Kicking off the Legislative Session with a new governor and property tax reform

In this episode of Straight Talk with NDFB, we return to Bismarck for the 69th Legislative Assembly. Host Emmery Mehlhoff talks with Pete Hanebutt, NDFB Public Policy Director. They discuss the first week of the Legislative Assembly, Governor Armstrong's State-of-State Address, property tax reform, livestock issues and more.

Join us for this episode.

To follow the legislative session, visit ndlegis.gov.

To subscribe to NDFB's Legislative Front, visit https://ndfb.org/news/signup/

Contact Pete Hanebutt, NDFB Director of Public Policy at pete@ndfb.org

Questions? Contact us at emmery@ndfb.org.

Transcript

[Straight Talk theme]

[00:11] Emmery: Welcome to Straight Talk with NDFB. I am your host, Emmery Mehlhoff. This is our first episode of our legislative season as we cover the 69th Legislative Assembly. We'll be interviewing lawmakers in Bismarck as they make decisions for the future of North Dakota.

In today's episode, I visit with NDFB's Pete Hanebutt, Director of Public Policy. Pete and I talk about the first week of the legislative session, the newly elected Governor Armstrong, state of the state address and policies important to NDFB. Join us for this episode.

[00:49] Straight Talk stinger

[00:51] Welcome to Straight Talk with NDFB. This is Emmery Mehlhoff and we are starting your next season of Straight Talk with NDFB regarding the legislative session. This is our 69th Legislative Assembly, I believe, in North Dakota.

[01:07] Pete: Correct.

[01:08] Emmery: And I have with me today the famed Pete Hanebutt, the director of North Dakota Farm Bureau Public Policy. So, Pete, let's just dive in and you know, we're already a week into session. I don't even know what happened. Just dive in. Tell us a little bit, just briefly about yourself again so that our listeners out there can be reminded, and then we'll jump into talking about the session.

[01:30] Pete: Sure. For those who don't know me, as Emmery says, I'm Pete Hannebuty. I've been with North Dakota Farm Bureau for going on 12 years now. The previous 20 before that I was with Indiana Farm Bureau. I've been a lobbyist for 30 years now. Grew up in Indiana. My dad was an extension agent. My mom was a school teacher. I went to Purdue and by the grace of God, graduated from Purdue.

And I'm happy to be a North Dakotan. And me and the boys live in New Salem. My sons live in New Salem. And we would not change that at all. We're never going anywhere else. We're dedicated North Dakotans.

[02:07] Emmery: That's awesome. The day recording this is Friday. What have you seen this week? They gaveled in on Tuesday. The governor gave a state of the state. I look at that all as all the heads of government the first day kind of give their perspective. So the judiciary gives their state of the state, the judiciary gives their state of the judiciary. The governor gives his state of the state. The legislature all listens to that.

And as the third branch of government decides what to do as they make our rules. And so right. Is the state of North Dakota in a good state or how are we looking?

[02:37] Pete: We. We really are as a state. We're so much better off than, than many of our neighbors and certainly many of the states in the country and even just those within our Midwest region. We're, we're doing well as a state. We have cash, which sometimes leads to problems because there's spending, of course, but you know, everything is going well as far as that is concerned.

How we prioritize spending and all is obviously a concern. And then where that spending is generated at through taxes is, is obviously a concern. But you know, all three of the, the speakers on Tuesday gave positive remarks about where our state's at.

I'm sure there have been years in the past where the state coffers were empty and nobody knew how we would pay for anything. I reflect back on one of my predecessors in this job that I knew when I was in Indiana and Brian Kramer, I'm talking about, came to the meeting and said, how in the world are we going to pay for this stuff?

But the state did not have as much cash flow as they needed at that time pre-oil boom. And so with that kind of money comes good and bad. You just wonder, you know, how long does it last for us.

But right now the state is in a, in a very good position and most of the state of the state speech, the speeches on Tuesday were all very positive. It is interesting to hear the reflections of legislators. As soon as the speech is over, there are those who will say, that was a great speech. We're going to do what we can to support this governor, all in for whatever Governor Armstrong's pitch is.

And then there's others that say, I don't like it at all. I didn't like anything I heard. You know, there's always folks at both ends of the spectrum and then there's those in the middle who say he brought up some good ideas, but we're the legislative branch and we're the ones that make laws. And so those are generally the three answers. It could happen with any state of the state address, not just necessarily this governor or this legislature. It could happen anywhere with that kind of stuff.

Probably the same would be reflected at the federal level or in any other legislature. So it is a matter of the governor setting the bar for what his vision is going down the road and then the legislature's reaction to it and what they can do if they want to, you know, help the seated governor if they're of the same par, they probably will what they want to do to help the seated governor and what's practical on his wish list versus what's, you know, pie in the sky or, or something to consider for down the road.

