Sen. Tim Mathern (D-Fargo) discusses bonding, use of federal COVID relief money, redistriicting and the main budget issues left to be decided in the 2021 Legislative Session.
Watch the full conversation https://youtu.be/oiaXXIa4VoY">on our YouTube channel.
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[Full Transcript]
Dave Thompson: This is Legislative Review on Prairie Public. I'm Dave Thompson, we're on our radio service and also on our digital platforms. We're joined by Senator Tim Mathern. He's a Democrat from Fargo. Long-term member of the North Dakota Legislature. Senator, thank you for being here.
Senator Tim Mathern: I am so happy to be here and thank you for having me.
Dave: I'd like to start by a discussion about your perceptions of how this session has gone, given the fact that it's been kind of a different session because of the pandemic.
Sen. Mathern: Well, I think there are a couple of factors. One, because of the pandemic, we've created more ways for people to see and hear what's going on. In order to give our legislators access when they might be home or might be ill, we created these virtual methods and that's turned into citizens having another opportunity to listen and hear. And I think that's gonna stay around forever. I think the COVID change was gonna create a systemic change in terms of how we deal with the legislature. Now, there's been a downside in terms of citizens not being here. I mean, being able to listen and see has a benefit, but actually citizens being here has a greater benefit. So that concerns me. And so that's the electronic aspect of the session. Another aspect is really the change in the ethics commission. And there used to be legislators going out and eating and drinking almost every night, that's cut down dramatically. I thought it would be stopped in total, but I noticed some of the people asked me if I was gone to the Lignite Council deal last night. And I said, "No." But anyway, the amount of wining and dining going on in the evening I believe has dramatically gone down. I think that's positive. I think certain people who have enough wealth to wine and dine legislators shouldn't get more access to legislators than regular citizens who might be dealing with concerns of how do we fund the human service budget or mental health care and that sort of thing. So that's a change from the past, but I think there's a new change, Dave. And you've been around a long time. I first voted in 1986, and you've probably been here since that time also. And I note that the session seems to be going longer and longer, and that the pressure on the part of the legislators to adjourn has been reduced. And I think the legislators have changed. It used to be there were more farmers here. And so where they were pushing, "Let's get this done. Let's get out, planting going on, calving going on." That pressure has been reduced as many of the farmers or ranchers are no longer here or they're older, so somebody who's doing that work. I think there are more retired legislators. So there is less pressure for getting back to work in the regular jobs. And I think there's a little bit of a sense of some people may be feeling they're gonna lose their status once they leave the legislative process. So in the early years we used to complain about the opposite party, because they're dilly dallying around and wasting a lot of money by being here longer. I haven't heard that once this legislative session.
Dave: So that is a change that has some positives and some negatives to it as well.
Sen. Mathern: Yeah, yeah.
Dave: There are people would argue too that maybe things are getting a little bit more difficult. They're getting a little bit harder, because getting to be a little bit more complex in terms of our budget, in terms of how we spend on things like human services, I've heard that argument as well.
Sen. Mathern: Well, there is some merit to that but we still vote on alfalfa and abortion. And I mean, all these tough subjects are still here. And so there are also more technical assists that we have now that we didn't have then, electronic message. And we used to have 25 people in the back room taking telephone calls and bringing out little notes to us telling us how to vote. All of a sudden, I look on my screen and I got 25 emails in the last 10 minutes asking us to override or sustain the governor's veto. So that's just happened in seconds, where 25 years ago that would have taken maybe a few hours to get to all of those messages. So there are things that have changed, and I think we could actually do better in terms of the end of the session here, meeting more evenings. I wouldn't adjourned for the weekends in the last two weeks or months of the legislative session. And, but that's a different style. People are taking more time to do those things. The pros and cons to that are one, you don't keep the pressure on. Compromises aren't being made. The positive though, people get out of the building and get home, see their constituents and get more feedback and could potentially make better decisions. So it's not a clear good or evil.
Dave: I like to talk to you about some of the issues, some of the big issues that have come up this session. And I go back to the Bonding Bill which was signed at $680 million. Originally Republicans are $1.1 billion bill. You actually introduced one at about I think, I would think it was two billion, correct?
Sen. Mathern: Well, I actually introduced one during the interim. I suggested we have a special session and that we pass a bill that would be $1 billion of bonding. And the Republicans rejected it. I said, "The time was right to do it when the interest rates were way low, when we had COVID and we could get some projects going and start up the economy when COVID was over." Republicans rejected that, said they weren't for bonding. Well, lo and behold, they come into the legislative session and they introduce a bonding bill. And I also introduced another bonding bill for $2 billion. And the positive thing about this is, Republicans and Democrats and the governor have agreed on the concept of bonding for big projects. I think that's positive. And now we've gone beyond the concept of actually passed the $680 billion bonding bill. I think it's a positive development and it evens out our spending through the years. When you pay cash for everything it's a boom and bust cycle. And that's just not a very good way to build roads for example. When you do boom spending, means money in the economy, that means everybody's building roads. And so our road construction people leave here and they go elsewhere or they charge us 20% more. But if we have a road building project that is steady, those people stay here, we continue on the projects, and we even that out. So it's a positive thing. And I think it's too small. I think it's too late, because interest rates are already creeping, companies are already moving where I wanted them to be working right now. And, but it'll be a little bit of increase, a little bit of challenge in getting this to the workers, but the principle is right and it'll be positive in the longterm.
