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North Dakota Session Recap
Just before 3 a.m. on Sunday, April 30, 2023, the 68th North Dakota Legislative Assembly adjourned sine die1. Throughout the past four months, the North Dakota Legislature convened for 75 legislative days2, leaving five days to call themselves back into session to address gubernatorial vetoes, disasters, economic shortfalls, etc. Since Tuesday, January 3, the Legislature has been working diligently to fund state government, pass tax cuts, address the workforce and childcare crisis, fund capital projects and enact several policy bills. At the conclusion of this session, the Legislature passed the largest budget in North Dakota history, to the tune of $19.6 billion, with a vast majority of this spending being appropriated from both special and federal funds.
The content of this video reflects the status of legislation passed by the North Dakota Assembly as of May 3, 2023. At the time of filming, several bills were still pending signature by the governor.
Prior to the legislative session, The Chamber hosted multiple meetings with members, local elected officials, and key business and community leaders to identify and develop strategies to ensure our region’s top opportunities and challenges were at the forefront of this legislative session. In January, The Chamber published the 2023 legislative priority agenda, which outlined four major priorities: Comprehensive Workforce Solutions; Quality, Accessible and Affordable Childcare; Competitive Educational Systems; and Business and Community Vitality. These expansive priorities included several subpoints that specifically addressed the needs of our region.
This session, The Chamber spent a considerable amount of time at the North Dakota Capitol advocating for these priorities, building relationships, meeting with elected officials, testifying on bills and lobbying on behalf of Cass County and our business community. Now that North Dakota's session has adjourned, it is time to look back at the major outcomes for 2023. Let it be noted that the Legislature passed a number of other major pieces of legislation, and this article serves as high level overview of this year’s session as it relates to North Dakota businesses.
TAX REFORM
One of the major conversations of this legislative session related to taxes, specifically income and property taxes. Generally, the House of Representatives and the governor were in strong support of reducing the state’s income tax to a 1.5% flat tax, while the Senate was in strong support of property tax relief and expansion of the Homestead Property Tax Credit for persons 65 years or older or permanently disabled. After approximately 14 conference committee meetings, the Senate and House were able to come to a compromise on a comprehensive tax reform package (HB 1158) that included $358 million in income tax relief, a $500 property tax credit for a homeowner’s primary residence and $156 million in Homestead Property Tax Credit. Depicted below are current and newly enacted income tax brackets.Current Income Tax Brackets for an Individual Enacted Income Tax Brackets for an Individual Taxable Income Current Tax Rate Taxable Income New Tax Rate $0 to $37,450 1.10% over $0 $0 to $44,725 $0 + 0% over $0 $37,450 to $90,750 $411.95 + 2.04% over $37,450 $44,720 to $225,975 $0 + 1.95% over $44,725 $90,750 to $189,300 $1,499.27 + 2.27% over $90,750 $225,975+ $3,534.38 + 2.50% over $225,975 $189,300 to $411,500 $3,736.36 + 2.68% over $189,300 $411,500+ $9,602.44 + 2.90 over $411,500 *The chart above only shows the taxable income brackets for Single, other than head of household or surviving spouse, filing status. Please refer to the bill or the North Dakota Tax Department for details on other filing statuses.
Additional tax bills that passed in the 2023 North Dakota legislative session
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21st Century Manufacturing and Animal Agriculture Workforce Incentive – HB 1168 extended and expanded the state’s expiring automation income tax credit to include the purchases of manufacturing and animal agricultural machinery and equipment to automate a manufacturing or animal agricultural process. This nonrefundable income tax credit is for purchases of qualifying machinery and equipment in North Dakota to improve job quality or increase productivity. The amount of the credit is equal to 15% of the cost of the qualifying machinery and equipment purchased in the taxable year. The total amount of credits allowed each calendar year may not exceed $3 million ($6 million per biennium).
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Apprenticeship Income Tax Credit – HB 1383 created a new apprenticeship tax credit that can be applied against the income tax liability for qualified compensation paid to an apprentice employed in this state by the taxpayer. The amount of credit is limited to 10% of the stipend or salary paid to an apprentice employed by the taxpayer. The total amount of credits allowed to a taxpayer may not exceed $3,000 in total credits for all taxable years combined. The tax credit can be applied to a max of five apprentices employed by the taxpayer at the same time.
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Military Income Tax Credit – SB 2293 expanded an existing income tax deduction for military pay. SB 2293 reduced North Dakota taxable income by the amount of military pay received by a taxpayer that is a member of the armed forces of the United States on federal active duty, a member of the national guard, or a reserve member of the armed forces of the United States, provided that military pay is included in the taxpayer’s North Dakota taxable income.
