By Rep. Steve Vetter
North Dakota competes with other states for skilled and specialized workers. Unemployment is very low nearly everywhere so everyplace is seeking workers. We need military retirees who are mobile and are ideally suited for our many of open jobs with their extensive experience and expertise.
Former military are the few who are qualified for the higher skilled jobs, especially if the job requires a security clearance, at places like Grand Sky, the nation's first UAS airport. To grow the exciting new UAS industry, we need a skilled workforce.
HB 1053 was introduced to help retain or attract military retirees by exempting their military pension from state income tax. North Dakota is the only state in the Midwest without some form of exemption. Just seven states offer no special tax treatment of military pensions.
The bill makes North Dakota competitive to retain and attract military retirees who on average receive $1,750 per month or $21,000 per year. Who else brings income with them to a new job?
A typical military retiree is between the ages of 38 and 50, right in the prime of their working career. This state exemption is a benefit retirees would receive in 86 percent of the other states and they should expect it in North Dakota, too, for their years of service, often at lower wage rates than civilians receive for similar work.
This state tax exemption is also a criteria that the Department of Defense checks off their list when deciding how military friendly our state is. So this bill has a role in base retention and expansion.
This state tax exemption pays for itself several times over. There are 5,430 military retirees who call North Dakota home. The fiscal note on this bill is $3 million, or $550 per retiree per biennium. However, the retiree pays income tax on their other income. A job of $60,000 added with a spouse's job of $30,000, means they will pay $2,500 in state income taxes, or nearly five times the amount of their state deduction. Plus they pay sales taxes of at least $1,500 and also pay property taxes.
Plus the state receives federal funds for each military retiree, an average of $1,910 in federal dollars each.
Add their income tax ($2,500), sales and gas tax ($1,500) and federal funds ($1,910). That is nearly $6,000 in revenue to the state, 10 times more than the investment of $550 in their state income tax exemption. Let us bring in more military retirees with that kind of return and payback. This is a great investment for North Dakota. Who would not invest their own money for a possible return of 10 times the amount of the investment?
And what better neighbor to have than one who knows how to work and defend our country? Let us say thank you for their service and say welcome to North Dakota with HB 1053.
Steve Vetter serves as a Republican representative for District 18 in the North Dakota House of Representatives. He also is a real estate appraiser in Grand Forks.