Next challenge for (North Dakota) lawmakers

North Dakota can save itself from ongoing intellectual and financial losses of staggering proportions.

But it will take political courage, change in attitudes, bipartisanship and investment to do it.

By:
Lou Ziegler
The Forum
Fargo, ND
http://www.in-forum.com

The need is urgent.
That consensus emerges from more than 1,100 contacts made by The Forum – through interviews, surveys, polling, e-mails and online chats – for its "Saving North Dakota" series.

Reporting for the series started in April and ended on Monday. The constant drumbeat heard during that time was young people are leaving the state in alarming numbers, and people making good wages are on the way out, as well.

The reason for the flight: better-paying jobs and career opportunities elsewhere.

In a bittersweet way, reporting and polling showed that many of those planning to leave don’t want to go; they hold great affection for North Dakota.
Bolstered by solid popularity ratings, Gov. John Hoeven and state legislators next week have the opportunity to begin work on measures that could ultimately stem the out-migration.

A statewide poll, commissioned by The Forum for the "Saving North Dakota” series, found 69 percent of the 606 people surveyed said the quality of state government was "good” or "very good,” while 66 percent also put Hoeven’s performance as "good” or "very good.”

With backing of the citizens, legislators have a platform to seriously address economic development issues that could end the out-migration.

Solutions offered
Many people offered varied solutions for the "Saving North Dakota" series, some small in scope, some broad.

Pulled together, the ideas reflect a "can-do" spirit instilled into North Dakotans by pioneers who settled the state:

– As the series reported, North Dakota holds a strong upper hand over South Dakota when it comes to technology and research, with examples being the University of North Dakota’s Rural Technology Incubator and Center for Innovation, and North Dakota State University’s Research and Technology Park.

The prospects of a research corridor between NDSU and UND are very real.
The setting for business-university partnerships in advance technology appears far more attractive in North Dakota than South Dakota, if the climate for economic development improves.

– There is a growing sense of optimism that North Dakota will strengthen internships between companies and college students in the state. This could serve to keep people in the state following their schooling.
Students at NDSU and future leaders with the FM Leadership class are working to create more internship opportunities. Hoeven plans to push the Legislature in this area.

– North Dakota’s percentage of population age 85 and above is the highest in the country, and growing.

Some suggested offering incentives for companies that could prosper from doing geriatric research – from equipment manufacturers to pharmaceutical firms.

– The open spaces of North Dakota, the beauty of the western landscape, make tourism the fastest-growing industry in the state.
As the series reported, some are taking steps to put the state’s natural resources to the forefront, such as Birding Drives Dakota, for bird-watching events and destinations.

There are dinosaur digs and museums to promote, buffalo to watch. Plans are being discussed for making a large recreational development along the Jamestown reservoir, named after the late novelist Louis L’Amour.

In Medora, a world-class golf course is scheduled to open this summer, joining two other spectacular courses in Bismarck and Williston, in an easily accessible golfing triangle.

– As the series reported, strong feelings exist that North Dakota communities and businesses must make themselves more interesting by tapping the creative energies of the young.

That’s especially important in the larger cities, where people just out of school have more job and career choices.

– Another solution is to actively recruit refugees to North Dakota so the state has enough workers to allow businesses to grow. Without the influx of refugees during the 1990s, North Dakota’s population would have dropped during the decade.

– Another solution voiced several times was the need for North Dakota to deal with what historian Elwyn Robinson more than 40 years ago called "The Too-Much Mistake." This is obvious in public schools, where nearly one-third of the state’s more than 200 school districts have enrollments of less than 100 students.

– In the end, the Legislature will need to tax more, or cut more, to find more money to promote North Dakota and to encourage companies with good-paying jobs to start or relocate in the state.

Interviewed for this series, Gov. Hoeven said it would not necessarily be political suicide to raise taxes, if more high-paying jobs resulted from it.
One proposal, from Sen. Randy A. Schobinger, R-Minot, is to eliminate both the individual and corporate income tax, replacing them with a revenue-neutral sales tax.

