ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS
North Dakota Century Code (NDCC) Chapter 54-35.2 establishes the Advisory Commission on Intergovernmental Relations. The commission is directed by law to study local government structure, fiscal and other powers and functions of local governments, relationships between and among local governments and the state or any other government, allocation of state and local resources, and interstate issues involving local governments.
The Legislative Council referred to the commission House Concurrent Resolution No. 3037 (2001), which provided for a study of the feasibility and desirability of creating cost-sharing mechanisms for the unexpected discovery of cultural and paleontological resources within local road projects. In addition, during the 2001-02 interim, the commission focused on various other areas of interest, which are headlined in this report.
North Dakota Century Code Section 54-35.2-01 establishes the membership of the commission as fourmembers of the Legislative Assembly appointed by the Legislative Council, two citizen members appointed by the North Dakota League of Cities, two citizen members appointed by the North Dakota Association of Counties, one citizen member appointed by the North Dakota Township Officers Association, one citizen member appointed by the North Dakota Recreation and Park Association, one citizen member appointed by the North Dakota School Boards Association, and the Governor or the Governor's designee. The Legislative Council designates the chairman of the commission. All members of the commission serve a term of two years beginning July 1, 2001. Commission members were Representatives Scot Kelsh (Chairman) and Kim Koppelman; Senators Dennis Bercier and Herb Urlacher; North Dakota League of Cities representatives Bob Frantsvog and Devra Smestad; North Dakota Association of Counties representatives Les Korgel and Maxine Olson-Hill; North Dakota Township Officers Association representative Donny L. Malcomb; North Dakota Recreation and Park Association representative Randy Bina; North Dakota School Boards Association representative Jon Martinson; and Governor John Hoeven.
The commission submitted this report to the Legislative Council at the biennial meeting of the Council in November 2002. The Council accepted the report for submission to the 58th Legislative Assembly.
DISCOVERY OF CULTURAL AND PALEONTOLOGICAL RESOURCES STUDY
Background
In 1999 the Legislative Assembly considered, but did not pass, House Bill No. 1236, which would have established a cost-sharing method to assist counties, cities, and townships in paying the additional costs associated with the discovery of cultural resources during highway construction or maintenance. The bill provided that the additional cost for any additional action, including an archaeological excavation or study, must be shared in the proportion of 25percent to the county, city, or township; 25percent to the State Historical Society; and 50percent to the Department of Transportation.
North Dakota Law
Although there is no North Dakota law regarding cost-sharing or funding mechanisms for the unexpected discovery of cultural or paleontological resources, the Legislative Assembly has enacted legislation protecting paleontological resources. North Dakota Century Code Chapter 54-17.3 authorizes the State Geologist to issue permits to investigate, excavate, collect, or record paleontological resources. A "paleontological resource" means "any significant remains, trace, or imprint of a plant or animal that has been preserved by natural causes in earth materials and the localities in which they are found."
The State Geologist is required to notify the director of the State Historical Society of all quaternary paleontological finds reported to the State Geologist which potentially or actually contain cultural resources. Any paleontological resource found or located upon any land owned by the state or a political subdivision may not be destroyed, defaced, altered, removed, or disposed without the approval of the State Geologist. In addition, the state and political subdivisions are required to cooperate with the State Geologist in identifying and implementing any reasonable alternative to destruction or alteration of any paleontological resource.
North Dakota Century Code Section 54-17.4-09.1 provides for a fossil excavation and restoration fund. All funds received by the Geological Survey for the excavation and restoration of fossils must be deposited in the fund. The balance in the fund as of April25, 2002, was $127,000.
North Dakota Century Code Section 55-02-07 provides that any "historical or archaeological artifact or site that is found or located upon any land owned by the state or its political subdivisions or otherwise comes into its custody or possession and which is, in the opinion of the director of the state historical society, significant in understanding and interpreting the history and prehistory of the state, may not be destroyed, defaced, altered, removed, or otherwise disposed of in any manner without the approval of the state historical board." The director of the State Historical Board is required to provide the governing official of the state or political subdivision written direction for the care, protection, excavation, storage, destruction, or other disposition of the significant artifact or site within 60days of written notification by the appropriate governing official's desire, need, or intent to destroy, alter, remove, or otherwise dispose of a significant artifact or site. The state and its political subdivisions are required to cooperate with the director in identifying and implementing any reasonable alternative to destruction or alteration of any historical or archaeological artifact or site significant in understanding and interpreting the history and prehistory of the state before the State Historical Board may approve the demolition or alteration.
