reasons.
Number one, it keeps us really focused
on what we're doing.
But number two with the new administration
that's completely different than what we have
the affordable, not-so Affordable Care Act
will be up for review it's on the news today,
that they're discussing what to do with it
and what are you gonna replace it with?
Because that has a tremendous affect on
even things like Medicaid expansion in North Dakota.
So we want to leave some days.
The waters of the USA, the Clean Air Act
to say just a few, are things that could be
changed drastically in the next,
the EPA ruling's coming out.
We need time if we have to come back
and react to those.
- And the way things are moving
there's been a lot of talk about
repeal and replace the Affordable Care Act.
And of course that's Medicaid expansion.
But if that happens simultaneously
it may not happen tomorrow.
It might happen after session. - It'll more than likely
happen when we're not in session.
And we're anticipating that.
It's kind of like the DAPL situation down south.
We know that the state has committed a lot
of money to pay for that.
Because of the public safety of our people
and our law enforcement is important to us.
But it's a federal obligation.
And there could be a time when we need
to do something to make sure we get
all those dollars back, 'cause right now
we're 25 million dollars into it.
25 million dollars in a short budget is not a good thing.
So we're going to keep our eye on that as well.
And we're gonna do whatever we can
to keep the pressure on Senators Hoeven and Heitkamp
and Representative Cramer to have something
that's a federal issue on federal land
be paid for by them.
And actually even should be sending law enforcement
officers in to help us.
- But do you need a deficiency appropriation bill
to cover the shortfall for the time being
and hope for reimbursement or
tie it somehow--? - What we're gonna do
and what I want to do and I've expressed that interest
to most everybody of that opinion
is that we need to have,
it's a loan of the bank of North Dakota.
If we're gonna leave that loan sit on the books
it's gonna run up some interest,
but we're gonna leave that loan sit on the books
until we get reimbursed.
Or until there's no other solution says we won't help.
- What's the interest rate on that?
- A couple percent.
I mean it's very low.
- It's low but
still it's an interest rate. - It's very low, but it
still adds up.
It'd be a lot cheaper than if the federal government
charged you a penalty on your income tax.
We told them we could match that
if they wanted to pay us more.
- So what do you think about the whole DAPL situation
as long as we brought that up?
Now that things have seemed to quiet down,
the chairman out there is saying that
people should leave, but there's still some
uncertainty out there.
And there's still costs piling up for law enforcement.
What's your take on this?
- Well you've got to remember that a majority
of the people left are eco-terrorists.
They're not normal Native Americans that say
they want to protect their water.
And I respect their opinion for that.
I'll always defend the right for peaceful protest.
Burning bridges, burning cars, slashing tires,
harassing ranchers, are not peaceful protest type things.
It's very disappointing I know these people are
very upset that are living out in that area.
When they've gotta have sheriffs patrol cars
following school buses to get the kids
in that area to school there's something wrong.
They're illegally on private land,
they've been illegally on core land.
And the state has stood up because we want
to protect the groups I mentioned.
The law enforcement and the people that live there.
I'm very disappointed in the leadership at Standing Rock
to come now and expect us to be happy about the fact
they asked them to leave.
That should have been done 150 days ago
when they were on the wrong land.
- And they were on core land. - Absolutely they're on
private land to begin with. - Private land to begin with.
- They moved back to core land and they're not supposed.
If you and I camped on core land today
they'd come out and move us.
- And this is all weighing the budget decisions,
it has to be.
And you coming in before this protest thing
really blew up.
With knowledge that things had slowed down
especially in agriculture and oil.
And so this all is a milieu that we haven't
seen for a long time.
- Yup, and it was not anticipated.
And we, like everybody else, I was one
that thought this might last for a week or two
and it'd go away.
We'll there's still between three and 700 people out there.
And when the day comes that our President Trump says
you have my permission the permit is reissued
to drill underneath the river,
there's gonna be in my opinion, an issue
that we'll have to deal with.
- Absolutely.
Since we're talking about that and some of the
other issues that are going on,
do you have any other priorities outside
of the budget that you're particularly looking at?
- Well there's always issues that you look at.
First, the budget's always first and foremost
because that's where the dollars are
and that's where the programs are.
You know when you're looking at
the measures that pass we need to do some
real clean up on the marijuana measure.
We don't want to deny the people what they
thought they were getting.
And that was some type of medicine
for someone with a chronic, long-term chronic
pain disease or a little Janie who has seizures
that's six years old and they believe this will help.
But it's going to be regulated
it's gonna be safe and it's gonna be
well-monitored from seed to distribution
when we get done.
And we are gonna do a bill.
Right now we put a bill in that put a hold
on anything because they're asking for permits.
The law went into effect thirty days after the election.
That's a big issue.
That's one of the issues.
We need to look at school funding
because we had the people voted for
the Foundation Age Stabilization Fund
for the use of that money.
And we're gonna do the right thing with that.
But again that's a budget item,
but it's a big deal that the people spoke on
and told us we wanted to use this for education
and we're gonna do it.
- What about Marsy's Law?
- Marsy's Law is a wild card, Dave.
Because they're still analyzing and the counties
are still trying to figure out what it's
gonna cost them and if victim's rights were really helped
or hurt directly by this.
I personally is disappointed when out of state
interests come in and buy elections in our state.
Whether or not, I mean obviously it passed.
It's a very emotional issue and it passed.
I think that we've got to be very careful
on initiated measures so that we won't have outside
interests hijacking our state and our policies.