Facts don’t tell story
During the reporting of the "Saving North Dakota” series, politicians often volunteered that 63,000 jobs were created in North Dakota during the 1990s.
They said this is a sign of a growing, healthy economy.

But rarely did they drill deeper to explain the kinds of jobs being created.
The Job Service’s "North Dakota’s Economic Road Map 2002," shows since 1990, employment increased by 25.8 percent, but the state’s labor force increased by 6.5 percent.

This means lots of jobs were available "but not at the skill and/or wage level people desire," the Job Service report said.

"Underemployment is the result, an increasing reality throughout the last decade in North Dakota."

This also created the climate where many people had to work two and three jobs to get by.

The numbers from Job Service North Dakota also show 43.5 percent of the job growth during the 1990s occurred in the service sector at an average wage of $22,817 per year – less than the state average annual wage of $24,683 in 2000.

Medical jobs, which average more than $29,000 a year, account for 38 percent of the service jobs. The average wage for the other 62 percent in 2000 was $18,640 per year.

Retail trade added the next highest number of net jobs – nearly 10,000.
In 2000, the average retail job in North Dakota paid $13,867 a year.

That year, nearly one in every five North Dakotans workers worked in retail, at an average wage of $6.67 an hour.

Politicians also trumpet the need for more higher-paying "high-tech jobs," although by 1999 the average high-tech wage of $30,535 placed North Dakota last among the 50 states.

Focus on good jobs
In 2000, the average wage per job in North Dakota was 48th lowest among the 50 states, according to the federal government.

"The state’s annual average wage is 30 percent lower than the nation’s," Job Service North Dakota reports.

Polling showed people leave the state mainly for better wages and career possibilities. Out-migration comes with a huge cost, according to two previously unreported studies reported in the "Saving North Dakota" series:

– People leaving North Dakota during a recent three-year period took $384.5 million more from the state’s economy than newcomers put into it, a North Dakota State Data Center study estimated.

Cass County, the state’s largest and most financially thriving county, actually lost almost $26 million in taxable income between 1998-2001, despite a net gain of 1,092 Internal Revenue Service tax filers.

This points to a path of higher-paid workers leaving the state, replaced by lower-paid personnel.

– The state Department of Public Instruction studied Robert C. Byrd Scholarship recipients during a recent 10-year period.

The study documents the intellectual drain occurring in North Dakota.
Winners of the Byrd scholarship are among the brightest in high school graduating classes.

The DPI received responses from 131 of North Dakota’s 204 Byrd scholars who graduated between 1987 and 1997.

The findings: 86 percent of them are no longer living in North Dakota; about half of them said better career prospects were available to them elsewhere.
In all, the Data Center estimates between 2000 and 2004, North Dakota will lose 13,000 residents ages 20 to 24.

No other state is experiencing North Dakota’s population losses.
Ten days ago, the federal government released U.S. Census Bureau information that said just one state in the nation lost population in the last year:

North Dakota, whose population was down by 2,440 residents – or 0.4 percent.

Uneven playing field
In addition to low wages, underemployment and population loss issues, North Dakota is fighting a losing economic battle with South Dakota.

South Dakota’s economy grew by 66 percent during the 1990s; North Dakota’s grew by 48 percent.

Nonfarm employment grew by 37 percent in South Dakota during that time; North Dakota’s grew by 27 percent.

Personal income increased 73 percent during the 1990s in South Dakota; it grew by 56 percent in North Dakota.

South Dakota gained 63,000 people the past decade; North Dakota grew by just over 6,300.

The reasons for South Dakota’s successes are obvious to politicians on both sides of the Dakota border.

South Dakota’s image is that it is much friendlier to businesses, with no corporate or state income taxes.

South Dakota also spends considerably more money promoting itself than North Dakota.

However, the North Dakota Legislature has the power this session, should it choose to use it, to begin leveling the economic development field.

Need is urgent
As many factors reported in "Saving North Dakota" point out, urgent action is needed.