A "cultural resource" is defined as "prehistoric or historic archeological sites, burial mounds, and unregistered graves."
North Dakota Century Code Section 55-10-09 requires the state and its political subdivisions to cooperate with the director of the State Historical Society in the preservation of historic and archaeological sites.
Testimony and Commission Considerations
The commission received testimony from representatives of counties indicating there have been incidences in which a local road project was abandoned as a result of the unexpected discovery of cultural or paleontological resources. The testimony suggested that delays associated with mitigating an unexpected discovery of cultural or paleontological resources, as well as the cost of mitigation, can be a significant burden on a local government because of the limited resources of some local governments.
A representative of the North Dakota Geological Survey testified that significant fossil discoveries during road projects are very rare because significant fossil sites are generally concentrated in limited areas of the state and usually can be easily identified before a road project is commenced. In addition, because fossils are usually found in layers, mitigation of fossil finds is generally inexpensive and not very time-consuming.
A representative of the Geological Survey testified that the Geological Survey will excavate fossil discoveries on political subdivision road projects at no cost to the political subdivision. With improved communication between political subdivisions and the Geological Survey, most problems associated with the discovery of paleontological resources could be avoided.
A representative of the State Historical Society testified that federal law applies to most projects where cultural resources are discovered. The testimony indicated that unexpected discoveries of cultural resources are more likely to result in significant mitigation costs to political subdivisions than discoveries of paleontological resources.
A representative of the Department of Transportation testified that unexpected discoveries of cultural or paleontological resources are infrequent, especially when adequate preconstruction investigations are conducted. Because the Department of Transportation distributes highway funding to political subdivisions in amounts exceeding that required by federal law, the policy of the department is to maximize the benefit of federal transportation aid by using it for construction rather than preconstruction investigations and resource mitigation.
Commission members generally agreed that the dialogue during the interim helped improve communication among political subdivisions, the Department of Transportation, the Geological Survey, and the State Historical Society and that with improved communication, unexpected discoveries of significant cultural or paleontological resources can be avoided.
Conclusion
Because there appear to be infrequent discoveries of cultural and paleontological resources during local road projects, particularly when the appropriate entities communicate well and adequate preconstruction investigations are conducted, and because any cost-sharing mechanism would result in reductions in funding in other areas, the commission makes no recommendation with respect to this study.
COUNTY MILL LEVY CONSOLIDATION
Background
Between 1981 and 1993 each Legislative Assembly enacted legislation allowing political subdivisions to increase levy authority in dollars by a specified percentage. This optional levy increase authority was established in 1981, when the property tax system was restructured, to avoid substantial increases or decreases in property tax bases which would have occurred when property was reassessed.
In 1995 the Legislative Assembly enacted Senate Bill No. 2081, which allowed a taxing district to levy up to 2percent more in 1995 and up to 2 percent more in 1996 than was levied in the taxing district's base year. The bill defined "base year" as the taxing district's taxable year with the highest amount levied in dollars in property taxes of the three taxable years immediately preceding the budget year. The bill did not allow optional levy increases for taxable years after 1996 and allowed taxing districts to levy only up to the amount levied in the base year after 1996.
In 1997 the Legislative Assembly considered, but did not enact, Senate Bill No. 2021, which would have eliminated several special mill levies for cities, counties, and park districts and would have allowed those entities to include levies for those specific purposes within their general mill levy. The bill would have allowed a growth factor through which the maximum mills that could be levied by cities, counties, and park districts would have been tied to the consumer price index. In 1997 the Legislative Assembly also considered, but did not enact, Senate Bill No. 2022, which would have eliminated all mill levy limitations for a period of two years for cities, counties, and park districts.
