- Welcome to North Dakota Legislative Review.

I'm Dave Thompson.

Thanks for joining us here on Prairie Public.

Our guest is the New House Majority Leader Representative Mike Lefor, Republican from Dickinson.

Representative Lefor, thanks for being here.

- Well, Dave, thank you for inviting me.

I appreciate the opportunity.

- Well, you are a new leader.

Tell us what the challenges have been so far in leading your caucus.

- Well, we have 82 Republicans in the North Dakota House Republican Caucus, and what we're trying to do right now is do the best job that we can to educate on the issues and basically on the history of what's gone on in legislation in the past.

So I would say that the biggest challenge right now is they're very busy days, 12 hour days, talking to a lot of people about a lot of different issues.

So sometimes you just need some time to yourself to think a little bit, to go through the different issues that we're faced with every day.

But I will say my job has been made easier by the fact that we have a very talented House of Representatives, a lot of experience in the chamber.

Good leadership on the committees and so forth.

The freshmen have done an outstanding job of getting up to speed and so that makes my job a lot easier, but I would have to say the challenge right now is simply the number of people that want to visit about different issues, which has been very educational for me as well.

- When we were going into the session this year, it seemed like one of the big issues was workforce.

It remains that big an issue, correct?

- It does.

The simple fact of the matter is we have about 40,000 open jobs in North Dakota, and even if we filled it with every person above the age of 18 in North Dakota, we still come up short.

So we have to devise strategies to become effective in bringing people to the state of North Dakota.

And that involves a lot of different components.

We've actually been visiting with the Department of Commerce, the DPI, the university system, chambers across the state.

It really takes all hands on deck to bring people into the state.

We have, we're just having discussion on the commerce budget right now to have grants to bring people into the state talking about daycare, a lot of different aspects because there's a tremendous amount of workforce that isn't available because of things like that.

So we're focused on that very heavily.

What can we do to bring people to North Dakota because the simple fact of the matter is with the people that are here now, we don't have enough to fill the jobs that are out there.

- Is there still resistance to having some kind of state grants for daycare?

- Well, I would say there is, but it's one of those things, show me the data.

What does the data reflect?

If grants truly are something that that helps open it up, then absolutely.

I will tell you that in Watford City, they have wolf pups.

They've done a great job with that.

It's been, it's been successful.

So on that component, I would say that the involvement between the public sector, the private sector, and that's what it's gonna take, a cooperative effort of both to become successful.

So Wolf Pups has been successful.

So I would say that we should try to mirror that in other places across the state.

- Can you do that though?

Do you think that's possible?

- I do think it's possible, but it has to take a grassroots approach from each community.

Each community needs to be dialed in and want something like this to be successful.

I believe when you're talking about Wolf Pups in Watford City, I think it's something like 250 young people there that opens up the workforce, and they're doing a tremendous job there.

So to me, it comes down to communities saying, look, we want to do what we can at a local level to work with the private sector to get these programs up and running.

And you have employers in those communities that want to be part of this, so they can get more employees.

- So you're saying, it's kind of a multi-level solution to this.

- Oh, I believe it is.

It's gonna take all hands on deck in order to be successful with this.

We've had testimony from different parts of the state that indicate a bigger desire.

Well, you talk about the western part of the state where I'm from, there's an acute lack of people, and in the Red River Valley as well.

The Fargo Chamber does a great job with a software program called Ignite and that allows businesses to go online, present what their business offers in terms of internships, in terms of pay, in terms of educational opportunities.

So it's a matter of getting onboard with all these communities and getting the word out to people in other states to talk about the good life that we have in North Dakota.

North Dakota's ranked very high on many different, in many different areas of happiness, of business development, things like that.

It's just that we have to get that message out.

And I think between the different agencies that I've talked about, that will help recruit people to North Dakota.

- Are you and your caucus on board with the idea of these immigration offices that Senator Mathern proposed?

- I like the concept.

I don't know about borrowing money for $160,000 and things like that, but I like the idea that if we're gonna be aggressive about attracting workforce, let's have something within our state government that recruits people from different parts of the world.

I took a tour of Cardinal IG in Fargo, and they've got over 350 employees from 14 different countries.

It's a tremendously successful operation, and they've done a wonderful job getting all the cultures together to form a successful team.

So this can be replicated throughout the state, I believe.

But I think if we're gonna be aggressive, if we're gonna do better than other states, we have to do things like this, like have immigration, recruitment departments, how can we make it easier for people to come to this country either by becoming citizens or having the right visas to line up?

So I think that Senator Mathern's bill does contain some great ideas.

I do think we need to work with a little bit, but there's a lot of opportunities out there for us to bring immigrants to the country.

- But not a problem because it goes from a concept stage to what's reality.

- It absolutely does.

But the simple fact of the matter, this has been done in the state already.