- Interesting you brought that up because
there's going to be a hearing this week
on a bill that would create a separate commission
to look at initiated measures, referred measures.
What's working, what isn't working?
There's some suspicion of the people who like
to circulate these things saying,
"It's the legislature trying to raise the
"number of signatures required," et cetera.
What about that?
- I supported a measure last time, put a measure in
that there had to be geographically distributed
so you couldn't got to to West Acres
or you couldn't go to the state fair
and get all the signatures you want on an issue.
And when it is a state wide issue.
I don't know if that's the right answer
but I do know we need to look at how
the process is handled and how the process is approved.
Do we want to take away that
privilege of the citizens?
No we don't.
But it needs to be a North Dakota driven
initiative not somebody else's.
- Got to go back to the budget for a second
because something popped into my mind.
We talk about the March revenue forecast all the time.
How important that is and I think it probably
is that much more important this time.
- Absolutely I think that
as hard as we work this down,
and I've got a bill in that's going to create
a legislative revenue forecast system
that we continuously do every biennium,
that we're engaged in that.
We've got to be careful the way we do it
because it hasn't been working.
It's been very inaccurate and the changes
have been legislative in the last two bienniums.
But the March one is the last snapshot we get
after crossover and prior to the final
ink being put on our budget.
It's very important.
Our attempt this time was to get it
absolute close as possible with the first one
so that we don't have that major drop again
after the second.
Because last time we had another big drop in March
that made it very hard.
Our whole second half was scrambling trying to figure out
how to fill the difference
because we'd already been appropriating budgets as we went.
So we've got some work to do there.
It is very important to have it.
- Would that indicate that appropriations bills
are going to be the last things done?
- They will be unless it's a pretty minor
they will be the last thing out.
And that's the way it should be.
What we've encourage our caucus to do
is to not to put in a lot of extra bills
with spending in them, because there is just not
a lot of room for new initiatives.
And I've kind of challenged them.
I said, "If you wanna spend some money
"you find out, tell me where you're getting it.
"And you go out and find it somewhere
"and if it makes sense we can look at it.
"But if not there's not room for a lot
"of new initiative's this time."
We're examining exemptions.
Are they cost effective?
Do they have a cost benefit analysis that returns money?
Because of giving this break do we get
more money back in the future?
And you're gonna see a tax day at the legislature
pretty soon where a lot of those bills
that went through the interim committee
are gonna come up with either being removed
as an exemption or being changed
or reduced as an exemption.
- So is that going to be done in one day you think?
- Well we're gonna try - In the House?
- and run, it might take two days.
But in the House we're gonna run there could be
eight or 10 bills in a roll that deal
with these various exemptions.
Everything is on the table whether it be
for wind power or angel funds or the renaissance zone.
There's all kinds of things that'll
be addressed in those.
And we're gonna have to look at them.
'Cause there's a lot of ways to increase revenue
in the budget, one of them is taxes
which we're not doing.
The other way is to not be giving away tax incentives
and have that go back into the pool
of money that we spend.
- Couple of other issues I wanted to mention real briefly.
One is that the idea of putting two legislators
on the investment board.
That bill is in. - Mmhm.
- What do you think about that in particular?
- You know I don't have really an opinion either way
I think that if we are in charge of something
we should have involvement in it.
I mean I'll always defend the legislative
branch of government.
If in fact we are given the responsibility
to watch over it.
It's the same as the PERS board.
You know we put people on, but it's still
dominated by the people receiving the benefits.
And I'm gonna work hard to see if
I can get that changed.
Because we're responsible for that
as legislators in the end.
And input is good, but at the end the
final responsibility on all these things
still lie upon us to do it.
- The PERS Board.
Are you thinking about adding more legislators?
'Cause there were two put on.
Or what's gonna happen? - Well you have to wait
to see how it comes out. - Ah-ha.
- (laughs) It's one of those that--
- Will do.
- It's in discussion.
I just believe that if we are responsible
it's not responsible to allow an unelected board
to sign a contract and commit the state
to 21 million dollars of expenditures
without our input.
That's just wrong and I think it should be changed.
- Well speaking of that since state employees
were part of the equation because of the insurance plan,
state employees no raises this time.
- There's probably gonna be a policy
across the board, Dave of zero and zero.
And we're gonna try and hold as many people
harmless as possible.
K12 is no different.
We're gonna probably not have any increases
but we're not gonna have decreases for them either
in their
pupil payments. - Pupil, yeah.
- And that's important.
That we make sure that we maintain what we can.
And that goes with the DD providers
that goes with all the other areas where
there's automatic increases that we've
tried to not do over the years.
And then review them on a biannual basis.
It's not gonna happen.
I just do not see where that's gonna be coming from.
In the few seconds we have left, how many days
for the session?
- I'm hoping that we're done in 70 days.
Which would put us in about the 15th to the 20th of April.
- And then if you need to come back
and address Medicaid expansion you can do that.
- Yes and there could be other issues,
but that would probably be the biggest one
would be how we handle the repeal of PPACA.
The Affordable Care Act I've always said is named wrong.
It's not so affordable.
And we should have the option as a state
to not be mandated on that.
And we should have the choice like
we always did before to run our programs.
- Well thank you very much.
The half hour's gone by real fast.
- It always does I'd be glad to come back
when we get into the second half
and talk about where these initiatives have gone to.
- I'll take you up on that.
- [Al] Sounds good, thank you David.
- Our guest Al Carlson, the House Majority Leader.
For Prairie Public and Legislative Review,
I'm Dave Thompson.
(triumphant orchestral horns music)
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