Dakota Download Governor Burgum's Weekly Update - April 30, 2023

Burgum: 2023 session provides historic tax relief and invests in key priorities including workforce, child care and infrastructure

North Dakota is providing more than half a billion dollars in tax relief to citizens while also cutting red tape and making historic investments in workforce, child care, infrastructure and other key priorities, Gov. Doug Burgum said Sunday after the 68th Legislative Assembly adjourned its regular session sine die.

“This session, major achievements were accomplished – resolving many longstanding, seemingly intractable issues – that will now help North Dakota reach our fullest potential,” Burgum said. “From major investments in child care, education, workforce and infrastructure to cutting mountains of red tape, to pension reform, strong support for law enforcement and our active military and veterans, strengthening tribal engagement, and growing animal agriculture and value-added energy – each of these important areas saw tremendous progress.

“With these and other challenges being met head-on, and a historic $515 million income and property tax relief package that will allow North Dakota residents to keep more of their hard-earned money, our state is well-positioned to grow our economy, strengthen our communities and create a brighter future for all,” Burgum continued. “We’re grateful for the incredible work and collaboration by our Team ND members who serve citizens across North Dakota every single day, and to the members of the 68th Legislative Assembly whose hard work and passion this session supports what we strive to do in state government, which is empower people, improve lives and inspire success.”

The landmark tax relief package will provide $358 million in individual income tax relief by zeroing out the state’s bottom tax bracket and combining the top four brackets into two brackets with reduced tax rates of 1.95% or 2.5%. The remaining $157 million in the package will be available to homeowners by claiming a $500 property tax credit on their primary residence and through expanded eligibility in the state’s Homestead Property Tax Credit program for homeowners ages 65 and older.

“North Dakota can now claim the lowest income tax rates in the nation among states that have individual income tax, helping us to recruit and retain workers to address our workforce challenges,” Burgum said. “We’re grateful to our legislative partners whose thoughtful work allows North Dakotans to save more than half a billion dollars over the next two years and moves us further down the path toward becoming a zero-income tax state.”

In December, Burgum recommended a 2023-25 budget with general fund expenditures of nearly $5.9 billion and a total budget of $18.4 billion, which included a huge influx of federal and special funds, formula-driven increases and historic inflationary costs.

The legislatively approved budget contains general fund expenditures of $6.1 billion and a total budget of $19.6 billion. The record general fund budget is $6.8 billion in 2013-15, and the previous record total budget, including federal aid, was $17.8 billion for the current biennium.

Burgum had signed 538 bills through Saturday, with 45 bills awaiting action. He has 15 business days – until May 19 – to act on the remaining bills.

Click the button below to read about the significant progress made during this year's session.

Governor signs $66M child care package, addressing major barrier to workforce participation

Gov. Burgum on Friday signed House Bill 1540, which provides nearly $66 million to support child care services and help address a major barrier to workforce participation as North Dakota continues to face a severe workforce shortage.

“This is a historic day for North Dakota children, parents and employers. House Bill 1540 will have a positive impact on thousands of families and help our state build and sustain a workforce to support economic growth and reach its full potential,” Burgum said. “Expanding access to affordable, quality child care will make it easier for parents and guardians to engage in work, provide for their families and strengthen local businesses and their communities. We’re deeply grateful to the bill’s supporters and all the business leaders, child care providers, chambers of commerce, Workforce Development Council members, Department of Health and Human Services team members, industry groups and legislators who spent 14 months developing the framework for this landmark legislation and moved it across the finish line.”

Last September, Burgum and lawmakers proposed a $76 million comprehensive package to address the availability, affordability and quality of child care as a barrier to workforce participation. The nearly $66 million in HB 1540 funds many of those proposals, including:

• $22 million to expand the Child Care Assistance Program (CCAP), increasing the number of families with children ages 0 to 3 who receive help paying for child care from 4,660 to 6,460 by the end of the 2023-2025 biennium.
• $15 million to incentivize more providers to deliver child care for infants and toddlers by increasing the CCAP rates for child care centers and group/family child care settings, plus $3 million to increase monthly payments to providers who are quality rated;
• $5 million for an additional 500 families to participate in a pilot project where private employers contribute money to help cover their employees’ child care expenses;
• $2 million in stipends for child care workers pursuing additional training.
• $3 million to increase support to providers who want to become quality-rated or increase their current quality rating.

