RYAN TAYLOR: Medicaid and North Dakota Healthcare

Real people, real issues, real close to home.

In October, 2010, I was campaigning for my third term in the North Dakota senate in the town of Rugby, the biggest city in my district with a population of 2,900 people. I was going door to door–introducing myself, leaving my brochure, asking to earn their vote. This particular afternoon, I was at one of the mobile home parks, and I came to a home with a young girl outside raking leaves. She said her dad was inside, so I knocked on the screen door, saw a young father inside peeling potatoes with a toddler nearby, and I said, “Hi, I’m Ryan Taylor, I’m running for the state senate. I just wanted to visit a bit and hopefully ask for your vote.”

He stopped what he was doing, looked up at me and said, “Are you Bud’s boy?”. Coming from a fella so much younger than my dad, younger than me, stopped me cold. I said, “Yeah, I am Bud’s boy.” He said, “I used to take care of your dad.” You could have knocked me over with a feather. My father had passed away about five months before, after spending a year and a half in long term care at the Rugby hospital with advanced Parkinson’s, dementia and the many difficulties of age. I visited Dad regularly and knew many of his caregivers, but this kind young father worked the night shift and I had not had the honor of meeting him.

He invited me in, and I sat down and visited with him a good long while about Dad, his work at the hospital, his new work at the manufacturing plant where he had just changed jobs, his family and some of our work in the senate. It helped me realize that when we discussed things on the senate floor like ‘FMAP’  and reimbursement rates for Medicaid and our long term care providers, we were talking about the care for my father and the other residents, half of whom, on average, depend on Medicaid for that care. It was about the wages this gentle caregiver would earn to do that physically demanding, emotionally difficult work and support his family. It was about the very financial viability of that rural hospital and clinic, the largest employer in my rural senate district. Medicaid hits close to home.

Now, far from home, after working behind closed doors and in the dark for several weeks, the U.S. Senate has now come out with their ideas to re-vamp health care and health insurance, including Medicaid, in the United States. Thirteen men have authored a proposal that will impact one-sixth of the U.S. economy–without hearings. It has become clear why the plans were kept under wraps: the proposals from the Senate make deep cuts to the programs that help us all care for the most vulnerable in our society: children, pregnant women, people with disabilities and seniors in long term care. The Senate cuts to Medicaid are even deeper than the cuts that passed in the House version last month.

The health reform proposals fundamentally change the Medicaid system. Medicaid has been in place for nearly 52 years. Many of us have lived our entire lives knowing that there is a safety net that will help to hold up those of us with the fewest resources and some of the toughest health challenges. The proposals take away the guarantee that the federal government will contribute a certain share of care for each person who needs it. In its place is a proposal to place a per person limit  or “per capita cap” on the federal share. How this plays out is that care will have to be cut, or a state budget will have to fill in the gaps. At a time when the North Dakota Legislature has just made significant budget cuts and the majority Republicans refused to even revisit previous tax cuts to out of state corporations and oil companies, things do not look good for the 118,000 people that we care for through Medicaid or Medicaid Expansion.

If the Senate bill passes, and then passes the House and is signed by the President, North Dakota will have some unsavory options to try to make up for cuts. States could raise taxes (unlikely), make other budget cuts (unimaginable for colleges, local governments, and agencies already hard hit), reduce Medicaid “optional” benefits through waivers, limit coverage of high cost enrollees, or reduce rates paid to providers including hospitals, doctors and medical caregivers, clinics, schools, and more.

No matter which version, House or Senate, of health care reform is considered, cutting services or limiting the numbers of people who can receive services will be a fact of life or death for these people who receive care thanks to Medicaid:

  • About 1 of 3 kids in our state who can be seen by a doctor when they’re sick, including children with special and complex healthcare needs
  • About 1 of 3 people with disabilities
  • Half of all people living in long term care facilities
  • 19,000 North Dakotans who are covered under Medicaid Expansion, about 58 percent of whom live in rural areas

Medicaid Expansion, by the way, would be totally phased out over 6-7 years. Cutting Medicaid Expansion could burden North Dakota hospitals with $542 million in loss of revenues and $24 million in uncompensated costs as it gets phased out. This could be a life or death situation to our rural hospitals like the ones I supported as state director for USDA Rural Development, who have rallied under Medicaid Expansion, but could find themselves back on life support. Hurt yet again would be Indian Health Service facilities in the state who are already under-funded. Medicaid Expansion reimbursements have allowed them to add staff and become more stable. Losing Medicaid Expansion would send them backwards.