Dave: Have we set then a precedent going forward that we may see a bonding bill every two years?
Sen. Mathern: You know, I think that will be the case. And we'll probably, like I suggested, we put 250 million into housing bonding. And that didn't happen this time around but I think maybe next time around that might happen. And so I think we'll probably have a bonding bill now regularly going forward, and that will make our budgeting less erratic. And it'll also help our present needs. For example, we're bonded for 450 million for the Fargo diversion plan. Well, that essentially is a project that goes on for many years. And so when we take that off a regular budget and put it into bonding, then a regular budget can deal with all of these other water projects around the state, and there's million dollar projects and $20 million and 30 million. Well, if you put paid cash for 150 million that means everything else stops and that's not good for our economy. We can't have Fargo stopping road development, water development in the rest of the state. So that's a good example of how it is positive in other ways too.
Dave: Just a question came to mind as you're talking about that, there's going to be a push from the Biden administration to do more infrastructure projects. Do you think that these two might intertwine somehow?
Sen. Mathern: Well, certainly, many of the Biden kinds of we call them Biden Bucks now in the legislature. The Republicans have a little bit of difficulty with the word, but they came up with it so I'm gonna use it, Biden Bucks. Essentially, those are just sort of like cash, do what you want. Biden Bucks are incentives to do certain kinds of things. And they also require some buy-in from the States. And so now when that becomes available and we have bonded on some of these things, bonding basically means you just go to the market and get 2% money and you bring it in your bank and you start spending it out. And then you pay for that interest rate through the years. Well anyway, so when we bonded, we basically said, "We're gonna go get this money. We'll put it in our bank. And then we use it for these projects." Well, to the degree that the Biden administration said, "Okay, ladies and gentlemen, here's $500 million to build some bridges and roads." They're also gonna say, "And you have to put in so many million dollars to get it." Well, now we have the so many million dollars to do it and we can do those projects. So yes, it's gonna fit right in there, and it's gonna make us click instead of clash. And this is what we need to do with the federal administration. And we don't need to do this.
Dave: Since we're talking about Biden Bucks and also the COVID relief fund, the America's Recovery Fund, that's still pending out there, but legislators are waiting on some guidelines from the federal government on how you can and cannot spend that, correct?
Sen. Mathern: Yes, and those guidelines become more clear every day. The first money that came 'cause of COVID we called Trump one money. That came in the Trump administration. And even those rules have taken a long time to implement. For example, we passed 10, 15 yesterday, I mean the bill. And I'd like to get into that some if we have time. that's basically spending the last of that Trump money that has to be spent or sent back by July 1st of this year. And so that's also a piece of this. And, Dave, I would predict, I'll do it on your program. You've been here the longest as a journalist, and we appreciate journalists to stick around because you know how to dig behind what's really going on and look behind the scenes. Anyway, I think there will be a special session of the legislature, probably in July. And the main intent of that session of the legislature will be to do a very fine tooth combing through the Biden administration proposals, figure out how best to spend those dollars and make it a positive thing for the growing of our economy, for the partnership between the federal and the state government. And that will then take us through probably to 2024. Most of the Biden Bucks are really not just a crash infusion of cash. They actually have long-term policy agendas attached to them. And so it's good that we take some time, figure out how to do it best. And what I suggest to my colleagues is that we have the appropriations committees meet and go through the details. And then when we understand the details, come to some consensus and then we call in the whole legislature and go through it and appropriate the money appropriately. The last time with the Trump administration, the governor basically through the budget section controlled all of that process. I believe it was incorrect in that not every district was represented through the budget section process. Your budget section is a smaller group of people. I happened to be on it, very fortunate to be on it, but not every district has somebody on that committee. And so it's not really fair that we're not including those districts that have no member there, and, but doing it this way with the appropriations committee and then calling us back into session makes it fair for every district to be represented. So I'm hoping that we do this correctly and we do it through this special session.
Dave: Do you expect that the appropriations committees then will hold formal hearings between now and July perhaps?
Sen. Mathern: That would be my expectation that we would have formal hearings, that way citizens know what's going on. The budget section we basically have a group of six people that makes all the decisions. They go to the budget section, and you vote yes or no. You can't say, "Well, I don't think we should put 240 million there we should put 140 and put another 100 over there. You just got a yes or no vote and a formal hearing through the appropriation process, the public, the lobbyists, the citizens, the schools, the hospitals, Everybody could listen to the process, can raise their hand and say, "Wait a minute, guys. I think we should do this a little differently." And so I think that's the correct process. And I think most of the legislators, Republicans and Democrats now haven't seen what happened in the past. We'll take this view and we will have the special session to do it that way. I mean, even you like a journalist and the other journalists that watch the process, we'll get to know more of the details. And I mean, you're the eyes and ears of the people. And if you got a little bit of time to listen to what's going on in hearings, you're better eyes and ears for the people.
