Coming revenue forecast to guide raises for North Dakota state employees

BISMARCK — Budget writers in the Legislature will use an updated state tax revenue forecast this month to better guide their work, including what pay raises to approve for state employees.

The House and Senate appropriations committees are tentatively eyeing 4% raises in each year of the two-year 2023-25 budget cycle. That's subject to change after joint meetings to hear forecast presentations on March 14-15, after which budget writers will adopt a final forecast. The presentations will come from the state Office of Management and Budget and two consulting financial services companies: Moody's and S&P Global.

The Senate last month approved $75 million for a "targeted market equity pool" for boosting salaries to be in line with the overall market. Gov. Doug Burgum asked for $90 million, which he said "will make us more competitive when we're trying to recruit for critical positions."

The 4% raises and the $75 million targeted equity pay are "adjustable" after next week's forecast updates, said Senate Appropriations Committee Chair Brad Bekkedahl, R-Williston.

The 2021 Legislature approved 1.5% and 2% raises for the 2021-23 budget cycle.

The governor also asked the Legislature for 6% and 4% performance raises for state employees in the first and second years of the next budget cycle, respectively, costing $211 million.

"If we don't make that investment, we'll spend more than that on training, recruiting and rehiring as we lose the talent that's out here. That's an investment in our future," Burgum told lawmakers in his December budget address.

Turnover in state government was 14% in 2021, a 14-year high, according to the governor.

House Appropriations Committee Chair Don Vigesaa, R-Cooperstown, said the updated forecast likely will be "relatively close" to lawmakers' preliminary forecast adopted in January, with "maybe a minor adjustment up or down."

"With that in mind, I guess we'll just have to discuss with our colleagues here in the chamber and with leadership to see if we want to go that extra step to the 6% and 4%," Vigesaa said. "Right now I would say the chances are that we probably would, but there's so many factors," such as how the House and Senate will adjust and reconcile budgets.

North Dakota United, which represents more than 11,000 public employees and schoolteachers, is advocating for 8% salary increases in each year of the 2021-23 budget cycle.

"Public employees have historically been paid anywhere from 7% to 12% less than their similarly educated and experienced counterparts in the private sector. The state has the resources and now is the time to invest in the workforce that provides the vital public services that North Dakotans deserve and have come to expect," ND United President Nick Archuleta told the Tribune.

A state budget office report released last month showed general fund revenues through January running 24% or $785 million ahead of the Legislature’s 2021-23 forecast. The general fund is the state's government's main operating fund.

House and Senate budget writers have included funding for Burgum's recommendation for the state to cover the $78 million premium increase for health insurance, according to Legislative Budget Analyst and Auditor Allen Knudson.

Senate budget writers boosted the salaries of several constitutional elected officers in a move to address longtime pay disparities, Bekkedahl said. The House will consider those proposals.

For example, the secretary of state, insurance commissioner, auditor, tax commissioner and agriculture commissioner would all be brought up to $130,000 a year, with a 4% raise the next year.

"We're just trying to bring everybody up to the same level. We just thought that was fair," Bekkedahl said.

Vigesaa said, "I think there's some merit in getting (the elected officials' salaries) in line with each other," but House budget writers haven't dived into the issue.

North Dakota's highest-paid state elected official is the Supreme Court chief justice, at $173,946; the lowest-paid is the lieutenant governor at $111,727.

The House last month passed the Legislature's budget with 4% raises for lawmakers. The budget goes to the Senate.

The House last month approved 8% and 4% raises for judicial officers in the 2023-25 budget cycle, including the five Supreme Court justices and 52 state district court judges. That would cost the state over $2.37 million.

The judiciary has asked for 20% and 15% raises, which would cost $6.5 million. Judges and justices say the increases are overdue, would bring North Dakota toward the middle range compared to other states, and would attract more candidates for judicial spots.

House budget writers "wanted to balance that request with how we approach raises across all employees across state government," Rep. Karla Rose Hanson, D-Fargo, told the House.

The court is still asking for the 20% and 15% raises, according to State Court Administrator Sally Holewa.