(energetic music) - This is "Legislative Review" on Prairie Public.

Hi, I'm Dave Thompson, thanks for joining us.

Our guest this week is Representative Zach Ista of Grand Forks.

He is the Assistant House Minority Leader.

Representative Ista, thank you for being here.

- Well, it's great to be back with you this session, Dave.

- You are also on Finance and Tax, I believe.

- [Zach] I am.

- And that has been kind of a hotbed of perhaps one of the biggest issues the session's dealing with, and that's tax relief.

- That's true, it's really been a big topic of conversation in the halls of the capitol this session.

I think we've seen some movement in the Senate just this week in coalescing around a package of tax cuts, tax relief packages dealing with property tax, our homestead tax credit, and also our income tax.

So it'll be interesting to see how that bill now moves through the Senate with these new amendments.

- It's interesting, the Senate seems to be on the side of property tax relief, whereas the House seemed to be more focused on income tax relief.

But as you said, there is a package now that's going through the motions with a cap of around 600 some million dollars.

- That's right, and we're just starting to get some more detailed information about this package.

You know, out of the House, the majority party passed several versions of what is called a flat tax, where above a certain income rate, everybody will pay the exact same level of tax rate on their income.

What we see in the amendments now making their way through the Senate, is a plan that I sorta floated as a good idea as we were debating in the House, let's keep this 0% tax rate we've heard a lot about from the Governor's office for about the bottom 60% of income earners in the state.

But let's not touch the rates for everybody else.

I think we have to remember, even at the highest end of our tax scale, nobody pays more than 2.9% of their income in state income taxes.

So I was pleased to see the Senate make amendments in that direction, as related to income tax.

And we've got a lot left to learn about the property tax portions coming up in the last few weeks of our session.

- I know there's been a lot of talk about going through, you know, a mill levy reduction for schools.

And I think it goes from 60 to 40 mills.

That's the way I understood it.

- Yeah, that's my understanding.

This bill came through the Senate, it's Senate Bill 2066.

As it happens, that bill was just referred over to our House Finance and Taxation committee today during our floor session.

So I anticipate we'll have a full-fledged hearing on that bill sometime next week or maybe the week after, get into those details.

We had a joint session with the House Education Committee just last week to sort of get a broad overview.

I know the bill had a lot of support out of the Senate.

I think there's a lot of good intention in the bill.

As you hear from so many people.

When we were out on the campaign trail this fall, those of us on the ballot, property taxes was really front of mind for homeowners throughout communities across North Dakota.

So I'm certainly open to the ideas in the bill, but I'm going to listen with a careful ear to any concerns from counties, from school boards, from cities, make sure we're understanding exactly what that does.

And also, to hear from critics who say, we've tried at a state level to buy down property taxes, and where has that left us?

- But it's interesting, the property tax bill that the Senate's kicked over is going directly to lower the amount of mills that have to be levied if there's going to be state aid payments, which is an interesting concept.

- It is an interesting concept.

And I understand it also sets cap on the increase in evaluation for the tax assessment, as well.

So we're gonna dig into those details in our Finance and Tax Committee, hear from supporters, hear from potential opponents about those concerns.

Like you mentioned at the front end, as a body, the House of Representatives, I think, has shown a little more skepticism towards the property tax portion, as is the Governor's office.

So I'm sure there'll be all sorts of hotly contested debates to come next week.

- That could be a conference committee to watch.

- It certainly could be.

I have no doubt that the overall question of what type, how much, what's the scope of tax relief, is gonna be one of those final questions to be resolved in this assembly.

- One more question about tax relief.

And the House just took it up, this constitutional amendment to get rid of the one mill statewide property tax levy for the UND Medical School.

- Yeah, I was the lone dissenting vote against that proposal in the House Finance and Taxation Committee.

Obviously, the University of North Dakota Medical School is right in my backyard in Grand Forks.

You know, the bill supporters all have stated that their intention is to make sure we keep the medical school's funding whole.

Well, we're gonna have to do that, if we get rid of the one mill tax levy, we're gonna have to do that through general fund or some other sort of of source.

So I do have concerns about making sure we do meet that obligation to the medical school.

We heard some very passionate remarks from representatives on the floor today about just how important the medical school is to North Dakota, that anytime any of us go to the doctor, there's a very good chance that physician or that mid-level provider was trained at the University of North Dakota.