Overall, the bill’s far-reaching impact means an estimated 2,200 extremely low-income working families will no longer have a co-pay requirement for child care; at least 1,800 additional children will receive CCAP support each month; 3,500 child care spots will receive increased CCAP payments for quality and infant/toddler care; 1,200 to 1,800 child care workers will receive training stipends; over 800 providers will receive grants or shared service supports; and over 9,000 child care-related background checks will be completed more quickly and efficiently.

“House Bill 1540 addresses the current needs of our child care system: access, affordability and quality,” Rep. Emily O’Brien of Grand Forks, the bill’s prime sponsor, said during today’s signing ceremony at the Missouri Family YMCA child care center in Bismarck. “This ($65.6) million package supports low-income families, employers, providers, state employees, quality-based programs and outcomes.”

Co-sponsoring the bill were House Majority Leader Mike Lefor, Senate Minority Leader Kathy Hogan, Reps. Alisa Mitskog, Jon Nelson, Greg Stemen, Don Vigessa and Robin Weisz and Sens. Curt Kreun and Judy Lee.

Lefor thanked O’Brien, Burgum, Lt. Gov. Tammy Miller, Senate Majority Leader David Hogue, House Minority Leader Josh Boschee, Hogan and others for their work on the bill.

“This bill provides a foundation for a child care system that is high quality, affordable and accessible for all North Dakota families,” Lefor said. “This package provides the most effective vehicles for the Legislature to continue building on our progress and stabilize the child care workforce that our state’s economy so heavily relies upon.”

The House approved the final bill by a vote of 72-20, and the Senate passed it 41-5.

Department of Health and Human Services Commissioner Chris Jones praised the bill, noting the importance of quality child care to the brain development of young children.

“We are so excited to see what impact it’s going to make over the next two years and really help the workforce of today, but also the workforce of tomorrow,” Jones said.

Burgum, Legislative Assembly celebrate signing of historic tax relief package providing $515M of income and property tax relief for 2023-2025

Gov. Burgum, members of the 68th Legislative Assembly and State Tax Commissioner Brian Kroshus on Thursday celebrated the signing of a major tax relief package that will provide a combined $515 million in savings for payers of state individual income tax and local property tax over the next two years.

Burgum signed House Bill 1158 with Rep. Craig Headland, the bill’s prime sponsor, House Majority Leader Mike Lefor, Senate Majority Leader David Hogue, bill sponsors, Kroshus and other bill supporters during a ceremony at the Capitol.

“This landmark bill provides the largest individual income tax relief package in state history and is a huge win for North Dakota taxpayers,” Burgum said. “House Bill 1158 allows workers across all tax brackets to keep more of their hard-earned money while also easing the property tax burden on homeowners and making homeownership more affordable for our senior citizens.”

"We put in a lot of work to come up with real tax relief for the people of North Dakota and I'm very pleased with the final result,” Headland said. “It combines $358 million in income tax relief while also providing $156.7 million in property tax relief. This is in addition to the ongoing $1.5 billion in property tax relief the state provides to local communities. All in, this results in historic tax relief for our citizens."

“We’re proud to be providing the taxpayers of North Dakota the largest tax relief package in the state’s history,” Hogue said. “This package is meaningful relief for working families and homeowners across the state.”

“The package is a significant win for North Dakota taxpayers,” Kroshus said. “The greatest benefit of the plan is that it provides meaningful relief to our state’s lower-income earners and retirees on fixed incomes. Rather than a top-down model, it begins with everyday citizens.”

House Bill 1158 will provide $358 million in individual income tax relief by zeroing out the state’s bottom tax bracket and combining the top four brackets into two brackets with reduced tax rates. The two middle income brackets will be taxed at 1.95%, down from 2.04% or 2.27%, and the top two brackets will be taxed at 2.5%, down from 2.64% or 2.9%.