Take existing negative forces, and it appears North Dakota’s economy is at the greatest risk of any time in the history of the state.

History suggests it.
In 1990, "The North Dakota Vision 2000 Report," written after 40 community meetings, said:

"The basic conclusion … now shared by many North Dakotans today is that North Dakota’s fragile economy is AT RISK. Consider:

"North Dakota is the only state in the union to have fewer residents today than it did in 1930.

"Per capita income has steadily declined since 1975 and is now 15 percent below the national average.

"Forty percent of net farm earnings are in the form of federal support payments, making the state extremely dependent and vulnerable to the whims of the federal government.

"Retail activity in only our nine largest cities accounts for 70 percent of North Dakota’s taxable sales."

That was written nearly 13 years ago. Today:

– North Dakota remains the only state to have a population less than it did in 1930. It is the only state in the new millennium with declining population.
– Per capita income slipped in the past 13 years, and is now 16 percent below the national average.

– For the past four years, about 100 percent of net farm income came through federal subsidies, according an NDSU study released this year.

– Retail activity in the state’s six largest cities now accounts for 70 percent of North Dakota’s taxable sales.

What can be done to save North Dakota?

One week from today, the North Dakota State Legislature convenes to take on heavy problems.

With publication of "Saving North Dakota," an inspired Legislature, should it wish, can draw from a body of information and ideas – and solutions – for dealing with those problems.

The governor and the Legislature have the knowledge that they are opening the session from a position of power – power in terms of popularity among the citizens of the state.

The 1990 "Vision 2000" report said in bold type:
"North Dakota is at risk and cannot stand still. It must take bold actions now to prepare for the future."

Nearly 13 years later, that future is now.
By all appearances, the Legislature – all North Dakotans – never faced more compelling reasons for dealing with the present than they do now.

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North Dakota Vision fell short of goals

By:
Janell Cole, and Patrick Springer

The Forum

Fargo, ND
http://www.in-forum.com

In 1986, crude oil and farm prices were on the skids. People were leaving North Dakota in droves. Per-capita personal income was 85 percent of the national average. State government cut spending when revenues plunged.

Something had to be done.

The state’s chamber of commerce, the Greater North Dakota Association, came up with a remarkable statewide effort: "Vision 2000."

In fall 1989, almost 7,000 North Dakotans attended 40 town hall meetings that resulted in a report calling for eight "flagship initiatives" to turn the state around. "Vision 2000” would revamp the state’s economy for the modern era to provide good job opportunities.

Gov. George Sinner’s administration used the "Vision 2000” report to craft a $21 million legislative agenda, "Growing North Dakota." It amended or launched state economic development programs such as PACE, AgPACE, Ag Products Utilization Commission, the Myron G. Nelson Fund, Future Fund and Technology Transfer. The 1991 Legislature adopted it.

Still, 16 years after the crisis was declared, people continue to leave, an outcry for good jobs goes on and state government is again cutting spending because revenue projections went off the rails. "Growing North Dakota" didn’t achieve its goals:

o The state population did not grow to 700,000.
o The number of full-time farming operations dropped 10 percent instead of leveling off.
o Manufacturing jobs did not double to 32,800 (but have reached 25, 291).
o Per-capita income failed to come close to the national average, and is now at 84 percent of the average.

What went wrong?
Why didn’t "Vision 2000” and "Growing North Dakota” accomplish more?

What became of the "Vision 2000” agenda? After all, this was the report that was not going to sit on a shelf after it was published.

Former governors, economic development directors and legislators interviewed for this story blame a combination of factors:

o Lack of ongoing commitment by state government and business
o Party politics
o Unattainable or unrealistic goals
o No shared vision
o A populace with attitude problems, especially when it comes to taking risks

There was nothing wrong with the work that went into "Vision 2000," said Kevin Cramer, former state economic developer under Gov. Ed Schafer, who succeeded Sinner.

"The work was great. The document was great," he said. "This had magic. It had the full support of everyone."