So I understand the move to get the state completely out of the property tax game at the state level.

But that one mill reduction isn't going to feel like much of tax relief to too many homeowners.

- And I was gonna say, it also is a substantial amount of money that a statewide one mill will actually collect.

- That's correct, the figure is something like $11 million in every two year biennium.

So if we're not assessing that through that one mill levy, and sort of for context, in Grand Forks County, our overall mills are somewhere around 330.

So it's a very small drop in the bucket when we're talking about what that will do to any given property owner's bill.

We're gonna have to figure out a way to make up $11 million in some other way if we're gonna keep the medical school whole, which we should.

- Well, another issue that's probably gonna come down to the wire, and maybe leadership is gonna have a lot to say in the conference committee, is this idea of changing the state retirement plan from a defined benefit plan to a defined contribution plan.

It seems like in this case, each house has staked out its own position.

And this could be really interesting.

- Yeah, if I had to wager, I think this might be the last big issue that gets resolved and everything else slots in behind it this session.

You had Senator Cleary on with you last week.

And he's been been a very passionate voice in maintaining the current defined benefit plan that our state employees enjoy, along with Senator Dever in the Senate, and my colleague Senator Boche in the House.

And when we debated also in the House, Senator, or Representative Mock had very passionate comments about why we should keep this plan in place.

It's one of those issues that I think for citizens across North Dakota, the details can get very complex very quickly.

I fall on the side of we should preserve and fund that defined benefit plan.

It's good for workforce recruitment, good for workforce retention, and I think the alternatives end up proposing a worse plan, a less attractive plan at a higher cost to the state.

- That's an interesting comment.

And I've heard that from people in both parties.

I mean, it's not just Democrats saying that.

But there are Republicans who are saying the same thing.

And that's why Senator Cleary, who is a Republican, proposed that idea, keeping it, but allowing a choice.

- And I think Senator Cleary has spoken well on that.

It sort of does speak to all of these concerns.

You know, Senator Cleary and I maybe bring the average age of the legislative assembly down just a bit.

But people are right that folks that are maybe a little bit earlier on in their careers do like that portability of a plan.

So putting some sort of choice in that speaks to that could be a good option for many workers.

- When the session started, one of the big issues you heard a lot about was workforce, attracting workforce, developing workforce.

There was a lot of talk about it, but where are we at in terms of bills that address that issue?

- Yeah, this workforce question, I think, is probably one of the signature things we have to tackle this legislative session.

We have anywhere from 20 to 40,000 unfilled jobs in the state.

So every time we talk about attracting new jobs to the state, we have to remember, we have existing jobs in need of filling, Some of the good things we've already advanced, at least out of the House.

Representative Boche has really taken up the mantle of apprenticeships, trying to incentivize those through tax credits to employers who partner with workers to do that.

Partnering with those apprentices too, to make sure they're able to afford the training and education needed for that.

There's really good statistics out there about this concept of job stickiness, that if you sort of get enmeshed into the culture of an employer through an apprenticeship or an internship, you're very likely to stay on with that employer.

So I think that's one good area.

I've advanced a bill out of the House that would help retain more public educators, and private educators, in the teaching workforce by making them qualify for a lifetime teaching license early in their careers, after they've demonstrated that competency for 20 years.

So all of these changes, I think moved the needle a little bit in the right direction.

The big question that we saw in recent days in the House floor is, what do we do about childcare?

Because I think that is part and parcel of our workforce discussion too.

- You hear that from a lot of employers.

They say that they wish that they could attract more people in a family to come back to work, but childcare has become a real issue.

- It really is.

And my wife and I went through this firsthand.

When we moved to Grand Forks, we were expecting our first child, we now have two children.

It was very stressful, as we found ourself on waiting list after waiting list, just hoping for a slot in a childcare facility to open up for our son.

We were able to get into one.

But then the next hurdle becomes, how do you afford it?

To put some context based on our own family's example, we're paying over $2,000 a month for our two children to go to full-time childcare.

When you're looking at the decisions that a family has to make, if mom or dad is choosing to go back to work or not, is that job worth it if we're taking 12, 24, maybe $36,000 a year off the table that has to go to a childcare bill?

That's a tough decision for many families.