WORKFORCE
Workforce shortages are among the top issues facing employers across the state and a top priority of The Chamber. From early on, it was clear that workforce was a major topic of conversation for the Legislature. This focus especially picked up in the Senate, where the newly elected Majority Leader, Senator David Hogue, dedicated an entire committee to workforce development.Large contributors to the workforce funding were the Department of Commerce’s budget (HB 1018), the comprehensive child care bill (HB 1540) and the bill to establish an Office of Legal Immigration within the Department of Commerce (SB 2142), plus several additional bills that had workforce written into their budgets.
Department of Commerce Budget – This year’s Department of Commerce budget, HB 1018, possessed much of the state’s workforce programs and grants, as well as the department’s economic development/finance, tourism/marketing, global engagement, operating expenses and other priorities. The final bill enacted looked drastically different compared to the Executive Budget’s recommendations. As it relates to workforce programs, the Legislature agreed to fund 4 programs for a total of $28.5 million which includes; $12 million for the state's workforce talent attraction program, such as Find the Good Life and other initiatives, $2 million for a newly established New American Workforce Training Grant, $12.5 million for Regional Workforce Impact Programs and $2 million for Technical Skills Training Grants.
Workforce Funding Comparison Item Gov. Recommendation House Version Senate Version Final Version Workforce Talent Attraction Program $24 million $8 million $14 million $12 million New American Workforce Training Grant N/A $2 million $1.5 million $2 million Regional Workforce Impact Programs $20 million $15 million $12.5 million $12.5 million Technical Skills Training Grants $2 million $2 million $2 million $2 million Automation Transition Training Grant $5 million $5 million $0 $0 Automation Equipment Grants $10 million $5 million $0 $0 Total $61 million $37 million $30 million $28.5 In addition to these workforce programs, the Legislature compromised on several other items:
- $1,006,896 for Operation Intern
- $25 million for Destination Development (Tourism)
- $26 million for Beyond Visual Line of Sight – Vantis
- $10 million for Enhanced use lease agreement – Grand Sky
- $2 million for Rural Workforce Housing Grants
- $20 million for Legacy Investment for Technology Fund
CHILD CARE
A critical component of the state’s workforce shortage includes access to affordable and quality child care. This was a major priority for Gov. Burgum and many legislators in both chambers. Just before the Legislature convened, Gov. Burgum held a press conference in Fargo where he expounded on the importance of the state’s investment in child care. The governor’s proposal was estimated to cost roughly $73 million.As this priority went through the legislative process, most of the funding was allocated in the newly formed Department of Health and Human Services (DHHS) Budget (SB 2012). However, as the end of the legislative session approached, it was decided to remove the child care language from the DHHS budget and place the child care proposal in a stand-alone bill. HB 1540, the main child care bill, appropriated $65.6 million to address the child care crisis.
Additional concepts to highlight from HB 1540
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$22 million to adjust the state’s Child Care Assistance Program (CCAP) to serve more families.
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$15 million to increase CCAP payments for children 0-3 years old.
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$7 million for grants and shared services.
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$5 million for employer-led child care cost-share program.
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$1.8 million for care during nontraditional hours.
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$2 million in stipends for child care worker training.
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$1 million to streamline the background check process.
In addition to HB 1540, the Legislature also passed SB 2238, which provides DHHS with two full-time employees and the ability to purchase two fingerprint scanners to address the delays in employment of child care workers.
Office of Legal Immigration: While many regions are trying to attract individuals to participate in the workforce, it is clear that our nation simply does not possess the adequate numbers to address the current workforce shortage. Many companies have started to look beyond our nation’s borders to attract talent, and states across the nation are starting to invest in statewide approaches to international talent attraction. This session, the Legislative Assembly passed SB 2142 to establish an Office of Legal Immigration within the Department of Commerce. This bill provided the Department of Commerce with 2 full-time employees for this office. This newly formed Office of Legal Immigration:
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Shall develop and implement a statewide strategy to support businesses in recruiting and retaining foreign labor, including immigrants already in the United States, and integration of immigrants into the state to promote economic opportunities for immigrant communities.
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Shall advise and make recommendations to the governor, Legislative Assembly and state agencies regarding immigrant integration and foreign labor issues.
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Shall develop a pilot program to support businesses pursuing or employing legal immigrants and to support communities to develop immigration integration plans and activities.
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May contract with other state agencies to develop and administer programs or services related to immigration integration and access to basic needs that promote entrance and movement throughout the workforce.
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May contract with an organization with expertise related to the goals of the Office of Legal Immigration.
INFRASTRUCTURE
In this session, several bills included funding for various infrastructure projects. SB 2020, the Department of Water Resources budget, included funding for several water projects across the state.Red River Valley Water Supply Project: As a part of SB 2020, the Legislature provided $180 million to the Red River Valley Water Supply Project, an emergency water supply for central and eastern North Dakota, and signified its legislative intent to fund $953 million of the project over future biennium.
