ND Governor’s candidate Q & A

Ahead of the June 14^th primary for candidates in North Dakota, HPR asked questions of the two men running on the Republican side, Attorney General Wayne Stenehjem, who received the party’s endorsement in March, and challenger Fargo businessman Doug Burgum as well as state legislator Marvin Nelson, who received the ND Democratic-NPL endorsement and is running unopposed. Below find their responses. Answers may have edited by length because of space constraints.

HPR: Do you think the oil boom is over in the state?

Wayne Stenehjem: No. Certainly not. In many ways, it’s just beginning. Oil is commodity in high demand and our production in the Bakken region is one of key development areas in the world. Current reserve estimates point to many more decades of production coming from North Dakota. Oil prices are cyclical in nature and over the past 18 months we have been in a down cycle. Prices will come back, they always do. In fact, just in the past couple of months we are seeing an upward price trend. When prices rebound we will see a return of activity in western North Dakota. This time, however, the pace of development will be more measured and impacts will be less severe. This is due, in part, to the infrastructure that has been built over the past few years courtesy of our citizen legislators that wisely pushed funds to build roads and other facilities to address the stress points.

Doug Burgum: While the boom may have slowed for now, we need to be prepared for when drilling economics become favorable again. This pause in activity gives us an opportunity to better coordinate planning for the future. We need a comprehensive plan to host as many as 40,000 to 50,000 new wells that may be drilled in the next 20 to 30 years. The plan should include coordinated investment for public infrastructure, such as roads and water resources, and coordination between state agencies, local governments, and land and mineral owners, that will optimize the billions of dollars that will be invested in the years ahead. We can also do a better job of coordinating our efforts to protect our land and protect landowner rights. We should use the current downturn to make data-driven decisions that prepare for the new energy future ahead. My running mate, Mayor of Watford City Brent Sanford, and I support funding for infrastructure such as the Surge Bill and other one-time spending projects that went towards supporting critically-needed infrastructure and support for western communities.

Marvin Nelson: Yes, I think what we would call a boom is over for the foreseeable future. There is still business but it isn't going to be the explosive growth and people coming from all over the world to work here. The drilled but uncompleted wells act to cap the market. If China collapses economically, which is certainly possible, even probable, we could see really low oil prices.

HPR: How does the state better project its revenue so there aren't shortfalls and budget cuts are needed to be made like this last go around so we are not so dependent on the ever changing price of oil?

Stenehjem: The solution goes way beyond just addressing the revenue projection system. The long-term answer is found within an all-out effort to diversify our economy beyond energy and agriculture. Once we have developed and implemented new business sectors, we become less dependent on the cyclical pricing of oil. Incidentally, I want to point out that our legislature wisely set aside funding in anticipation of downward oil price trends. They know and understand the nature of the energy industry and responded appropriately.

Burgum: Like the companies operating in the Bakken, as a state we need to better recognize the cyclical nature of the energy industry and take the appropriate steps to manage our risk. The philosophical role of government should not change just because we find ourselves flush with tax revenue, and we should not be speculating on prices. I grew up in the grain business, and I am still involved in the family business, which has operated in North Dakota since 1906. We hedge grain daily. If we did not practice smart risk management in a volatile commodity business, we would have been out of business long ago. As a state, we need to manage our financial exposure by hedging, which would provide downside protection on our revenues and help stabilize our cash flows. This would prevent us from reaching a situation like we are in today, where unexpected revenue shortfalls force cuts to essential services such as staffing in rural nursing homes.

Nelson: One problem is the forecasting model doesn't seem to appreciate how strongly related oil is to sales and income tax collections. It's almost like they just bolted on an oil forecast onto a model for states that don't have oil. Price forecasting is never going to be great, after all its commodities.

One way to change it would be to go to a different system of how the oil tax money is divided, but it would take a lot of change. Instead of dividing up much of the tax by percentage and then the remainder goes to impacts and running the state. It would really smooth things if a certain number of dollars per barrel was taken for the impact and operations and then the remainder was divided among the various funds. That way the revenue would be much more stable, and when prices are up, more would be saved, when prices are down, less saved. This would not completely eliminate variances, but it would greatly reduce them. Along with a moderate rainy day fund, it would take some pretty unusual situations to require significant cuts during a biennium.

Another way to do it would be to take the oil part of the forecast out of the budget. We could do this by hedging our oil income for the biennium at the time of the legislative session. There would still be the effects on the other taxes, but the swings during the biennium would be greatly reduced.

HPR: Every year there seems to be fights between the Legislature and higher education leaders, what can you as Governor do to bridge that gap and make everyone work together for what's best instead of seemingly working against each other?

Stenehjem: I believe that my depth of experience both as a state legislator and as attorney general will be a great asset in linking the legislature and our higher education system. I have relationships with all the individuals involved and it’s important to remember that we’re all on the same team and everyone wants the same thing. We need to ensure that our higher education system is putting out a product that is responsive to the employment needs within North Dakota. I’m talking about a focus on workforce development. I think we have made significant progress in this area but there’s more that can be done.