Backwards: who would think that in a country as strong, advanced and admired as the United States, we would even think about going backwards when we have been taking care of each other for over half a century. Backwards: that is what these proposals are. Senator Heitkamp has pledged not to vote for bills that would take us backwards. Wouldn’t it be grand if Senator Hoeven could link his arm across the aisle and be part of a team of two U.S. Senators working for North Dakota’s people first. If you think that is how we should move forward, please contact Senator Hoeven’s office and let him know that.

 

Guest post by Ryan Taylor, former state senator. Written with Karen Ehrens, health and healthcare advocate.

Carlson Continues Vindictive Behavior Over Committee Chairs

While the issue at hand for Legislative Management yesterday was to determine how to handle Governor Burgum’s vetoes, Rep. Al Carlson retreated to his usual vindictive behavior on a separate topic. Carlson attempted to remove Senator Erin Oban as Chair of the Interim Education Committee. This is his second attempt to block Democrats from chairing committees. Both attempts have been voted down in bipartisanship.

Rep. Carlson is not good at hiding the fact he is still bitter about losing the Chairmanship of the Legislative Management Committee in 2015 and again in 2017 to Senator Ray Holmberg. Holmberg garnered the support of Senate Republicans and Democrats in both the House and Senate. He did it by promising a return to the tradition of the interim committee work. The traditional way of thinking that studying issues and challenges should be removed from partisanship. Who strayed from that tradition? Al Carlson. Holmberg was willing to put decency and partisanship aside for production and progress on matters important to North Dakota. A majority on the committee agreed with that approach.

For a better understanding, look at Carlson’s actions following the interim Human Services Committee work from 2015-2017. He and his cronies in the House voted against the bipartisan committee report and recommendations because it was Chaired by Democratic Rep. Kathy Hogan. Then during the regular session, he removed Hogan from Appropriations and placed her on committees he thought she’d be less effective on. Few of the solid recommendations brought by the interim committee were adopted.

Carlson always tries to justify his bitter, vindictive, partisan behavior. Then he has the audacity to accuse the Democratic lawmakers of being the ones who play politics. So why does Carlson say he wanted Senator Erin Oban removed as Chair of the Education Committee? Get this, because her husband is Executive Director of North Dakota United, the state’s teachers union. A conflict of interest he claims. He wanted Oban, who was a teacher, to be replaced by Rep. Mark Owens who until this session never served on the Education Committee. Clearly, Carlson doesn’t care about experience, only the party affiliation.

A conflict of interest because of what your spouse or family member does for a living? That’s new. Does Carlson feel that way about Senator Dwight Cook whose wife works in the Tax Department while he Chairs the Senate Tax Committee? Does Carlson feel that way about Senator Dick Dever whose son works in the Department of Commerce and whose wife worked for the Legislature? Does Carlson feel that way about Rep. George Keiser whose wife works at the Ronald McDonald House and frequently testifies before the Legislature? I don’t mean to bring this to your attention for malicious reasons. I’m sure they all do great work in their jobs. Not once has this concern been raised before by Carlson. Know why? Because it shouldn’t matter. 

Cooler heads prevailed, and Carlson was defeated yet again in the Legislative Management Committee. The interim committees chaired by Democrats and by Republicans can get back to the tradition of working and studying together. Carlson can round up his House followers and vote against the committee reports chaired by Democrats in two years and continue his tradition of petty partisan politics above good public policy recommendations. But first, Carlson needs to win reelection in a town tired of his behavior.

Family Farmers Oppose Massive Cuts to SNAP Budget

Family farmers joined the CEO of the Great Plains Food Bank on a farm near Amenia, ND today to give their opposition to proposed budget cuts to the SNAP budget. President Trump’s budget contained $193 billion in cuts to SNAP over the next ten years. Congress is now considering the budget. The event was held to spread awareness and call for bipartisan negotiations on food security.

