April 29, 2015

The North Dakota legislature left early today, leaving one fairly important budget bill unfinished. The PERS (Public Employees Retirement System) Budget bill SB 2022 was part of stalemate between the House and the Senate. It revolved around the disagreement on how to deal with the Sanford takeover of the state employee and retiree health program.

Many felt that there was something wrong with the fact that Sanford was able to outbid Blue Cross Blue Shield for the state contract. A delayed bill on this subject was previously defeated by the Senate, but the House amended those features into SB 2022 and it was just too much for the legislature to handle, so they left town and creating a need for a special session in before the new fiscal year starts in July.

This is noteworthy because nobody can really remember such a thing happening on a major "must-pass" budget bill. At least not in recent history.

Despite the Senate's attempt to block income tax cuts for North Dakota, the House did pass the Senate's original income tax cut bill which amounts to a roughly 10% across the board cut for individuals (as well as pass-thru entities) and 5% for corporations.

This brings the total income tax rate cuts since 2008 to just under 48%.

Last week, the Senate helped fix the major issue that was wrong with the earlier House-version which was the fact that the bill rapidly replaced the lower trigger rates with a higher immediate rate. For companies that were counting on that rate cut, it would have create even more chaos.

Luckily, the Senate fixed that problem by allowing the trigger to be on till the end of 2015 (if it is pulled) with a future permanent total oil tax rate of 10%.

This could still be a problem if the trigger kicks in and then would have been in place at January 1st, 2016 - but at least some time is given to companies to determine their business plan a little better.

We'll have more in-depth review of the session as the final numbers are compiled.

-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network