Burgum: One of the most important roles of a CEO in the business world is to clearly articulate a vision and make sure that all team members are pulling in the same direction. As governor, I'll be a leader who makes clear we as a state are much stronger when we are all working together to achieve the same goals. For higher education, that means we should be focused on producing a high-quality education at a cost-effective price for both taxpayers and students. We need to recognize that as our economy diversifies, universities, community colleges, and technical training will all play essential roles in preparing North Dakotans for the jobs oftomorrow. The legislature and higher education leaders all share the common goal of preparing North Dakota citizens to become positive contributors with good-paying jobs and providing them the best education possible. We need to focus on what unites us. We have an opportunity to differentiate our state with a world-leading education system. But to make this happen, we need to practice innovation and entrepreneurship even within higher ed. The digital economy is changing every job, every company, and every industry. We need to harness this power to take higher ed to even great levels of excellence and collaboration.

Nelson: How to change this as governor, well after getting done with the easy things, like finding a habitable planet and starting a colony there, the basic thing is people across the state need to see benefits from higher education in their communities. They need to feel a part of and a beneficiary of the system, not just a funding source. The people in higher education need to really be made to feel a welcomed valuable part of North Dakota. It really comes down to more interaction between the people in the institutions and the people across the state.

HPR: Would you support a bill which would enact discrimination protections for LGBT citizens in North Dakota and put them into law in the next Legislative session?

Stenehjem: I do support extending anti-discrimination protections for the LBGT community in housing and employment. One thing that will be necessary is to establish that discrimination in that area is a problem that needs to be addressed. No one should have to worry about finding a job or a place to live because of their sexual orientation. But these protections must also be accompanied by protections for religious freedom, especially as it relates to small business.

Burgum: As with any legislation, the specific language is very important. I believe no one should be discriminated against because of their sexual orientation and would want to work with the legislature to appropriately address this issue.

Nelson: Yes

HPR: What does ND need to do to diversify its economy beyond agriculture and oil?

Stenehjem: We need predictable regulation that allows businesses to plan with confidence. The federal administration has been challenging business with onerous regulation that impacts our primary sector business. As Attorney General, I filed more suits against the federal government than any other attorney general in the country. In fact, from January 2004 through June 2015, I filed 60 challenges. Through these actions I have scored key victories for landowners, energy producers, and the public. We also need a low tax environment for start-ups and for ongoing business. The bottom-line is creating and maintaining a business environment that invites business and industry. In this regard, our state has been doing well. According to the 2016 Kauffman Index for Growth Entrepreneurship, North Dakota was home to 245 new business startups for every 100,000 residents representing the strongest “startup activity” in the nation. The Kauffman Index also reported that business startups in the state grew at a rate of 86 percent last year. This rate of growth was the strongest growth among the nation’s 25 smallest populated states.

Burgum: Diversifying the economy is exactly what I’ve spent my career doing in the private sector. We need to create a favorable tax climate for job creation – one that will attract businesses, investor capital, and workers. Second, we need to ensure government is limited to its proper role – nothing can squash an entrepreneurial startup’s momentum like an endless stream of government red tape. We can’t let that happen. Third, we need to support emerging industries, like Unmanned Aerial Systems (UAS), and the application of high-tech systems in healthcare, ag, oil, and our education system, by ensuring that unnecessary regulations are not limiting their potential, and also by doing our part to protect them from federal overreach. We need to foster a culture of innovation, entrepreneurship, and capital formation. We can support entrepreneurial programs across North Dakota – which will unleash ideas and new startups. And we need to continue to work to bring value-added energy and energy dependent manufacturing opportunities to North Dakota.

Finally, we need to think long-term – that means supporting and re-inventing our education system, from pre-school through post-grad, so that we have a well-educated workforce ready to succeed in positions and industries that don’t even exist yet. That will be vital for North Dakota to succeed in the changing economy.

Nelson: There is physical infrastructure, such as natural gas to communities and reservations because industry just doesn't even consider locating where natural gas isn't available. Then we need to continue with the high speed data infrastructure.

Probably most important is the family infrastructure. People aren't going to build businesses where they don't want to live. Communities must provide a high quality of life if they are to prosper. Quality daycare must be available and affordable. Quality schools are critical. One of the biggest things is wages. If you look at history, North Dakota has throughout its history, been a low wage state, and the result was stable to shrinking populations as people moved out. Then when the oil boom hit, some of the state had high wages and it showed, we had a significant, rapid movement of people coming here. Then as the boom went away, we again are losing people. Within the state, you see the movement from low wage areas to higher wage areas. We must not continue with being a low wage state thinking somehow paying people less is going to bring prosperity and growth. We are also one of the states with the biggest gap in earnings between men and women. As long as families lose economically by being in North Dakota, they are going to go elsewhere.