The current Farm Bill expires in September of 2018. Under President Trump’s proposal, 25% of SNAP’s funding would be shifted onto state budgets in the next Farm Bill. As I’ve stated before when it comes to transferring Medicaid funding onto state budgets, North Dakota is in no fiscal position to undertake this additional funding. Without the available budget, the legislature might not be inclined to fully fund what is necessary leading to cuts in security.

According to Brandon Delvo of Farmers Union, approximately 27,000 North Dakotans live with hunger daily. Steve Sellent, CEO of Great Plains Food Bank, said: “Many North Dakota children, seniors, and adults are still missing meals and proposed cuts to the SNAP program would have a devastating effect on tens of thousands.” Food security is essential for these families to prosper and become more independent.

The event was held at Bill Hejl’s farm and organized by Ryan Taylor, former State Senator and USDA Rural Development State Director. Taylor has been to Washington D.C. to speak with North Dakota’s Congressional Delegation about the budget changes. We’ve seen a growing divide between rural and urban America. A recent poll in the Washington Post showed residents of each view the other as not holding the same values. Taylor said he believes the Farm Bill is a chance for not only rural and urban residents to come together, but also Republicans and Democrats.

Attorney General Opinion States Governor Burgum Overstepped his Authority

News breaking out of Bismarck this afternoon is Attorney General Wayne Stenehjem issued an opinion stating Governor Doug Burgum overstepped his authority. The opinion comes after House Majority Leader Al Carlson’s request to see if Governor Burgum’s vetoes after the 65th Legislative Session adjourned were constitutional. The opinion means action will likely be taken.

It will be interesting to see how the Legislative leadership decides to handle this news. Rep. Al Carlson and Senator Rich Wardner have already discussed calling their members back to Bismarck to attempt and override Burgum’s vetoes. They decided they’d wait for Stenehjem’s opinion. Well, now they have it. I’m sure Carlson feels vindicated.

The thing that is important to keep in mind is the Legislature only has three days remaining to meet until 2019. Carlson and Wardner publicly stated they intended to keep ten legislative days at the beginning of the session. Unfortunately, what has become routine is mismanagement and petty squabbles that drag out the session. If Carlson and Wardner decide to attempt veto overrides there will only be two days remaining.

Why only having two days left is significant is because legislation requires three days to go through the proper process. In other words, if a dramatic policy shift occurs federally – think health care reform – then the legislature cannot call themselves back to address it. It would require the Governor to call a special session.

Of course, the other option could be action through the Courts.

We will have more at ND xPlains as the story develops.

Tribal Input on Next US Attorney for North Dakota is Justified

A report in the Bismarck Tribune states, “the five federally recognized tribes in North Dakota want a say in who becomes the next U.S. attorney for the state.” The U.S. Attorney’s Office plays a pivotal role in the prosecution of the most serious crimes committed on the reservations. I support the tribal request, but question why all of a sudden? The answer could well point to Drew Wrigley’s aspirations.

Drew Wrigley

You’ll recall current US Attorney Chris Myers was interested in continuing to serve. That desire was impeded when former US Attorney and Lt. Governor Drew Wrigley sent his own resume to the Trump White House. Now, Myers would need to succumb to appointment hearings and Washington D.C. politics instead of simply doing the job. Myers has decided against that which is a loss for North Dakota.

The partisan nature can already be seen from Senator John Hoeven who publicly supported Myers until Wrigley came along. Hoeven was quick to retreat and throw support behind his former Deputy Chief of Staff Wrigley. Maybe pause a moment before asking Hoeven to be a reference on your resume, he might quickly flip-flop and support the other applicant in the process.

According to Tribal members, they want to make sure the next US Attorney can communicate and be a reliable partner in prosecuting crime on the reservations. If that is the case, history is not kind to Wrigley. What I’m talking about can be viewed in a 2010 Government Accountability report to the Committee on Indian Affairs. The report was completed at the request of former U.S. Senator Byron Dorgan, who chaired the Indian Affairs Committee, after information from the Department of Justice (DOJ) on Indian Affairs was absent. The numbers in the report are compiled from 2005-2009 when Wrigley was US Attorney.