The changes will result in an estimated $104 million in savings for the zeroed-out bottom bracket, $178 million in savings for the combined middle-income brackets and $76 million in savings for the combined top brackets.

The remaining $157 million in the package will be provided as property tax relief in two ways: $103.2 million will be available to homeowners by allowing them to claim a property tax credit of up to $500 on their primary residence, and $53.5 million will be provided by expanding the eligibility requirements and maximum reduction for the state’s Homestead Property Tax Credit program for homeowners 65 and older.

House Bill 1158 originated last August when Burgum, Kroshus, Headland and other legislators unveiled a major flat-tax income tax relief plan. The bill was introduced by Headland, who chairs the House Finance and Taxation Committee, and co-sponsored by Reps. Glenn Bosch, Jason Dockter, Jim Grueneich, Jared Hagert and Pat Heinert, and Sens. Scott Meyer, Michelle Axtman, Cole Conley, Kristin Roers, Terry Wanzek and Jordan Kannianen, who chairs the Senate tax committee.

Burgum noted that tax relief was a priority for both the Legislature and executive branch this session, and while there was much debate over how to provide income and property tax relief, he applauded everyone who came to the table and collaborated on the final relief package.

“North Dakota can now claim the lowest income tax rates in the nation among states that have individual income tax, helping us to recruit and retain workers to address our workforce challenges,” Burgum added. “We’re grateful to our legislative partners whose thoughtful work allows North Dakotans to save more than half a billion dollars over the next two years and moves us further down the path toward becoming a zero income tax state.”

The House approved HB 1158 by a vote of 84-6, and the Senate passed it 45-2. The bill also creates a Legislative Tax Relief Advisory Committee to study tax relief, including income and property tax relief, during the 2023-2025 interim. The study will include analysis of the tax relief in HB 1158 and options to implement a flat rate for individual income tax, with findings to be reported to the 2025 Legislature.

The income tax relief in HB 1158 builds on the $211 million in income tax credits approved by the Legislature and signed by Burgum during the November 2021 special session, which previously was the largest income tax relief package in state history.

Burgum signs bill to reform state pension plan, protect taxpayers from $1.9B unfunded liability

HB 1040 closes defined benefit plan and injects $200M into pension to meet obligations to existing team members and retirees, while moving new hires to generous defined contribution plan similar to 401(k)

Gov. Burgum on Saturday signed a major pension reform bill that protects the retirement benefits for existing public employees and retirees and also protects taxpayers in the long-term by addressing a $1.9 billion unfunded liability in the North Dakota Public Employees Retirement System (NDPERS).

House Bill 1040 closes the state’s existing defined benefit plan and injects $200 million into NDPERS to begin reducing the $1.9 billion unfunded liability, helping to ensure the state can meet its future obligations to more than 53,000 employees and retirees from state government and local governments enrolled in the plan. The legislation also shifts new hires to a generous defined contribution plan, similar to 401(k) plans offered to employees in the private sector.

“This bill allows us to ensure our ongoing obligations to current and former team members enrolled in the state pension plan while finally addressing the $1.9 billion in pension debt looming over taxpayers,” Burgum said. “We’re grateful to House Majority Leader Mike Lefor’s determined leadership on this issue and the interim Retirement Committee for bringing this plan forward and ushering it through the Legislature with thoughtful debate. House Bill 1040 will help in recruiting new team members and give them greater flexibility and portability in their retirement accounts, while also maintaining and protecting pension benefits for existing team members and retirees. Taking the off-ramp from defined benefits now will save North Dakota taxpayers billions more down the road.”

Burgum first proposed switching to a defined contribution plan and injecting $265 million into the pension fund in 2019. In his executive budget proposal for the 2023-2025 biennium, he recommended a $250 million infusion into the pension fund. House Bill 1040 infuses $200 million into the fund and adjusts contribution rates to ensure the plan can cover ongoing benefit payments and pension debt.

The House passed the bill on a 76-17 vote and the Senate approved it 28-19.