And I think we as the state have to recognize that, and do what we can to support families trying to afford care, businesses trying to make payroll in a thin-margin industry, and those workers who are trying to get ahead in the world on some pretty below-market wages.

- Yeah, it all seems to come together in a... You know, it's all meeting now because there is a situation in North Dakota.

I think you've well lined it out that there is a situation.

Childcare is needed if you're going to get people into the workforce.

And then there's an effort to get more jobs to North Dakota, bring more industry to North Dakota, and you need workers.

And you know, Senator Mathen had that bill to set up some immigration offices, I think two, one in Commerce, I think, and one in the Bank of North Dakota.

I have not followed it recently, did it get to the House?

- Yeah, the bill has made it to the House.

And I'm really happy that Senator Mather and Senator Kristin Roers worked together on this, and really spoke to how we can tap into the resource of foreign labor.

These are people who are lawful immigrants to the United States, or who may be eligible to become lawful immigrants to the United States.

We heard that bill in my Finance and Taxation Committee.

And I'm happy to report that we passed it out with a do-pass recommendation, with some amendments to clarify the scope of it.

It'll now head to the House Appropriations Committee.

I think it's a really important component in the workforce.

In my district, district 43 in Grand Forks, we have a lot of new Americans, from Somalia, from the Nepali community, the Liberian community.

And when I talk to these communities, these neighbors of mine during the campaign, they all said, what we would love to be able to contribute is to the workforce locally, whether that's in manufacturing or in medical care, in food service, in childcare, there's a real desire.

Let's work as a state to partner businesses with employers, with immigrant communities and figure out if we can have some solutions there as well.

- And I know that the business community embraced the idea.

- Absolutely, we heard strong support from individual employers, from leading business organizations, like the State Chamber of Commerce, local chambers of commerce, universities.

There was really a very, very strong support.

I don't recall any opposition to this notion.

And I think we saw that in some of the other bills that had the support of bipartisan leaders in their chamber on this.

So here in North Dakota, we've sort of broken through that national partisan divide in immigration to come together and say, here's how we can use this part of the workforce to better meet our needs.

- Since you have a number of people who are UND employees in your district, I wanted to get to this question.

And that is, are they happy about the pay plan the way it's coming through?

It started as a four and four, 4% per year, and now it's six and four, at least that's the proposal on the table now.

- That's right, and that was sort of the movement within the capitol this week, is to settle on this notion of a 6% pay increase in year one of the biennium, and a 4% in year two.

I believe the notion of these equity payments is also part of the conversation as well.

So that would be sort of a one-time bump in that base pay of our public employees.

And on top of that, these 6% and 4% increases.

The constituents I talked to were very pleased to hear that the 6% number got back into the conversation this week.

I know other public employees and public employee unions were hoping for something closer to eight and eight.

The fact of the matter is, we have to keep up with rising costs, with inflation.

Retaining our state workers is also part of our workforce question.

And we know that our workforce state employees often are sacrificing higher wages, higher salaries they can make in the private sector.

Sometimes they have better benefits as state employees.

But what can we do to make sure we're competing with that private sector to keep talent working for us in North Dakota?

- And since we're on the subject of the universities, at least the House passed a new building plan that, it's a four year building plan, that if a college proposes a building or some building project, they have two years to raise a match, and then it'll be done in the next two years.

How did you vote on that concept?

- Well, what I think we have seen in terms of higher education funding when it comes to building is what you just said.

And I support this concept of matches.

It's worked very well for the University of North Dakota.

Our school to the south, the North Dakota State University, they're able to tap into those alumni bases, the donors to their schools, the local businesses.

to not have too much difficulty meeting these matching requirements.

And it's worked really well.

I think what we always have to be mindful of is, does this work as well for Mayville or Valley City or Dakota College at Botttineau, who have smaller alumni networks, smaller communities to tap into.

But take for example, Mayville State University right now.

Their old main building has a real need for some significant repairs that come at a pretty hefty price tag.

I think we as a legislature have to be really attuned to those needs and make sure we're funding not just our flagship universities in the valley, but our smaller colleges throughout the state too.

- Yeah, and along the same line with the flagship universities, there was a real push on to put more money toward research in the university system, not just at the two research universities, but at the other universities that do their own kind of research as well.

Where is that in the system right now?

- Yeah, that's been a conversation that our Appropriations Committee have been having.