Below is the compilation of numbers from those years. I want to emphasize the “declination” rate. A declination by a prosecutor means they make the decision to decline to file criminal charges based on the results of a law enforcement investigation. During that period, North Dakota had the second highest declination rate in the country at 64%. Nearly two-out-of-three cases were declined by Wrigley’s office.

U.S. Department of Justice Declinations of Indian Country Criminal
Matters (2005-2009)

Following that report, the Tribal Law and Order Act, sponsored by US Senator Byron Dorgan, required the DOJ provide these number on a regular basis. Here are the results from 2011-2014. Links to the reports are included on the year.

  • 2011 : 161 referrals; 38 declinations, 24%
  • 2012 : 146 referrals; 61 declinations, 42%
  • 2013 : 146 referrals; 52 declinations, 36%
  • 2014 : 188 referrals; 52 declinations, 28%
  • Totals: 2011-2014: 641 referrals; 203 declinations, 32%

Tim Purdon

As you can see, the declination rate was cut in half. The US Attorney during that time was Tim Purdon. It is no secret how Purdon did it. In fact, he wrote a law review article for UND laying it out. It wasn’t that attorneys in the office started to care – they had always cared. It was the reallocation of resources in the office and more time spent on the reservations themselves to make sure the investigations were thorough and complete so that prosecutions for crimes committed could be pursued. In other words, partnership, priorities, and reliability made the difference which is exactly what the tribes want in the next US Attorney.

Take that past from 2005 to 2009 and then reflect back on the handling of the Dakota Access Pipeline protest. Former Governor Dalrymple and his Lt. Governor Wrigley didn’t even go down to communicate with the tribe before things escalated by out-of-state protesters. They made it a point to talk about the situation to editorial boards and on radio programs, but not with the tribe. It doesn’t appear much has changed over ten years.

To be clear; this isn’t about partisanship. The US Attorneys Office should not be about personal politics. We shouldn’t see this position campaigned for in the opinion sections of our area newspapers. Unfortunately, that has been the case in recent months. This is about results. The numbers are clear in this case. For those reasons, I get why all of sudden the five federally recognized tribes want to be heard in the selection of the next US Attorney for North Dakota. Wrigley put his own name out there and they maybe don’t want to see him appointed again. The tribes want a partner who will do the job, prosecute crimes, and keep their children safe.

Western North Dakota is Better Served When Different Views are Heard

I spent last week in Western North Dakota. The trip was set up because I was invited to speak at a gathering in Dickinson. 2014 was the last time I had been there when I ran for the Public Service Commission. I couldn’t pass up the opportunity to visit since so much has changed in those three years. Here is a recap of my observations.

The Tuesday night event in Dickinson was hosted by area Democrats but open to the general public. Ellie Potter of The Dickinson Press wrote about the panel discussion. After losing reelection last year, I have left behind any official capacity within the Dem-NPL so I wasn’t sure my input would was warranted. It didn’t deter the hosts from having me as they’re simply looking for different perspectives on what took place in the Legislative Session that otherwise might not be heard in western areas. It was a pleasure to participate. Following the event I spent a couple of days visiting with others over coffee or at happy hour.

Democrats have not fared well electorally west of Jamestown. Because of that, Republicans have had a monopoly on the dialogue in Western North Dakota. Perhaps that is more pronounced in Dickinson since the NDGOP Chair and the Senate Majority Leader both call it home. Devoid of perspectives different from the manufactured talking points created by advertising agencies and delivered by politicians can skew reality. The result is Western North Dakota receives the short end of the stick but are being told otherwise.

So what are our western neighbors hearing when the narrative isn’t being challenged? They’re hearing the Legislature has been prudent and weathered the current budgetary storm well. That Western ND is stronger under their sole leadership. That Democrats would have been awful for western counties. That the budget shortfall is because of factors outside of the leadership’s decisions in Bismarck.