As I use Cardinal IG as one example.

There's many other companies throughout the state that have done this.

So the immigration office could coordinate with the different businesses in the state that want workforce.

And I believe that if we can get them all talking on the same page, commerce, DPI, immigration, that we can be very successful.

And I think we're looking in that direction right now.

- Now it's kind of along the same lines, but the House and the Senate have fast tracked this bill to provide some funding for these career academies across North Dakota as they're waiting for federal dollars to come through.

There are projects that are ready to go, but they can't move forward.

And it looks like there's a mechanism now to do that, to let them go forward.

- Well, there is.

During the special session, the legislature allocated $88 million of which $20 has been sent to certain CTs across the state.

Now there's 13 projects across the state that are gonna be affected by this in all regions of the state.

It's about $69 million that has been allocated in House Bill 1199.

It has gone through the House, gone through the Senate.

It's on its way to the governor's desk.

I'm guessing that's gonna be the first bill that he's signing.

But part of the issue for this is that since we passed that legislation in the special session, obviously costs have gone up.

Supply chain issues have become problematic, but at the end of the day, those dollars will be able to get them a little bit more down the road with their projects.

And there is another component of another $40 million that we're looking at right now to attempt to move that for the, to take care of the inflationary costs that they've been faced with.

But again, the more educational outlets that we have in the state of North Dakota and career and tech academies are growing very rapidly, we know that higher education has online curriculum and things like that, so education is changing, but as long as we're working in partnership with the private sector to train individuals to meet the market that we need, we're gonna be most successful.

- Well, there are other issues along with that in terms of business development.

And I wanted to get into one, and there was a huge news conference a couple days ago about the idea of animal agriculture and trying to open up maybe some carve outs in the corporate farming law for that.

I know you're a backer of that.

Tell me why.

- Well, this all started probably last April.

Representative Paul Thomas and I got on the phone, and we both have been talking about this for quite some time, and I looked at the statistics in South Dakota about what they have for animal agriculture.

North Dakota is woefully lacking in animal agriculture.

So when you talk about the dairy industry, we are so woefully under, we don't have the economy here for that.

Right now my restaurant, for example, buys milk from Minnesota, and that should never happen with the opportunities to have cattle.

There's so many states that have 10,000 cattle herds, 20,000 cattle herds.

But the simple fact of the matter is, you don't have the capital if you don't have an ability to incorporate, to get shareholders to share the risk of these operations.

So when you talk about hog production, just in the state of Iowa alone, they have a $40.8 billion industry.

And so between pork and dairy and cattle, there's tremendous opportunities that are available in agriculture for that.

So we've embraced all the entities that are around the state, whether it's Farmer's Union, Farm Bureau, Corn Growers and so forth, that once we can improve that ability to have animal agriculture in North Dakota, the manure for fertilizer, that cost is through the roof right now, and corn, and feed that local farmers can sell their product to those that have cattle herds.

So there's so many synergies at play here that would be tremendously successful.

And we don't wanna be overly dependent on one sector, energy, but agriculture has always been the foundation of our economy.

And I just believe getting the players here to have a sincere discussion about how can we get through the restrictions that we find ourselves in to be able to grow this issue in our state.

- And the governor's behind this, of course, 100%.

- Yes, he is.

I've had several discussions with the governor, and we've looked at this, and he's all on board.

He was at the press conference, but I have to tell you that Representative Paul Thomas from Velva who has done just an outstanding job of putting this coalition together to talk about this very important topic in the state.

- So you think it's going to move forward, at least it looks positive from your view?

- For me, it does.

There's still more discussion to be had with different groups.

But again, we wanna have a positive conversation about this.

How can we, I don't think there's any disagreement that we need to grow animal agriculture in our state.

It's just how do we accomplish that?

And you do that by opening up a dialogue.

So like I said, we've had many Zoom meetings.

NDSU Ag has been in all the way.

All the groups have been involved.

We understand the issue, but how do we work forward to grow this aspect of our economy?

- Well, there are a couple of bills that you've introduced that, we'll say you've got some pushback on.

- [Mike] Oh, absolutely.

- First thing is the bill to change the retirement plan for state employees, - [Mike] Right.

- The new hires.

- [Mike] Correct.

- What's the status of that right now?

- Well, right now it's in committee.

The bill has been heard, but there's been some changes to it.

So right now in the defined benefit plan, we have about a $1.8 billion unfunded liability, which is about 65% funded, which between Hawaii and North Dakota are among the two worst in the country.

So the study that was done during the interim requires us to move from a defined benefit to defined contribution plan.

So what we've done is we engaged with three different groups of experts: the Milliman Group, TIAA, The Reason Foundation.

We've embraced North Dakota United, PERS, all these different entities to the table, cities and counties, to talk about how do we go through this process.