So it's always interesting to hear and we'll just have to see how it goes. We obviously, as Farm Bureau have our priorities and some of them align with things that he mentioned and some of them will be contrary to things that he mentioned or at least on parallel paths, not the same path. And we'll just have to see how that shakes out.

[05:34] Emmery: Well, and I think even with, if you completely agree with a governor or any executive on any in government, if the legislative branch is just going to come around and yes stamp everything that a governor puts out, I think, I think we're at a little bit of a caution.

I think that that tension between the legislative branch and executive branch is a good thing because, I mean, that's the whole idea behind the three branches of government was the checks and balances.

And so even if you have a governor with great ideas, a great vision for North Dakota, you still want to have a little bit of resistance from a legislature, at least a little bit of caution, because you want to have that good checks and balances that, that our forefathers intended.

[06:21] Pete: Absolutely. That is the beauty of our system, that we have three branches. Obviously, the state of the judiciary laid out their ideas and what is needed in this state and what they would like to see.

And then the governor with the executive branch and then the legislature weighs in. And so that balancing act is what keeps us as Americans straight in most situations in that it, we don't live in a dictatorship, we don't live in a, a kingdom where he gets, he or she as, as the monarch gets to make all the rules. It is government by the people.

The people elected the governor, but the people certainly elected their legislators. And so we have that balancing act. And in this state, the people elect judges too. And so that's all positive.

[07:08] Emmery: So a couple of the issues that the governor mentioned that I think we can touch on because we have some policy issues on them. Well, maybe I should just back up really quick and say this, that it was a historically short speech. Usually the state addresses tend to carry on for quite some time. And Governor Armstrong's was very short. I was thinking kind of seemed in the same tune as our current president, President Trump.

He really focused on efficiencies and getting rid of government waste. That was just very much the general theme that I got through it. A couple of the things that he talked about in that was eliminating unnecessary boards and commissions in North Dakota to increase government efficiency.

He did talk about local food, value added agriculture, some of that stuff. He talked about school choice, so education, savings account and charter schools which is something new coming from the executive branch.

But the biggest thing that he talked about was property tax, and that was a consistent theme that kept coming back. He talked about two big areas that we could mention here is property tax relief by increasing existing primary residence tax credit. So basically the idea that he has is to eliminate the primary residence property tax over time using legacy fund earnings. A buy down, buy down was, was one one area and then the other one was capping future increases in property tax to 3%, which I think our neighbors to the south do.

[08:54] Pete: South Dakota has had a cap for a while and I know our colleagues down there, they're dealing with some other issues with, with taxes now, and we will probably be following a similar path.

It seems the consensus around the capital this week seemed to be that that 3% is a pretty good number for a limit on spending or a limit on, you know, money raised in spending and that kind of stuff. So that, that 3% seems to resonate pretty well with a lot of people. And then, you know, I'm, I'm sure that every urban-suburban homeowner that heard the speech loves the idea of never having to pay taxes because no one likes to pay taxes.

But everyone also likes the services that taxes pay for. I've never seen anybody volunteer to have bad roads, bad fire and ambulance and, and police force, bad schools. Everybody wants those types of things that property taxes pay for. We think about schools particularly. And yet, you know, it's when, when the property taxes that pay for those things are such a big burden on your family, gross revenues, income, however you want to call it, in farm country particularly, it gets to be a serious crisis.

Couple that with the idea that looking at USDA numbers, profitability in the ag sector has not been that great over the last several years, particularly for grain farmers, say row crop farmers, versus the only segment of the rural economy that's been booming in the last, say 24 to 36 months has been the cattle sector.

We obviously have a lot of cattle in this state, but that's not everybody. And so how we fairly assign, you know, the price, the cost of paying for all those things that, that the citizens demand is going to be a tough, a tough nut to crack and still be politically palatable. So that's a tough one for us.

Farm Bureau, you know, has had policy for a long time talking about property tax relief and reform. We have a specific policy this time that talks about eliminating property taxes, certainly reducing property taxes through reform of the government budgeting process and just reform the system in general, I guess I'd say. And so that that's going to be pretty important for us. So how we provide property tax relief at the political subdivision level and give that kind of relief back to the people who are actually paying property taxes, and then how we fix the budgeting process so that we don't come back to this in just a few years while maintaining those essential services, that's a tough nut to crack.

But we're going to have to follow it as closely as we can and weigh in, you know, on a lot of it. We're blessed that we have good rural farmers in the legislature who are in charge of some of these committees that will ride herd over it, and we will trust them to help us a lot with these things.