Here is my challenge to the narrative being spun. The Legislature has not been fiscally prudent and the budget they passed this year to get us through the next two is unsustainable. If you thought the cuts to services, like the rural maintenance shop in New England south of Dickinson, and the rise in your property taxes (which you won’t notice until after the 2018 election) were bad this session, wait until 2019 if we don’t have a dramatic surge in economic activity.

Western ND had grown rapidly as oil prices were high and with it came growing pains. The Legislature failed to adequately address some of those pains because they wanted too much control in the Capitol in Bismarck. It is not enough to simply campaign on local control. In fact, Dem-NPL legislators moved to allow western oil-producing counties to keep more of the oil tax revenue to address their own rapidly developing challenges. There was no need for county and city commissioners to travel to Bismarck hat-in-hand and beg legislators for more assistance every two years. Instead, central and eastern Republicans refused, and western legislators caved. At least they’d be able to take a photo opportunity with a big cardboard check that they’d later use in campaign materials.

The budget shortfall is due to external factors and fiscal mismanagement in Bismarck. The dramatic increases in spending coupled with arbitrary tax cuts were unsustainable. Republican leadership was warned about this but ignored it. I’m not saying that as a former Dem-NPL legislator, I’m saying that as a voter. The voting public in ND rejected some of the tax cuts the legislature eventually passed on their own. They didn’t listen to you. Now it appears we are over reliant on one commodity for the budget.

Here is the thing; a good, honest, debate to better Western North Dakota won’t be had unless the North Dakota Democratic-NPL makes a good, conscious effort to connect with those neighbors. Just as I’ve criticized the national Democratic Party for ignoring states like ours, I need to criticize the state party for its lack of effort in western districts. The difference between the two is the lack of resources from the state party. I’m told there are efforts at both levels to correct this practice.

The monopoly of the debate doesn’t serve the general public well. Misleading claims go unanswered. Without having other views on the state’s functions readily available, elected officials can act without accountability. Having both sides of an honest debate leads to better outcomes in the long run. I look forward to continuing that conversation here.

Continued Calls for a Full Performance Audit of Oil and Gas Division is Warranted

Last Friday, Lauren Donovan of the Bismarck Tribune published an article stating 38,700 emails had been deleted by the Department of Mineral Resource’s Oil and Gas Division but later recovered after an open records request. Those who instigated the request suggest the deletion of these emails was at the directive of Lynn Helms, the Director of the Department. The situation leads to further questions, all of which could be answered with a full performance audit of the Oil and Gas Division.

We’ve written about this particular performance audit more than once over the six months of our publication. Our first call for an audit was included in a post about creating smart oversight for pipeline infrastructure. Secondly, and much more relevant was when we asked Governor Doug Burgum to uphold his campaign pledge of supporting this very audit during the GOP primary.

READ: GOVERNOR BURGUM SHOULD PURSUE OIL & GAS AUDIT (AUDIO INCLUDED)

Repeated attempts to move forward with this audit in the Legislature have been to no avail. The argument continuously used by Director Lynn Helms is that the Department is regularly audited. True, as is every department. But those are routine audits, not performance audits. For a clear example of how the revelations differ from the two, we can look at the Department of Trust Lands. After routine audits were performed things seems to be running okay. Then a performance audit was undertaken which revealed startling mismanagement and demand for corrective actions. The performance audit led former Governor Jack Dalrymple to order over a dozen changes as recommended by the performance audit. 

The Legislative Audit and Fiscal Review Committee can and should add this to the agenda at their next meeting. I’ve heard Lynn Helms may be invited to give preemptive remarks to the committee. This is a rather odd step that has not necessarily been granted to other agencies and institutions. It leads us to question why it would be allowed in this instance.

Section 54-10-01 lays out specifically how the Auditor and the committee have authority to make this request. Here is the language from Section 4 of 54-10-01:

Perform or provide for performance audits of state agencies, or the agencies’ blended component units or discreetly presented component units, as determined necessary by the state auditor or the legislative audit and fiscal review committee.

