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Eliot Glassheim: North Dakota Legislature cut too much, raised too little

The official story of North Dakota's 2017 Legislature is that the Republican majority balanced the smaller budget with the least possible harm.

It's a great bedtime story. But it isn't true.

The harm done by the Legislature can be clearly seen at UND. Small programs phased out, many dozens of faculty pushed out, departments merged, the liberal arts downgraded, women's hockey cut—all resulting from a 20 percent cut in the university-system budget.

The damage will take a decade to recover from.

And there was harm done to those fighting child sexual abuse, to the effort to reduce teen smoking and to the ability of Human Services and all other departments to provide needed services.

Gov. Doug Burgum seemed delighted to claim that cuts will let departments "do more with less." But this makes no sense. If your wages were cut 20 percent, would you travel more, fix up your house and buy more clothes? Or would you do less with less?

Then there's the impact of legislative action on property taxes. The Legislature claims it did no harm, because it replaced the popular 12 percent property-tax buydown with the state paying up to 20 mills of the cost of county social services.

But the key words are "up to." Many counties will get less than the full amount. Grand Forks estimates the swap will mean a 7 percent increase in local property taxes (perhaps $200 on an average house).

Then there's the claim by legislative leaders—accompanied by a triumphant thumping of the chest—that, despite budget cuts elsewhere, K-12 was "held harmless." In fact, K-12 got $49 million more than in 2015-17; but that amount doesn't cover increases in enrollment, inflation and property valuations.

So, many school districts will have to raise property taxes just to stay even.

A different kind of harm was done by raiding many reserve funds to make it look like the budget was balanced. By using $825 million of one-time funds to pay for ongoing expenses, lawmakers assured that next session will start $825 million in the red.

What could a more creative Legislature have done to raise revenue and minimize harm?

▇ Delayed the implementation of a tax deal that gave corporations doing business in North Dakota the choice to pay corporate taxes based on North Dakota sales as a percentage of all their sales.

Under the deal, companies such as LM Wind Power (which sells its wind blades mainly out of state) will save more than half its current corporate income tax in North Dakota. Local businesses won't get a break because most of their sales are in-state.

▇ Taxing Internet sales would have narrowed the deficit gap while also making the sales tax more fair. State bricks-and-mortar businesses are at a 6 percent to 7 percent competitive disadvantage compared to those that sell the same product on the web.

▇ The Legacy Fund, as approved by voters, contains a section specifically allowing each session of the Legislature to allocate up to 15 percent of principal each biennium.

Clearly, the voters' intention in setting up the fund was that, though 85 percent of the fund's balance must be saved, 15 percent could be used in case there was an emergency or a strong need for it.

If there was a sickness in your family, and you had $100,000 in the bank, would you spend $15,000 taking care of a loved one? Even spending $200 million of the $4 billion in the fund would have cured a great many harms caused by the Legislature's miserly refusal to seek new revenue.

▇ Over the past six years, when the state was flush with oil revenue, the Legislature cut tax rates that had been considered acceptable before the boom hit.

The rate changes in the past four biennia will cost the state $729 million in 2017-19.

I agree that when the state has collected more than it needs, it makes sense to give some back. The mistake the Legislature made was in lowering the rates permanently.

Now, when the oil surplus has dried up, we are stuck with income, corporate and oil tax rates that are far too low to support the services the public has come to expect.

Cuts in spending and increases in revenue were both needed. Everyone should have shared in the pain. But the Legislature should have had the courage to raise rates closer to their level in 2008.

As a recovering politician, I know it's not easy going door-to-door with the slogan, "Re-elect me, I raised taxes." But campaigning on slick slogans and governing on the needs of the state are two different obligations.

□ □ □

It is with deep sadness that I note the passing of the Amazing Grains food cooperative in Grand Forks.

I was on the incorporation papers 47 years ago and helped get the organization off the ground.

To many of us, Amazing Grains was more than a store. It was a place we could go find healthy food. It also was a cooperative, with leadership chosen from members.

And it was a place where you could run into friends who had similar aspirations about the importance of healthier foods and lifestyles.

Of course, there was no way to prevent existing supermarkets putting in natural-food sections of the sort that Amazing Grains had pioneered. Nor could one keep out the corporate-chain natural food stores.

And so, our co-op's base was whittled away. Nevertheless, some of us are saddened that we no longer live in a city that has Amazing Grains.

Glassheim served for 30 years on the Grand Forks City Council and represented Grand Forks for 24 years — from 1992 to 2016 — in the North Dakota House. He was the North Dakota Democratic-NPL Party's candidate for U.S. Senate in 2016.

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