During the 1997-98 interim the Advisory Commission on Intergovernmental Relations received testimony from local government officials requesting the commission to consider proposing legislation, similar to the 1997 legislation, which would either eliminate or suspend the mill levy limitations. Although the commission members generally supported the concept of either suspending mill levies or consolidating mill levies, the commission members were reluctant to recommend legislation because of inadequate time to consider the idea during the interim.
In 1999 the Legislative Assembly considered, but did not enact, Senate Bill No. 2346, which would have suspended for two years all statutory mill levy limitations that affect the amount that may be levied by cities, counties, and park districts.
During the 1999-2000 interim the Advisory Commission on Intergovernmental Relations again addressed consolidation of mill levies. The commission recommended House Bill No. 1031, which provided for the consolidation of several park district special levies into the park district general fund levy. The Legislative Assembly adopted House Bill No. 1031.
Testimony and Commission Considerations
The commission received information from a representative of the Tax Commissioner indicating the consolidation of park district mill levies had little effect on the 2001 taxes levied by park districts and that no serious problems were encountered in implementing the consolidation of park district mill levies.
The commission received a request from representatives of the North Dakota Association of Counties to consider consolidating several special county mill levies into the county general fund levy. It was contended that consolidating the special levies into the general fund levy would provide boards of county commissioners with needed flexibility while not increasing the total number of mills counties could levy.
Opponents of consolidating county special fund levies argued that consolidation provides county commissioners with the opportunity to increase special levies to the maximum amount and redirect the designated funds to the general fund.
The commission considered a bill draft that allowed a board of county commissioners to adopt a preliminary resolution to consolidate several special county levies into the county general fund levy. The bill draft provided the voters of the county with the opportunity to refer the question of consolidating levies to a vote of the qualified electors of the county. The bill draft implemented a general fund mill levy cap of 134mills.
Recommendation
The commission recommends House Bill No. 1024 to consolidate several special county levies into the county general fund levy that may not exceed 134 mills and to allow the voters of a county to refer the question of consolidating the levies to a vote of the qualified electors of the county.
REVENUE SHARING AND PERSONAL PROPERTY TAX REPLACEMENT
Testimony and Commission Considerations
The commission received a report regarding the history and current status of revenue sharing and personal property tax replacement. In 1997, House Bill No. 1019 was introduced to address legislative concerns and also protect local governments from funding reductions. The following elements were in the bill: (1) four-tenths of the first penny of sales tax would be the revenue generating formula (local governments were, in reality, sharing about .38 of the first penny in the previous biennium); (2) all revenue in the fund would be allocated through a continuing appropriation so that future legislative action would not be required; (3) the revenue sharing and personal property replacement programs allocation formulas would be repealed, removing ties to personal property collections in 1968 and eliminating the connection between increased property taxes and increased state aid for individual jurisdictions; (4) direct allocations from the state would be eliminated for all entities except counties and cities; (5)counties would be required to allocate to townships and cities to park districts at the same proportion that existed under the old formula in 1996; (6) all revenues would go into an entity's general fund for appropriate use as directed by the governing board; (7) total revenue would be split between county entities and city entities at the existing 1996 proportion, with the cities getting the University of North Dakota medical center share; and (8)counties would be divided into seven population groupings, each with a fixed percentage of the county allocation, cities would be similarly divided into seven groups, and within the groupings, the revenue would be allocated strictly by relative population.
House Bill No. 1019 was enacted with a delayed effective date of January 1, 1999, to minimize the impact of the new formula on the 1997-99 state budget.
Representatives of the North Dakota Association of Counties and the North Dakota League of Cities testified that as a result of the 2000 federal decennial census, the population groupings are in need of revision. The representative of the counties and the cities submitted proposals for revision of the population groupings.
The commission considered a bill draft that reduced the number of rural county groupings to two, eliminated the fixed population breakpoints, and used a formula that incorporated a base plus a population multiplier in each of the two categories.
The commission considered a bill draft that revised the city groupings to include a grouping for cities of 80,000 or more. The bill draft also revised the other city groupings to adjust for the shifting of cities from one population grouping to another.