You know, University of North Dakota, with our new president Andy Armacost, I think has just done a really good job articulating the vision of why we need to invest in research, whether that's bio-sciences, medical sciences.

At the University of North Dakota, we're heavily involved in unmanned aerial systems and now partnering with the newly formed Space Force, also.

These research opportunities, they're not just good for students to gain the skills they need to enter the workforce.

They're good for the communities where these colleges and universities are, because they can attract private sector development as well.

If we have a highly trained workforce geographically located in say, Grand Forks, that helps us get those employers to look closely at our city for future expansion.

- Now I thought that that ask was for some of the proceeds from the Legacy Fund for that, correct?

- That's my recollection, yeah.

There's been some talk about, is that an appropriate investment from our Legacy Fund?

And those conversations are going to continue.

It seems like we're always debating what's the proper role-scope of the Legacy Fund.

I think supporting research at a university is certainly worthy of that discussion.

And we're gonna have to see what our appropriators come to us with in that regard.

- One thing that has also been talked about with the Legacy Fund is that it was not defined when the measure was put in front of the people, about what it's supposed to be used for.

It's a rainy day fund, we know that, or a sovereign wealth fund.

In your opinion, should there be more definition of what the Legacy Fund should or should not be used for?

And maybe the proceeds should or should not be used for?

- I do think we could probably benefit from a little bit clearer definition of what do we mean when we say the earnings from the Legacy Fund?

What do we mean when we say how many of those we can spend?

And over what time period are we evaluating the strength and value of those earnings?

My friend and colleague, representative Corey Mock to Grand Forks, I think has been a real leading voice on this, to say we are very fortunate to have robust rainy day funds, the Legacy Fund itself.

We do also have to be mindful of the long-term impact, especially in a state where so much of our state revenues are tied to the volatility of the oil market, for instance.

We don't know when that rainy day is going to come.

So I think we have to be mindful that what looks like a prosperous situation now is great, but going forward, will we have enough there to leave that legacy, as the fund is named, for our children and grandchildren?

- So there's some discussions yet to come, I think, on this.

Not going to be solved necessarily in the next month, but maybe over two years or four years.

- I think that's absolutely right.

I think as the fund grows bigger and bigger, as the citizens of North Dakota get more accustomed to the notion we have this fund in place, you start hearing it during the campaign season.

I certainly did when I knocked on doors.

People are very cognizant of the fact that we have seven to eight billion dollars set aside, and there's needs that aren't being met right now, whether that's childcare or infrastructure, or things like that.

There's a desire out there to tap into that.

And I think we as legislators have to balance that very understandable desire with a long-term vision for the state's finances.

- Now, here's a little off the wall thing, because it's an another evolving thing.

$150 million was set aside for a natural gas pipeline to get Bakken gas to the valley and to Central North Dakota and to help Grand Forks.

But the trouble is, although there was a lot of interest in it, nobody tapped into it because they didn't have end users set up.

So now there's a new issue that's going to be in...

I think it's in the Industrial Commission Budget, where they're going to pay for part of the capacity of the pipeline, if you have some end users, and then that can be paid back.

So it's an incentive to get gas, not to build a pipeline, but to get gas to a destination.

- It's a really critical infrastructure investment to benefit Grand Forks and Red River Valley, and our state as a whole.

If you talk to oil producing counties, representatives of the oil and gas industry, that's really a top concern of theirs, is how can we get the natural gas that we're producing in the Bakken to the east where we have the need and industry to harness the power of that natural gas?

My colleague Representative Alisa Mitskog out of Richland County has been a real leading voice on this.

I supported the state investment during the special session in that fund.

And we talked to local business and community leaders in Grand Forks.

It is really crucial for us to be able to get that pipeline to help support our agriculture industry, for instance, value-added agriculture particularly.

I'm very receptive to this plan to sort of guarantee as a state a floor of capacity.

I think when you hear from pipeline builders, the contractors that would do it, that's the biggest concern of how do we make this construction economically viable.

That might be an area for the state to step in and say, we're going to guarantee a floor of capacity to make sure we can move that project forward.

- And again, not to put too fine a point on it, there are apparently a number of projects that are really looking at Grand Forks to locate.

There's a wet corn milling plant.

There are soybean crushing plants that...

They all depend on natural gas, that's one thing.