An interesting and unexpected variable was thrown into this equation recently. The questionable separation of the Performance Audit Manager, Jason Wahl, and the Auditor’s Office now headed by Josh Gallion. Wahl’s position was removed in the legislative session when Rep. Mike Nathe introduced an amendment to the Auditor’s budget. Governor Burgum vetoed the language, and the Senate upheld the veto. Nathe targeted Wahl specifically and claims it was for budgetary reasons. I’m not buying it. Others in Bismarck have indicated the move may have been more political if not outright personal. We will continue to work to get to the bottom of it. Interestingly, Nathe serves on the Legislative Audit and Fiscal Review Committee. The whole situation leaves me to doubt the Auditors Office would make this a priority without the request from the Legislative Committee.

Interested parties content on maintaining the status quo complain this could turn into a political witch hunt, to which I say if there is nothing going on then there is nothing to worry about. In fact, the intent of the performance audit is to find areas of improvement and government efficiency by providing guidelines for agencies to adopt. That is exactly what happened with the Department of Trust Lands. It is also why Governor Doug Burgum supported the idea less than a year ago. This performance audit seems to fit neatly into the messaging Republicans have laid out before the voters post session and equally to the repeated demands of the Democrats. There is no reason to not undertake this audit. Royalty owners, oil and gas companies, and taxpayers should demand it.

Is North Dakota in a Position to Pick Up More of the Medicaid Tab?

Is North Dakota in a position to take on more of Medicaid’s funding? That is an important question to consider while Congress debates health care reform. Under the rushed plan passed by the House of Representatives, Medicaid would be shifted to a new funding formula. Reports suggest the new formula would limit federal expenditures and place a bigger burden onto the states. The official Congressional Budget Office (CBO) score is expected to be released on May 24th.

Often people simply equate Medicaid to poor people. Partly true, but Medicaid also funds many services for children, women, working individuals, and helps keep rural hospitals afloat. It is so much more than just low income individuals that benefit. These vital services are funded jointly by the federal government and states. Currently, the funding for traditional Medicaid comes from an equation known as Federal Medical Assistance Percentages (FMAP). Over the past couple of years, when North Dakota’s budget grew, our state and federal share became approximately 50-50. The state picked up more while our federal reimbursement diminished because we could afford it. Under current federal law, states cannot receive less than a 50% federal match.

Medicaid Expansion, part of Obamacare, expanded eligibility in states who voted to allow it and is primarily funded by the federal government. That funding will be phased down to 90% federal funding by the year 2020. States will then pick up the other 10%. In 2013, North Dakota expanded Medicaid to a lot of people’s surprise. It was renewed this year, and approximately 20,000 North Dakotans have benefited from its passage.

Though the Medicaid funding formulas are different, one thing is common; both rely heavily on constant federal funding. Under the current GOP plan in Congress, that federal funding would be capped putting more pressure on state budgets to either increase their expenditures or cut services to individuals and hospitals that so desperately rely on it. Which begs the question if North Dakota is in an ideal position for this? My answer: absolutely not.

We saw the dramatic downturn in our state’s budget over the last two years because of volatile commodities and poor fiscal management by the Republican-led Legislature. To make the budget balance this session, they cut services and dug deep into budgetary reserves. The method does not look to be sustainable over the long run and for future budgets. The decrease in federal funding doesn’t mean the cost of providing these services will go down. In fact, costs will likely continue to rise. Is the legislature prepared to fill that gap with increase general fund dollars? I’m not confident they are. Governor Burgum and legislators themselves should not be eager for these federal changes.

And where in the hell are the local associations when it comes to speaking publicly on this federal healthcare bill? A couple of weeks ago, the Fargo Forum ran a story saying local organizations remain quiet or did not return requests for comment on the GOP health care replacement plan. (Ironically, when I reached out to the Forum reporter for comment, he didn’t return my request either.) Where does the North Dakota Hospital Association (NDHA) stand on the potential changes to Medicaid? The rural hospitals they represent have a lot at stake in this debate. Not only do they rely on these organizations to speak up, but they can serve the greater public by informing them of the potential impacts.