And at the end of the day, we came up with an approach that continues the define benefit for those individuals who are already in the plan and provide cash up front.

The bill that I'm pushing forward has $250 million in one time cash.

And in the streams bill that was passed last session is another nearly $50 million.

So you're looking at about a $300 million cash injection, and hopefully, just say you get a 6% rate of return, that's $18 million a year.

And you go through that without even compounding interest.

You've got a significant amount of dollars flowing into that, and so the other component is that we want to have a competitive defined contribution plan because we need to be aggressive in recruiting and retaining our state employees that would, for example, if you come to work for the state of North Dakota, the state North Dakota would pay for 4% of an employer contribution, 4% of employee contribution.

So even if you don't put any dollars in, you're getting an 8% return.

Now if you decide you wanna put 3% in, you'll get up to, the state will match that.

So it's a very competitive plan.

But the other component of this is a 20-year mortgage, for lack of better term, to say we're gonna pay off our unfunded liability over the next 20 years, so that the defined benefit plan is strong.

It's stable for future retirees, and the defined contribution plan contains all the components of best practices from the best experts in the world going forward so we can be aggressive in recruiting and retaining state employees in the future.

- Have you reached out to Senator Cleary in Bismarck who has a bill that would continue the defined benefit plan?

- We have talked, and we will continue to talk.

I think Senator Cleary is very, very interested in this issue as well, and as he stated, we need to find a solution to this because it's unsustainable, but we have different approaches to how to work through this.

- So this is a work in progress is what you're telling me?

- It is, and we've will continue to have conversations to find out, okay, what aspect of House Bill 1040 and Senate Bill 2239 make the best solution for the long term for our state's employees.

- Okay, well, tax relief has also been a big topic of discussion right now, and I'm hearing lots of different things on it.

You know, that income tax proposal to do a flat rate tax and cut the rate may be going forward.

Also there might be some room for a property tax relief of some kind.

And can you tell me where the discussions are out on that?

- I sure can.

We've had some informal discussions among our caucus and among our caucus members I should say, and Senate leadership as well.

And the discussions were how do we put more dollars in relief to North Dakota citizens as opposed to non-residents?

So the governor's proposal of 1.5% was a total $566 million.

What we're looking at right now, and what I believe Chairman Craig Headland of House Finance and Tax is gonna move forward with is a 2% flat tax, but embedded in that 2% flat tax would be about $265 million of tax credits, so that the lowest tier for North Dakota citizens actually goes away.

And the total dollar amount flowing to non-state residents is down to $10 million.

So North Dakota residents would get $371 million of tax relief out of a $381 million relief package.

- So that's the package that might be coming through at this point.

- That's the, yes, I believe that's the plan that's coming through House Finance and Tax.

And we've had informal discussions with Senate leadership and Senators on that topic.

- What about property tax, though?

- We're still talking about that.

There's different components to, from some House members about property tax reform.

What's the long game?

Property tax in North Dakota in the last about 14 years, the state of North Dakota has provided about $7.2 billion worth of property tax relief.

This biennium alone it's $1.5 billion.

In addition to that, the tax credit of $350 dollars per person, $700 a couple provide another $211 million.

So the state legislature, I think, has been very aggressive in providing tax relief to our citizens.

But we also have to be cognizant about the ongoing cost of property tax relief as these dollars continue to rise.

It's been projected that within six years, it'll cost another $300 million just to maintain the level of what we've got right now.

So we have to be careful.

The one component of tax reform is what do we do long term to solve this issue?

The other, the short term component is what dollar amount do we give for tax relief?

Do we target it to senior citizens?

Do we use homestead tax credit?

There's a lot of different ways of taking a look at measured property tax relief.

- You know, it's amazing that we can talk about tax relief.

If we would've had this conversation 20 years ago, we probably wouldn't have been talking about it because the state was not as flush with cash as it is right now.

- And that's something that we wanna be very cognizant of.

I think the conservative legislative branch has done a wonderful job.

When I first came to legislature in 2015, I was stunned by the fact that the oil buckets with all the revenue was there in cash before we spend it for the next biennium.

So it's been a very conservative approach.

We have a budget stabilization fund, which has about 70, excuse me, $750 million in it and other common schools trust fund, different areas, trust funds that take more and more of the property tax off off of our citizens, and those continue to grow.

So, but you know, from going to a great financial situation, 2015, just two years later in 2017, we're slashing budgets because the huge drop in the price of a barrel of oil.

And agriculture was in a tougher position too.

So having that, those two industries face difficult situations, we're cutting a lot of dollars off of budgets, and so we wanna take a measured approach to tax relief.

We do wanna provide tax relief because we do have the dollars to do it, but we wanna be smart about it for the long term.

- So again, it's kind of once bitten, twice shy almost.

- Absolutely.

- I do have to ask you about another bill that you're getting some, a little bit of pushback on.

