North Dakota's counties take a vested interest in the state's legislative sessions since much of what goes on usually has a direct effect on how they will conduct business, particularly in the property taxes they have to collect.

The North Dakota Association of Counties is again planning to take an active role in lobbying legislators on an agenda that provides a formula for property tax relief. NDACo Executive Director Mark Johnson and his assistant, Terry Traynor, are experienced hands with a combined 41 years with NDACo and 20 legislative sessions between them. They'll be joined by Wade Williams, a former state legislator from Jamestown for 10 years, who's attended 14 sessions of the Legislature.

"All three of us will be at the Capitol every day, all day, until the session ends, probably sometime in April," Johnson said. "We'll be tracking a lot of bills this session. About 1,200 bills are typically introduced during a session and about three-quarters of those usually affect county governments."

A quick and dirty summation of the formula calls for increased state support of the State Aid Distribution Fund, State Highway Distribution Fund and Human Services costs and financing, along with passing proposed legislation amending the budget flexibility legislation adopted at the last session. According to Johnson, the latter provides counties with greater management control of their budgets. The budget flexibility legislation allowed counties to combine several special levies into their general fund for a new consolidated general fund levy.

"Counties have 71 mandated mill levies, which all go into separate funds, which becomes an accounting nightmare," Johnson says. "The bill passed by the Legislature during the last session took 25 of the levies counties collect and rolled them into one; meanwhile the county remained responsible for what the mill levy had been dedicated to, such as care and upkeep of cemeteries. Counties found the legislation wasn't workable and are asking for improvements."

The improvements involve removal of levies for separate boards that "certify" their budgets to the county commissions and removal of the "growth limitation" amended into the bill that ties further growth to mills rather than dollars, Johnson explained.

State Aid Distribution is an important source of revenues for counties. The fund takes four-tenths of the first cent of statewide sales and excise tax receipts and turns it over to the counties' general funds. How much each county gets is mainly determined by population, but other factors ensure the smallest counties get a fair share. Projections put the State Aid fund $4 million above what was projected at the end of the last session, and an additional growth of $4.3 million is estimated for the next biennium. The NDACo wants to make sure the Legislature will continue to honor its commitment to State Aid.

The State Highway Distribution Fund, not to be confused with the State Highway Fund, is shared by the state, counties and cities, while the State Highway Fund is strictly controlled by the N.D. Department of Transportation. The Distribution Fund provides counties with money they can use to match federal highway dollars for projects. Gov. John Hoeven is proposing a $15 increase in vehicle registration fees, which is projected to raise an additional $20 million to be placed in the State Highway Fund. If this were instead placed in the State Highway Distribution Fund, cities and counties would see an increased allocation of $6 million annually.

Johnson said the State Highway Distribution Fund is the largest source of nonproperty tax revenue in county budgets. And with reconstruction costs of two-lane paved highways running $1 million a mile and more, the fund is critical to preserving the state's paved infrastructure. But Johnson points out that vehicle fees and fuel taxes are stagnant and not appropriate sources for the growing costs of road reconstruction. The NDACo prefers a source that grows with the economy and proposes using a small portion of the excise tax on the purchase of vehicles.

In North Dakota, counties spend $50 million annually to support state-required human services. Of this amount, $35 million comes from local property taxes, usually making human services a county's highest budget item. But while state spending on human services goes up every biennium, the percentage it provides relative to the counties' goes down, according to Traynor.

Child-support enforcement is among the fastest growing parts of the human services budget, and NDACo wants to see this cost transferred solely to the state.

"Legislation to immediately transfer administration, freeze county costs at 2004 levels, and phase out the county costs over a period of time beginning in the next biennium is being contemplated," Johnson said.

Property tax relief can be realized through support of these items, Johnson said, but he admits reduction of property taxes is unlikely. There is little incentive for counties to lower property taxes because increasing them when the money is needed is tremendously difficult. Keeping taxes where they are is a more realistic approach.

"You have to remember, the people who are elected to county commissions pay these property taxes, too," Johnson said. "They don't want to be paying property taxes any more than anyone else, so they tend to be more conservative."

Other issues NDACo will be keeping its eyes on are changes to the Homestead Tax Credit, statewide mutual aid and authorizing the use of juvenile detention as a sanction by district judges for juveniles violating drug court restrictions. The association supports changes in the income thresholds and maximum property tax credits for elderly and disabled homeowners that it thinks will keep those who qualify in their homes longer. It also supports the mutual-aid legislation that provides a blanket coverage for responders no matter what their jurisdiction and where they're asked to provide aid, though it does not supersede those mutual aid pacts already in place.

But the NDACo is wary of allowing district judges to use detention as a penalty.

"Studies show this is an ineffective deterrent and can actually increase the risk that kids will get into deeper problems," Johnson said. "There also is the possibility it will result in increased county costs."

During the last session, legislation to consolidate counties was soundly defeated and Johnson feels it remains a "dead issue." But legislators are showing a lot of interest in efforts being made by counties to consolidate services. Not just county to county consolidations, but county and state along with county and city cooperative efforts.

"If there were a mandate from the Legislature to enter cooperative efforts, you can be sure there would be little willingness by the counties to participate," Johnson said. But the Legislature has provided them with the tools and they've taken advantage of them on their own."

(Reach reporter Gordon Weixel at 250-8255 or gordon.weixel@bismarcktribune.com.)