MILITARY
During the session, there were several bills introduced that related to North Dakota’s Office of the Adjutant General and the National Guard.Museum: SB 2016, the Adjutant General’s budget, which gave fundraising authority to the Adjutant General so his office may accept funds, including those from private and federal sources, to match state funds for the construction of a North Dakota military museum during the Fiscal Years 2023-25 biennium.
Tuition Assistance: SB 2094 expanded the North Dakota National Guard’s tuition assistant grants to include out-of-state and online post-secondary education institutions, granting greater flexibility for our guard’s members.
Base Retention: A major priority for The Chamber this legislative session was to re-establish the state’s commitment to the Base Retention program. This program is a statewide effort between the communities of Fargo, Grand Forks and Minot to maintain the current missions at each of the communities’ respective military bases. In SB 2240, the Legislature furthered its commitment to our military by appropriating $1 million ($500,000 to Minot, $250,000 to Fargo and $250,000 to Grand Forks). These funds will be strategically used to maintain the mission at the 119th Wing in Fargo through Strategic Advocacy and Awareness, the Advancement of Personnel Recruitment, and Community-Based Programming and Support.
EDUCATION
Each session, the Legislature considers many bills that relate to the funding, scholarships, capital projects and curriculum for both K-12 and Higher Education. This session, there was great emphasis placed on Capital Projects, Challenge Grant Funding, Career Builders Scholarship, Career Academy Funding, and K-12 Cybersecurity and Computer Science curriculum requirements.Higher Education: HB 1003, the North Dakota University System budget was the primary bill that funded higher education throughout the state of North Dakota. The bill that went to the governor’s desk for signature included:
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Capital Projects: The appropriation of over $209 million in capital project funding of which $59 million was allocated to North Dakota State University for their Center for Engineering and Computational Sciences and $18.9 million was allocated to North Dakota State College of Science for their agriculture, automation and autonomous systems building expansion project.
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Challenge Grant: The appropriation of $20 million in Challenge Grant funding, a matching grant program for funding raised by a North Dakota public college and university institutional foundations for projects dedicated to the advancement of academics.
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Career Builders: A fund transfer of $6.8 million from the current earnings and accumulated undivided profits of the Bank of North Dakota to the skilled workforce student loan repayment program, also known as Career Builders.
K-12 Education
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Career Academy: In the 2021 special legislative session, the North Dakota Legislature allocated over $88 million in Federal Funds to fund 13 career academies across the state. The U.S. Department of Treasury is yet to release $68 million dollars of the allocated federal funding to the State of North Dakota. HB 1199 authorizes the Bank of North Dakota to loan funds to the Department of Career and Technical Education to provide grantees with the funding needed to build 13 career centers across the state. However, due to this delay in funding, costs to complete these projects have increased drastically. The Legislature has appropriated $26.5 million to address these inflationary costs with an opportunity to access additional funding if specific funds are unutilized by the North Information and Technology Department before October 1 (SB 2015).
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K-12 Cyber Security: HB 1398 requires schools to teach computer science and cybersecurity courses. This bill also calls for grants to be available for computer operations and cybersecurity courses for adults.
ADDITIONAL TOPICS THIS SESSION
This session, there were 989 bills introduced covering a variety of topics. A few of the other topics that had a great deal of attention this session are summarized below.-
Legacy Investment: SB 2330 modifies the asset allocation for the investment of legacy funds.
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Fertilizer Development Program: In the Office of Management and Budget (SB 2015), the Legislature appropriated $125 million in the Clean Sustainable Energy Fund to incentivize the construction of a fertilizer production facility.
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Approval Voting: HB 1273, which failed to pass following the governor’s veto, would have prohibited the use of ranked-choice and approval voting in elections.
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Book Bans: HB 1205 and SB 2360 ban and prohibit certain materials and obscenities from public and school libraries.
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Transgender sports/athletics participation: HB 1489 and HB 1249 restrict transgender athletes from participating in K-12 and collegiate sports.
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Agriculture: HB 1371 modernizes North Dakota’s corporate farming law to encourage growth in the animal agriculture sector.
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State Retirement: HB 1040 closes the state’s defined benefit plan and requires new state employees to participate in a defined benefit plan.
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Theodore Roosevelt Presidential Library: In SB 2019, the Parks and Recreation Department budget, the Legislature approved $70 million in a line of credit through the Bank of North Dakota to support activities related to the Theodore Roosevelt Presidential Library project.
The FMWF Chamber of Commerce is proud to work alongside our business and community leaders to advocate on behalf of our community in the North Dakota Legislative Session. For more information regarding The Chamber’s public policy and advocacy efforts, please visit https://www.fmwfchamber.com/public-policy.
Terminology used throughout the article:
1 Sine Die – The conclusion of a meeting by an assembly, such as a Legislature or organizational board, without setting a day to reconvene.
2 Legislative Days – Per the North Dakota constitution, the Legislative Assembly may meet for up to 80 days during the biennium.
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