And this is bill concerning tenure for higher education faculty.

Can you explain what the bill would actually do?

- Absolutely.

If you look at other states like Florida and Texas, and a growing number of states are looking at tenure.

If you look at the education model that's out there right now from more and more classes being taught online, I know of a young lady in my hometown that's taking classes from a University in Utah.

She'll never set foot in the state of Utah, but their costs are much lower than what we have in North Dakota.

So if we're gonna get serious about being competitive in the future, as the higher education gets more complex with competition from other states, and the fact that career and tech academies are now taking some of those students as well, that we have to look at all aspects.

So when the university professors come into the legislature, we're asking them detailed questions about their operations, about their costs.

My concern is that I don't believe that tenured professors are getting meaningful reviews, that it needs to come from the president of the institution, not a fellow faculty member.

That the president is answerable to the chancellor.

The chancellor's answerable to the State Board of Higher Education.

Faculty should be answerable to the president and be held accountable for what they do as a team member.

Are they a productive team member?

And if they are, they shouldn't be concerned about what I call the Tenure with Responsibilities Act whatsoever.

So those are some things that, yes, I've been getting a lot of pushback, but I think it's important to have the conversation in North Dakota, so that we can be lean and mean in the future.

So whether this bill passes or not remains to be seen, but it's very important to have the discussion.

- And your proposal is a pilot project for Dickinson State University and for Bismarck State College, correct?

- That is correct.

And the, one of the reasons for that is that both of those institutions have changing business models.

Dickinson State is getting more and more into dual mission, and that's when I said they were very involved in the creation of our career in Tech Academy in Dickinson.

Bismarck State College is becoming more and more polytechnic as well.

So when you have changing business models, you need to give the leadership some more options on how to run their organizations going forward to be, like I say, be competitive and effective in the future.

- So you'll watch and see what happens, and if these become successful, then you'll try to get them in the university system as a whole I suppose.

- Well, I'd like to see how this, it's a four year pilot program.

I'd like to see the results of the program first before I'd say, you know, let's look at expanding this to other institutions.

- Well, I have never asked this question of a guest, but I'm gonna ask it of you.

Is there a hidden bill out there that we should be paying attention to that we're probably not hidden paying much attention to?

- A hidden bill?

No, not that I'm aware of.

- Not necessarily a hidden bill, but something that may be flying under the radar right now because of all the other big issues that are out there.

- No, I'm, for people that know me, I'm extremely transparent, open, honest.

Let's have a good positive dialogue.

Let's have the arguments, let's have the discussions.

But no, I would, in no way, when I ran for this position, I told the people in the House caucus that I'm gonna be open.

I'm gonna be transparent, and whatever I say to you, I don't have something else hidden in my back pocket.

So as far as what I'm aware of, no, there's no hidden hidden agenda or hidden bill.

- Okay, I do have to ask about state employee's salary because there have been some talk about proposals.

Is that worked out now or are you still working on that?

- The idea that Senator Hogue, the Senate Majority Leader and I have worked on from the beginning is let's work through a lot of these issues at the beginning of the session so we understand what we're talking about, share the information with our caucuses, get input from our caucuses.

But I will say the OMB and the executive branch have done just a fantastic job.

They had a task force that looked at salaries across the country in terms of the different jobs that we offer in the state of North Dakota.

Now they came up with a plan to fund $90 million for a one time market adjustment, and after that to have a 6% raise and a 4% raise in the second year of the biennium.

What we've decided to do in leadership is look at $75 million and 4% embedded in budgets at this point.

Now unless the, we're gonna wait for the budget forecast on March 15th and 16th.

And I'll tell you, if it looks as good as it does now, I will certainly advocate for that full 90 and the 6% and the 4%.

I think we're just being a little cautious to make sure that we don't get some negative news that we haven't seen at this point.

- Yeah, that March forecast is going to be really key to a lot of things.

- It absolutely is, and it comes from two very well respected entities in this country, Moody's out of the executive branch and the S&P Global, which provides information to the legislative assembly.

And their information has been fairly close to each other on a scale.

- So when, we've got about 30 seconds left, so I'm going to ask you the question I ask everybody.

- [Mike] Okay.

- When do you adjourn?

- I've, you know, every year they have the, every session, they have a little pool about that.

And I've been so wrong on every occasion, but I will tell you that the goal would be to try and be completed in 74 days.

- 74 Days?

Yes, so you have six days in reserve in case you need to come back.

- That's correct.

But if I'm off, I want you to burn the tape.

- Okay, well, thank you very much.

- Thank you, Dave.

I appreciate being invited to talk to you.

- Our guest on legislative review, Representative Mike Lefor of Dickinson.

He is the new House Majority Leader.

For Prairie Public and Legislative Review, I'm Dave Thompson.

Thanks for joining us.

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