HPR: What can the state do to help deal with the opioid addiction crisis?

Stenehjem: Addressing this crisis is a key priority for me. Just last month I announced a plan to address the problem. Addressing the acute shortage of licensed treatment professionals for substance abuse and mental illness is the core of the plan. A state-wide public awareness campaign is also part of my plan. We need to put a face on the heroin and opioid epidemic in North Dakota. Both school-age children and adults should be warned of the dangers of new powerful drugs invading North Dakota. These drugs are killing people and we must be communicating the hazards. The funding for this program will come from prison reform. We need to reduce corrections spending and reinvest the savings into strategies that reduce recidivism and increase public safety. When the problem of treatment availability is resolved, sentencing reform is possible which will reduce the state’s current problem with skyrocketing corrections spending. We still need to lock up the bad guys but we can do a better job helping good people that suffer from addiction problems and mental health issues.

Burgum: Drug abuse is skyrocketing in North Dakota. It’s an epidemic that is hurting North Dakota families, employers, and taxpayers and threatening our way of life. It’s past time our attorney general begins making these issues a top priority, and as governor I look forward to working with him to address this important statewide crisis.

An ounce of prevention is worth a pound of cure. Working together across the state, we need to invest more time, energy, and resources in prevention, and we need to treat addiction like the chronic disease that it is.

As Governor, I’ll work with communities, employers, and health care providers to restrict the supply of drugs like meth, fentanyl, and heroin, fight the federal reimbursement incentives that are fueling the exponential rise in the abuse of highly addictive prescription drugs, reform our corrections system, and get people the help they need.

Nelson: Need to have treatment available and not just in a few population center or just through a few doctors. We need to give assurance to health providers that if they invest in treatment, we aren't going to just change our minds tomorrow. Exact solutions are going to vary by communities, but we need to look at things like tele counseling, and using our critical access hospitals to deliver necessary care.

Evaluation of people at all levels of the penal system for addiction by the state. Currently, mental health services are required by local jurisdictions, but they don't do it. The state needs to provide those services. We are in a horrible legal liability situation, just waiting for the lawsuits. Need to have things like drug courts dealing with first time offenders instead of requiring multiple convictions before being eligible for drug court. We can't afford to wait until people are sent to the state penitentiary to evaluate and deal with their addictions.

And we need education, education of the public and those addicted to deal with some of the fears and educate them in what to do and what is available. Education of professionals who haven't necessarily had a lot of education in addiction but who deal with it and its effects, professionals like pastors, doctors, and first responders. We also must educate people in addiction and drug abuse and prevent addictions.

HPR: Fargo and the western part of the state don't really understand each other as well, both appear to not care what the other is doing and the Legislators in each area battle for time and attention during each Legislative session, is there anything you can do as Governor to end that battle between urban and rural who each benefit the state in their own ways?

Stenehjem: This is a great question and I am uniquely qualified to address it since I have lived in both the east and the west. As you know, I was born in Mohall and grew up in Williston. I moved to Grand Forks for college and law school and stayed there after graduation and opened a private law firm. I was elected to the legislature representing a Grand Forks district. I understand the concerns and issues from every corner of our state. Because of this deep understanding, and because of the relationships I have built over the years with people from all over the state, I am uniquely qualified to bring clarity and understanding to the issues.

Burgum: A key differentiator of my campaign is the choice I made in choosing my running mate. I chose Brent Sanford from Watford City as lieutenant governor for many reasons, and one is that he knows and understands, firsthand, the opportunities and challenges of western North Dakota. As mayor of Watford City, Brent has been a great leader during the oil boom. He understands the tremendous opportunity that the Bakken has provided to western North Dakota, breathing new life into communities that had been on the verge of disappearing. He understands the challenges that oil development brings to these communities, but most importantly, he knows how these challenges can be addressed. Brent knows that in addition to creating great jobs, we need to build strong communities, where families can put their roots down, raise their kids, and make North Dakota their home. His mayoral experience, combined with his record creating jobs in the private sector, make him an invaluable partner in steering North Dakota into the future.

Nelson: A lot of the problem is North Dakota has never had the resources to handle the needs of its people. With the oil boom, we started to work on catching up, but we never really did. So you have the natural effects of the competition for limited state resources. It will always be easier to know your own needs and desires over the needs and desires of someone else. So there will be competition and resentment. Fargo will always be accused, fairly or not, of being a big bully, using its power to take from those weaker. Many in Fargo came there after they experienced hardships or lack of acceptance in other parts of the state, or for quality of life issues, they will always, fairly or not, think of the rest of the state in light of their personal experience. As long as the state is primarily run with the idea of reducing taxes for out of state corporation rather than providing a place where people want to live, this will not change. We must make North Dakota a place people want to live, a place where all are welcome.