[12:17] Emmery: Well, and our policy that our members put into the books is pretty clear as far as what we want and helps provide a good beacon forward and provide some flexibility. Clearly support the productivity formula and support farmstead and farm use buildings, home exemptions, but then allow for some flexibility on how relief gets provided. I think the biggest piece of this conversation is that budgeting component, because I think if anybody looks outside, they want some sort of road to drive on. They want some sort of fire truck to show up for chimney insurance or whatever services happen, they want to have those services.

But the budgeting component, what really is necessary to pay for. And I think. I think that all of this property tax really revolves around people feeling like their government is imploding.

Last biennium, we spent more than we ever have before. They see spending going out of control and it's like, "Hey, all we're buying all of this stuff, and I'm not really seeing a huge increase in my benefits. My roads really aren't that much better. I don't have any more fire trucks. Where's all this money going?" And so I think that people are really looking for, "Hey, I want some of that money back in my pocket."

I think that if we can remember that and focus on that, it can provide some clarity in this conversation. Particularly in the ag sector, where we are paying a lot of money in property tax for not a lot of stuff.

[13:52] Pete: Yeah. When you think about the generation that's on the farm now, the average age of the farmer, just simple math tells you that if they're 60, they're certainly, they've already paid for their kids to go to school and they may be paying currently for their grandkids to go to school. That hardly seems fair that it's not a user fee at this point. It's, "We're going to tax you senior citizens or those approaching, at least those that are qualified to be in AARP. We're going to tax you folks to pay for the schools, arbitrarily, not based on your ability to generate income or generate a profit or have a profit, but just based on the fact that you own land."

So you're land rich, but cash poor. And yet we're going to make you, you know, pay for these services that the inner city folks who have, you know, the majority of the kids in the school, they're not, they're not going to be taxed with this burden any longer, as if this plan is, this comes out the wrong way. So we have to be vigilant to preserve our, our interests in rural North Dakota.

[14:54] Emmery: So other Farm Bureau priorities, I would sum those up with livestock and property rights. Why don't we first touch on livestock? Where do you, do you think we're going to make any inroads on that this session? Or where do you see that?

[15:07] Pete: I believe, I believe we will. I was on an interim committee dealing with livestock zoning. And this has been a perennial problem in this state in that most states base livestock zoning on sound science and things that our land grant universities have known about for years, as far as, you know, manure management, how to manage smells, all those kinds of things, water usage and everything.

The Iowa way of doing things is very similar to the Nebraska way of doing things, is very similar to the Indiana way of doing things, which comes from Purdue, Illinois, most of the states that are -- even Minnesota -- most of the states that are big livestock producers have a system that they have, you know, has been proven through their land grant system that they employ to decide, you know, where is the best place to place this livestock operation.

Doesn't matter if it's dairy or poultry or anything with hooves in between. There's a standard way of doing it. And unfortunately, in this state, personal emotion down to the township level has ruled more of the day. And we're trying to fix that through the adoption of an updated version of our state's model ordinance. This for where livestock facilities should be placed, how far the setback should be, whether the setbacks vary according to the prevailing wind, all those kinds of things.

And what I think the basic citizens never recognize is that we have in the state of our Department of Environmental Quality, who are there to look out for all the citizens, not just the farmers, obviously, they're there to look out for Joe Public and, and Joe Public Wants to make sure that his or her water is protected, that his or her, you know, their nose isn't offended by smells, and that there's not, you know, a runoff issue or anything like that.

Well, that's why we have a Department of Environmental Quality. And yet decisions are made at the local level that aren't based on anything that the DEQ weighs in on. So protecting, you know, the taxpayers as a whole is their job, and they do that before a permit is granted. And yet we have permits that are refused based on personal animosities. Things as simple as we think that we should have been able to buy that land that you bought, or personal animosities that go back generations.

And that's a shame. We're going to try to take that emotion out of the equation by passing new model ordinances. And that came out of this interim study committee that I was a part of and several other ag groups.

And I think that bill has legs and will sail through because most of the stakeholders agree on it. Whether we modify some things with that along the process, through the process, I don't know. Or have a companion bill. But as good as this bill might be, it may not mean anything if we can't get it implemented in every county and every township. And so we have to find a way to make sure that once the state adopts new rules that townships and counties and municipalities would -- but they're out of the question because you wouldn't build a facility within a municipality -- but how townships and counties have to adopt these rules and play along with the rules that the state set and not set higher standards, which they're not allowed to do, but in some cases have. And so we have to kind of find a way to fix that.

So that's, that's where we're at on the livestock things there. There may be some other things and a little bit of tweaking, but that's the major one this time.

[18:50] Emmery: So private property issues. We have a few priorities set regarding private property. Do you see that topic coming up during this session, or do you think the property tax conversation will overshadow it?