Others like to point out their silence is because the reform has a long ways to go before becoming law. They’re correct. But, I wish those same individuals would tell that to Congressman Cramer who grabbed a six pack after voting for these changes and went to celebrate at the White House. If people aren’t informed on the impacts and what they might mean for family, their place of work, or their rural hospital, the Senate might not make the changes necessary. These groups speak up all the time while legislation is being crafted, what is different this time? It is too important to remain silent for political reasons.

If Congress is successful in passing health care reform with the current changes to Medicaid in the next two years, the North Dakota Legislature was only successful in holding onto three legislative days. They failed to maintain ten as they had hoped for. Three days on something so large means a rushed public debate. If North Dakota needs to pay more to maintain access to vital care delivered through Medicaid, does the Legislature have the will to do so? We better begin this debate sooner rather than later.

NDGOP: “…New Tax Rate would put LESS money into Oil Tax Buckets.”

The political debate surrounding the Republican decision to cut the oil extraction tax in 2015 continues over two years later. Rightly so, because this rushed change to North Dakota’s oil tax collections is having profound long-term impacts on our state budget. Moreover, the Republican decision to cut the oil extraction tax was passed and implemented without any study or prior analysis. The end product of this arbitrary oil tax cut has cost the state $235,530,746 to date according to Tax Department figures.

First, a quick refresher on how the oil extraction tax works. There are two separate components at play here. First, the tax rate itself, which was established by North Dakota voters via initiated measure in November of 1980. Second, the so-called “trigger,” which was a provision to automatically lower the voter-approved rate when the price of oil stayed below a specific dollar amount for an extended period of time. The trigger was created by the North Dakota Legislature in 1991. The 1991 bill to create the trigger was SB 2279 and was sponsored entirely by Republican legislators. One of those sponsors was then Representative Rich Wardner, the current Senate Majority Leader from Dickinson.

The two parts to the oil extraction tax – the tax rate and the trigger – are entirely separate policy decisions. One was created by the people in 1980; the other was created by the Legislature eleven years later. Thus, illustrating that we can change one without changing the other. But, that wasn’t what happened in the final days of the 2015 legislative session.

The Republican machine, along with its public relations specialists and oil industry lobbyists, continues to manipulate the narrative regarding the decision to cut the oil extraction tax. Only now, Republican talking heads are using simplistic catch phrases developed in last year’s Presidential campaign, calling legitimate disagreements over tax policy “fake news.” To state firmly that the tax rate and the separate trigger must be acted upon at the same time with the same legislative action is patently false. Those who claim otherwise are practicing the art of saying anything while knowing nothing.

Yes, eliminating the trigger prevented a huge revenue loss. But every legislator – Republican and Democrat – along with every policy expert I know of agreed the trigger should be eliminated. On the other hand, following the elimination of the trigger with a controversial decision to permanently cut the oil extraction tax rate from 6.5% to 5% without question caused loss of revenue. Of course the averted revenue loss from eliminating the trigger is bigger than the loss from the cut to the tax rate, at least in the short term. But, lumping these two separate policy decisions together is spin at best and dishonest at worst.

Senator Rich Wardner

By their own admission, the Republican’s decision to cut the extraction tax rate would bring in less revenue for the state. As a sponsor of the 2015 bill, Senate Majority Leader Rich Wardner – the same Rich Wardner who created the trigger in 1991 – admitted it on record during the Senate Finance and Tax hearing on April 21st, 2015. When giving his testimony in support of the oil tax cut, Wardner had this to say:

If everything were the same, the revenue under the new tax rate would put less money into the oil tax buckets. – Senate Majority Leader Rich Wardner (R – Dickinson)

“If everything were the same” i.e. keeping the rate at 6.5% while also eliminating the trigger, we’d have maintained $235,530,756 in revenue according to the Republican-controlled Tax Department. That scenario is one of the alternatives offered by Democratic lawmakers not once, but twice in 2015. It was also offered in 2013 by Democrats.

All attempts by Democrats to simply remove the trigger were rejected by the Republicans.

(BELOW): A month-to-month breakdown of what each proposal would offer in tax collections. The blue bar shows what the state would have collected if lawmakers simply eliminated the trigger without cutting the tax rate.

(BELOW): A cumulative chart since January of 2016. This chart includes the third bar without the tax cut passed by Republicans which has been “conveniently” left out by others.