Recommendation
The commission recommends House Bill No. 1025, which consolidates the two bill drafts relating to revising the state aid distribution formula for cities and counties to account for population changes resulting from the 2000 federal census.
TOBACCO EDUCATION AND CESSATION
The commission received an update regarding the implementation and success of tobacco education and cessation programs. It is estimated that tobacco use is the leading preventable cause of death and disability in the state, costing the state $193 million annually in direct medical expenditures and $158 million annually in smoking attributable productivity costs. In 2001 the Legislative Assembly adopted Senate Bill No. 2380, which appropriated $250,000 from the community health trust fund to provide grants to cities and counties on a dollar-for-dollar matching basis for city and county tobacco education and cessation programs.
A representative of the State Department of Health informed the commission that three entities have implemented programs using grant funds to address tobacco cessation, and two other entities had applied for funding. The department is monitoring the success of the programs to determine which methods are most effective.
Conclusion
The commission makes no recommendation with respect to tobacco education and cessation programs.
HOMELAND SECURITY
The commission received a report from the director of the North Dakota Division of Emergency Management regarding homeland security and emergency management. Because an emergency management infrastructure already exists, the Governor elected to use the emergency management structure in the state as the organizational base for homeland security. One of the primary efforts being undertaken with respect to homeland security is using available federal funds to address public health issues such as bioterrorism because a bioterrorism outbreak thousands of miles from North Dakota could significantly impact this state due to the mobile population.
Conclusion
The commission makes no recommendation with respect to homeland security.
E-COMMERCE TAXATION
The commission received a report on the status of taxing of e-commerce. Testimony was received from a representative of the Tax Commissioner regarding the status of state and federal law governing the collection of sales and use taxes from remote sellers, which includes e-commerce and catalog sales. In 1998 Congress passed the Internet Tax Freedom Act, which placed a three-year moratorium on Internet taxes. The moratorium has since been extended an additional two years.
In 2001 the Legislative Assembly adopted Senate Bill No. 2455, the Simplified Sales and Use Tax Administration Act. Adoption of the legislation included North Dakota as a member state in multistate discussions regarding implementation of model sales and use tax agreements. However, any proposed changes in tax law must be approved by legislative action.
Conclusion
The commission makes no recommendation with respect to the taxation of e-commerce.
PUBLIC SCHOOL FUNDING AND TAXATION
The commission received a report from a representative of the Tax Commissioner regarding school district taxable values and taxes levied from 1987 through 2001. The report indicated the average mill rate levied by school districts has not changed significantly over the last decade.
Conclusion
The commission makes no recommendation with respect to public school funding and taxation.
TOOL CHEST LEGISLATION UPDATE
In 1993 the Legislative Assembly adopted House Bill No. 1347, which is often referred to as the "tool chest" for local government. The legislation streamlined the joint powers process, clarified home rule powers, created procedures for reorganizing local county governments, and established a citizens' advisory process to encourage the periodic examination of city and county government structure.
The commission received a report from a representative of the North Dakota Association of Counties regarding the use of the "tool chest" components. Through the use of the procedures to change the structure of county government and the use of home rule powers, 22 counties have implemented some form of structural change since 1993. In addition, 17 counties are either considering the redesignation of elective offices as appointive or combining offices.
Conclusion
The commission makes no recommendation with respect to the "tool chest" legislation.
WIND ENERGY
The commission received a report from a representative of the National Conference of State Legislatures regarding the generation of electricity through wind energy. Wind energy development in the United States began to grow in the 1980s in California through a highly subsidized program implemented as a result of environmental concerns. If an adequate transmission system were available, North Dakota could produce enough electricity through wind generation to serve 250 million people. However, because electricity is transmitted through a grid system and the transmission capabilities are limited, North Dakota energy generators are relatively constrained with respect to selling electricity to large out-of-state markets.
The regulations relating to siting of wind energy facilities generally are the same as those with respect to siting of other electric generation facilities. In addition to state regulation, local government zoning regulations often impact the siting of wind energy facilities. The most common objections to the siting of wind turbines are the visual effect of the turbines and avian concerns.
Conclusion
The commission makes no recommendation with respect to wind energy.