Dave: Well, there's another reason I wanted to get into this discussion a little bit because there was some talk about using some of the money, if possible, to shore up the retirement fund. And in discussions on 1015 you had brought up that you were kind of disappointed that so far there has been no movement to get rid of the unfunded liability in the purse fund. So where is that right now?
Sen. Mathern: Well, it's in limbo, that's best that I can say. You know, and that was my objection to 1015. That's generally the last bill of the legislative session. That's sort of an amalgamation of everybody's lost dreams or little pet projects or things we should do yet before we adjourn. And it wasn't in there. So if there's a GBA committee, Government Veterans Affairs committee, that's doing this, but there are also people looking at Biden Bucks to see if they can use some Biden Bucks to put in there. And that's all taking a little time. We have a general sense that we'll put cash in and maybe an ongoing stream from the Legacy Fund. I mean, we have a $1.4 billion deficit, if you will, in the retirement program. And we need to guard that program. Public employees worked for many years and in many times maybe stayed with the state because we had a good retirement program. We can't morally bankrupt that program and then tell them after they're retired, "Sorry, you don't have a retirement program." So we need to fund it. And the other thing is, most people are not aware of this. This really isn't just state employees. We have a lot of County and city employees on these plans. And if we were to not properly fund this, property taxes would go up. I mean, that's what would happen. Somebody's gonna put another a 100 million dollars in a County, they don't have a $100 million laying around, they're gonna have to raise property taxes. So, this isn't really just for state employees that we need to address this. We need to address it because it's a bigger issue, counties, cities, all the political subdivisions. And so I would say, "We're going to find a chunk of money. We're gonna put it in either now or in a special session. And we're gonna create a stream of dollars from the Legacy Fund, little at a time to make do. But we do have a governor who says he wants to cancel the whole defined benefits plan. And we had some of our legislators who are on that path also. So it's, there are two issues really. One is, the money to properly fund the liability we have. And the other issue is, "Should we just scrap it and start a new program?" And I think the starting a brand new program is not the thing to do. And defined contribution basically puts people at risk. If they retire on the stock market is low they get very few dollars. If they retire when it's high, they'd get more dollars and it really should be even out. And so that's the position I am promoting.
Dave: And of course we are hearing a lot of legislators saying just that. "We paid this off, we get it solvent. And then we go to a defined contribution plan."
Sen. Mathern: Yeah, but that's a $1.4 billion bill. So good luck legislators who think that you pay for that, this session, you can't.
Dave: In terms of the use of the Legacy Fund where there's certain other things that you'd like to see the proceeds or maybe even the principal used?
Sen. Mathern: Well, I think most of it should be used at this point for permanent ongoing requirements for special projects. But it really shouldn't be sort of taking away our basic structure of raising income and budgeting the cost of doing government. You know, I think we had to keep our income tax system in place and our sales tax system and our property tax. And they were very moderate and we shouldn't reduce those for the Legacy Fund. The Legacy Fund is really for the time that is coming when fossil fuels will not be filling that big bucket when our income from oil and gas is no longer coming because there is no oil and gas. And then that's when the Legacy Fund should be serving the citizens of North Dakota. In the meantime, we can spend the interest, or we can't, I mean, we can spend more by a higher vote but I'm just suggesting we should really try to keep it to the interest and keep building up the base for that day when our grandchildren no longer have oil and they're living off this land just by what we've created here and not by this God given tax revenue source of energy. And then that will be there to help us solve our issues in terms of citizen needs.
Dave: So a lot of people talk about the three legged stool of taxation, and you're a big believer that that should be a three-legged stool?
Sen. Mathern: Yes, to me it's another thing of just kind of evening things out, you know? Property tax, for example, if we had too much on property tax, somebody's paying property taxes. A farmer has to pay that same tax, whether he has a drought or a bumper crop. And that just, if we had too much there, we'd be putting people out of business. Income tax is basically, if you're making money, you're gonna pay some. If you aren't making money and you have a bad year because of this or that, you don't pay it. And sales tax is more a gauge of economic activity and people's spending power. And so each one has a pro and con, and then when do you have a little bit of each, the economy, government services can stay even. We don't want one year where we have the interstate open 'cause we have enough money to plow snow. And then another year it's closed because we don't have money to plow the snow. We want things even, and the way we tax is a way to make it even.
Dave: Well, Senator Mathern, we run out of time, but I really like to thank you for being on the show.
Sen. Mathern: What, you don't have another question? Hey, I'm glad we covered it all. It was wonderful to do this. And next time, we'll talk about the Office of Management Budget bill. Thanks.
Dave: Let's do it, let's do it. Senator Tim Mathern from Fargo, our guest. He's a Democrat, member of Senate Appropriations Committee, and for Prairie Republic and Legislative Review, I'm Dave Thompson.