It never was a take-it-or-leave-it in 2015 as Republicans would like you to believe. Their political decision to couple the elimination of the trigger with a reduction in the tax rate itself was a decision made behind closed doors. Not only did Democrats offer a plan to eliminate the trigger while leaving the tax rate untouched, they also wanted to study what the most effective oil tax rate would be. The purpose of the study: at what rate would we be able to maintain our budget priorities while also satisfying economic growth?

I don’t think that this bill has not been thought out. YOU (Rep. Mitskog, D – Wahpeton) have maybe not been part of these discussions, but I have. It has been thought out for awhile now. – Rep. Craig Headland (R – Montpelier)

Rep. Craig Headland

Instead, the Republicans insisted on an arbitrary cut to the tax rate for purely political reasons. It is important to note their original wish was to cut the rate from 6.5% to 4.5%. They settled for 5% based on nothing more than wanting to cut taxes for oil companies. Rep. Tom Kading said as much in the House Finance and Tax meeting when he said any change to the trigger without lowering the tax rate would not pass the House Chamber. Politics, not prudent policy decisions, ruled the five days this bill was debated at the end of the 2015 legislative session.

Go through the minutes. It was repeatedly asked what Republicans were basing their decision to cut the oil extraction tax on. Nobody – not Al Carlson, not Rich Wardner, not Craig Headland, not Dwight Cook – not a single one of them could provide a coherent answer as to why they wanted to cut the oil extraction tax rate. That’s because no study or prior-analysis was conducted to determine what the most effective extraction tax rate would be. Remember, the rate of 6.5% at the time brought us to being the second largest oil producing state in the nation.

The false narrative that the only options were to go along with the Republican tax cut or maintain the status quo and have zero tax revenue while the trigger was on simply isn’t true. Blindsided with the 11th-hour oil tax bill left people scrambling. Nobody in the Republican majority would express the full impact of this permanent cut in the tax rate. Perhaps it was either because they didn’t know the impact of their decision, or maybe they just didn’t want you to know.

We continue to see people paint a false narrative by omitting information relevant to having an open, honest debate. The bottom line is that this was a politically motivated tax cut. It produced a lower tax rate not based on research, but on what was politically popular to do at the time for campaign donors and special interests. Because of the partisan decision to cut the oil extraction tax in 2015, vital services and tax rates for living, breathing North Dakotans are being impacted. In our upcoming series, you will learn exactly how this impacts you.

Oil Tax Collections Comparison Chart by Tyler Axness on Scribd

Burgum Vetoes Public Employee Retirement Power Grab by Carlson

Governor Doug Burgum line-item vetoed a number of bills over the last couple of days. One of the budgets Burgum line-item vetoed was the Public Employees and Retirement System (PERS). Make no mistake; this was a direct rebuttal to House Majority Leader Al Carlson.

You may recall, the end of the session was drawn out by a power struggle between what Carlson wanted and what Senator Rich Wardner wanted. The two went back and forth over the PERS budget, funding for Dickinson State University, and other Higher Education prioritizes. A grand compromise was reached last week, and legislators went back home on Thursday.

The changes in the PERS budget would have added twelve legislators to the Health Care Coverage Committee and mandated the board to look at self-insurance. All of the changes in sections six through thirteen were Carlson demands. On May 2nd, Burgum vetoed sections six through thirteen. This is a welcome development for the public employees I’ve talked to.

It is an interesting display of authority. At the end of the legislative session, Burgum, Carlson, and Wardner stood at a podium and congratulated each other for completing the session. A couple of days later, Burgum removed a lot of what Carlson demanded after he left town. Wardner got to keep what he wanted. Were Wardner and Burgum in on this together?

Many of us have wondered where Burgum was during his first session. Perhaps this goes to show he was plotting all along. It will be curious to see if Carlson, known for his vindictive ways, will attempt to call the House back and try to override the veto. There are three legislative days left meaning leaders can call themselves back to work. It is highly doubtful the Senate would go along seeing its leader was a clear victor in this game of politics.

HB 1023 Veto Message by Tyler Axness on Scribd