When they got gas to Gwinner, then the Bobcat plant down there went to natural gas and got out of propane and things like that.

So really, you're talking about a very important economic growth for your part of the state.

- It is, and we certainly had controversy locally with the wet corn milling plant in Grand Forks.

And I think everyone is, under the circumstances, relieved that we addressed those national security concerns.

But an industry like that, a production facility like that, is absolutely something the Grand Forks community would want and would welcome.

We need the natural gas to do it.

And the Bakken needs an industry like that in place to be able to have a market for its gas as well.

- Yeah, and again, to also keep oil production up.

- Exactly.

- Because natural gas is a byproduct of oil production.

- Exactly.

- Are there any particular issues that you are really honing in on, besides the ones we talked about?

Something that is in the back of your mind saying, we need to do something on this?

- Yeah, one thing I've really been proud to work on this session is universal school meals.

We have a bill pending right now in the Senate to increase the number of students, number of families, that could take advantage of no-cost breakfast and lunch at school.

We know students that are well fed are better behaved and perform better academically.

I'd love to see a universal meal program, just like Minnesota has passed, like one of our competing oil producing states, New Mexico has passed this year.

The version that came out of the House and is pending before the Senate would increase that income cap to 200% of the federal poverty level.

So that's a family of four making about $60,000, wouldn't have to pay out of pocket for school meals.

In terms of raw numbers, we're talking about 10,000 more kids that would be able to eat without worrying about mom or dad being able to afford it or remembering to send lunch money.

So I think this is a really important bill.

I brought a companion bill to preclude this practice of lunch shaming in North Dakota, which stigmatizes or embarrasses kids that don't have enough money for their school meal.

Maybe it's throwing that meal away, or giving 'em a cold cheese sandwich when everyone else gets the hot meal for the day.

That's gonna be up on the senate floor as soon as tomorrow or early next week.

- There seems to be support for that particular proposal especially, because of some of the reports coming out of some of the cities about lunch shaming.

- Yeah, there certainly does.

And I was happy it passed with overwhelming support in the House, and has unanimous support out of the committee in the Senate.

So I'm hopeful that it will pass on the Senate floor.

But as I told all of the committees that heard it, it would be better if we didn't need this bill at all.

And that could be true if we provide universal school meals to all students.

- Again, we're talking about potentially a workforce issue.

- Exactly, and living on the border with Minnesota, as I do, we're now competing against our neighboring state where they have adopted this plan.

I mean, if you look at just the brass tax of finances, a family with students in school is poised to save a whole lot more money if we have universal school meals provided by the state, versus even the most generous income tax cut proposals we're talking about.

So it really does distinguish one state from another, when you can look at which side of the river you wanna live and work on, and see one is providing school meals, and the other, there's still an out-of-pocket expense.

- In about the minute and a half we have left, are there other issues at this point?

- You know, we're to that point in session where we're in a holding pattern waiting for the plane.

It's circling the runway.

We're waiting for all the big decisions to be made.

And I think some of those issues that are outside the headline could sort of fall into place after that.

So it's going to be an exciting next couple of weeks here in Bismarck.

But I think we're up to the task of figuring out what we can do to advance progress for North Dakotans.

- Quick answer, annual sessions, yes or no?

- Simplistically, yes, I think it would help increase the capacity and capabilities of our legislators.

- I don't know where that...

There have been proposals for some kind of annual legislative, or calling a legislature back in without the Governor having to do it.

I've seen some of those bills, but.

- Yeah, there are bills like that, proposals to go on the ballot for the voters to decide as well.

I think it's probably time we at least have the option to meet more often than once every two years.

- All right, okay, here's the tough question.

I ask it of everybody, so you probably know it's coming.

What is the adjournment date, in your projection?

- Ooh, if I had to make a guess, I would guess April 26th.

- Okay, leaving a number of days for dealing with vetoes.

or dealing with something that might arise in the biennial.

- Exactly, if we don't skip any days between now and when day 80 hits, I think May 4th is when we expire and turn into pumpkins.

I doubt we'll go that far because it's just best practice to leave a few days in case there's some emergency that requires us to come back.

- Our guest today on "Legislative Review" Representative Zach Ista from Grand Forks.

Representative, thank you so much.

- Thank you.

- I'm Dave Thompson for Prairie Public.

Thanks for tuning in.

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