[19:02] Pete: I think, I think everything is overshadowed by property taxes and spending and that's just the reality after the ballot measure attempt last, this last election, while that measure didn't pass and was soundly defeated, it does say that people are very sensitive to the issue, and I think the legislature is sensitive to that, and they want to be responsive and proactive before another ballot measure comes back, that that is written in a way that more people will actually vote for it. So at any rate, we, we certainly see that almost every other issue that we would be routinely and normally interested in may be pushed to the back burner. That's not to say that private property issues aren't important to us, but I have not heard of a bill that deals with many of those things specifically and doesn't mean that they're not out there.

But I think probably a lot of legislators got the word that these things, meaning taxes and spending, are going to be the priorities of this legislature, therefore do not bring a whole lot of those types of things. I don't know that for sure, but it seems that that kind of writing is on the wall that this is going to be a legislature that really focuses on fiscal type stuff.

[20:21] Emmery: You definitely see that where legislative session kind of takes on a theme or just a feel about itself and, and not that other issues don't get covered, because they certainly do, but sometimes the mental effort of the political capital, etc., just isn't there to tackle another big, big issue because everybody's focused on something else. It's not that they couldn't. It's just if everybody's talking about tax and finance, not a lot of mental energy can go to, to some other really big issues.

[20:53] Pete: So, yeah, and those things ebb and flow. Sometimes all the focus is on improving something. Take your pick of what the topic is. Sometimes all the focus is on fixing something that, that nobody foresaw as a problem and it became a problem.

I mean, there was probably a year when we didn't talk anything about oil in this state. And yet obviously that's a pretty important thing for this state. And so, you know, we're an energy state and we're an agriculture state. You can bet that a lot of those things will be on the plate all the time because that's what drives our economy. We're not a manufacturing state per se, but this session the focus seems to be on the physical things of taxes and spending, how to limit spending, how to be smart with the spending so that the usual services for the public are out there, but not being a burden to the taxpayers.

And that's always a tough thing to a tough nut to crack. But we'll just sit up, see how this legislature deals with.

[21:55] Emmery: So in the Capitol halls. A lot of new faces out there or are they just the same old group of people?

[22:03] Pete: There are a number of new faces in both the House and the Senate. I don't know. You know, this is, this is kind of the preview for how are things going to be when we have term limits and it turns over a lot quicker? But, yeah, we're seeing a number of new ones, and I don't have the count off the top of my head to know the exact number of new ones. Some of them that are back have served in the past.

Some of them are new because of either folks choosing not to run again or, you know, elections that turned over. A couple of house members moved to the Senate, so they're not technically new. But then, you know, those seats in the House had to be backfilled. And so there's a substantial number in each, in each chamber that are strictly new legislators that don't know the ropes.

And I'm sure, you know, organization day in these first few days of session, those folks must feel like they're drinking out of a fire hose, and that's just the reality of it. But by the time we're moving for a few weeks, they, you know, new legislators each have a mentor to try to shepherd them through things. And by the time we've moved into things for a few weeks, I think folks will feel more comfortable with their roles, new as they are. Obviously, there's a new minority leader in the House, there's a new speaker in the House.

You know, a couple of other leadership roles have changed around a little bit. And so that's just part of the process. Some of that is naturally occurring, but there are, there are new faces to see. And an old time lobbyist was sitting next to me today in the House chambers and, and he's, and he's been around 35, 40 years. And he said, "Boy, I sure don't know some of them. And they're looking younger every day." The reality as we age. So. Yeah.

[24:00] Emmery: Well, thank you, Pete, for being in Bismarck and representing North Dakota Farm Bureau. It's a joy working with you and, and exciting to hear about everything that's happening. It'll just be exciting to see what comes down the pike, so.

[24:16] Pete: Well, it certainly will be interesting. And we, we have challenges ahead of us, but we also are blessed with good friends within the legislature. And so I, I think what citizens in this state should understand more than anything is compared to other states that I'm familiar with, where the legislature is so unrelated to the rural parts of their state. Thinking of my home state of Indiana, I bet of the 150 legislators there, there aren't a half dozen that are really agricultural. It's tied to agriculture. And so it's, it's a tough thing.

And yet you know that's what we deal with here is that we have a lot more legislators that are directly connected to production agriculture, and that puts us in good stead. And I hope people appreciate the fact that this is a much better situation than most of our Midwestern colleagues.

[25:19] Emmery: Well, thanks again, Pete, for joining me today, and we'll look forward to visiting with you again about how session is progressing and what the outlook looks like for agriculture in North Dakota.

[25:32] Pete: Thank you. Always a pleasure.

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[25:37] Emmery: You've been listening to Straight Talk with NDFB. To keep up to date on legislative issues happening in Bismarck, subscribe to NDFB's Legislative Front found in our show notes. You can always contact Pete Hannebut, email below, or myself at emmery@ndfb.org.

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