But the greatness wasn’t maintained, he said. "That level of intensity is needed all the time."
He said the Legislature didn’t get behind the "Vision 2000" report.

"The appropriation was consistently diminished every two years," he said.

The business community didn’t hold the Legislature accountable, and the public didn’t keep their representatives’ feet to the fire, he said.

Schafer agreed. After he took office in December 1992, he saw no legislators tailoring bills to fit the "Vision 2000" initiatives.

"So I said, ‘I’m going to force the issue.’ So I vetoed the higher ed bill. ‘This doesn’t meet our goals in Vision 2000.’" (The Legislature introduced a delayed bill to fund higher education.)

‘Vision’ lost steam
Just as he found little commitment from legislators to "Vision 2000," he said there was none from the business community, the news media or the public.

Schafer regrets that he didn’t "pound on the table" more.

"If I had to do it over again, I would have been more aggressive," he said. "I’m willing to take my share of the blame, if that’s the right word. I wasn’t forceful enough."

The goal of 700,000 population was a mistake, Cramer said. Such a goal doesn’t measure whether people’s standard of living has gone up. What’s the point of 700,000 poor people? he asks.

"Vision 2000" and "Growing North Dakota" may have not reached their goals, but "it should never be undervalued," Cramer said. "A lot of good happened."

Bill Patrie thinks so, too. Patrie was one of Sinner’s economic development directors and has been involved in economic development in North Dakota since 1975. He’s now rural development director for the North Dakota Association of Rural Electric Cooperatives.

"’Growing North Dakota’ really did work," he said. "Hell, yes, it worked. It worked wonderfully well. We just quit doing it."

He’s frustrated that the momentum and consensus were not sustained.

Rep. Rick Berg, R-Fargo, the new House majority leader, agrees the state would be worse off if not for "Vision 2000" and "Growing North Dakota."

"What would North Dakota look like if we’d lost another 50,000 people? After the 1980s, it was necessary to stop the downward spiral," he said, and that was accomplished.

He said job growth in North Dakota has exceeded the national job growth in the past decade.

Economy needs focus
The problem with the state’s economic development efforts has been a lack of focus, Berg said, a conclusion shared by Eddie Dunn, former vice president of GNDA who was the key staff person on "Vision 2000."

Dunn, now a vice chancellor for the state University System, said a survey of various state association directors in February 2000 showed not one believed North Dakotans have a clear vision of what’s needed for a strong economy.

Berg said progress hasn’t been measured.

"We need to put accountability into this. We need key performance indicators that show progress in those goals, not just for the commerce department but for all of government, he said.

Dunn agrees with Berg that were it not for "Vision 2000," we could well be a lot worse off than we are.

"I think this is a continuum. Each effort has accomplished something," he said. The key elements of "Vision 2000” — human capital, financial capital, entrepreneurship, quality of life, technology — are still valid, Dunn said.

Schafer and Berg say the efforts have to be focused.
"Today, we don’t have a product," Schafer said. He said North Dakotans often fall back on the state being a good place to do business.

"Well, what’s unique about that?"

Schafer, Berg and Dunn say North Dakotans have to get over their cultural resentment of success and mistrust of big business.

"We’ve got to start embracing and supporting success," Schafer said.

Politics don’t help
Berg and John Dorso, former House Republican leader from Fargo, say the lack of results from "Vision 2000" and "Growing North Dakota" is also due to political party rivalries. In 1991, when Sinner’s "Growing North Dakota” initiatives came to the Legislature, Democrats held the Senate and the governor’s office and the Republicans held the House.

Dunn disagrees that party politics have been a major factor.

"That hasn’t been the key," he said. The key, he said, is people have not been shown a clearly formed vision.

Party politics killed the "living wage" provision in the PACE loan program. It was in the 1991 bill that passed. Sinner said he signed it even though he opposed the living wage section. When Republicans took over the Legislature and the governor’s office later, the section was removed from law.

Sinner said he regrets opposing the living wage and now wishes he had done more to raise the state minimum wage. When people have to work three jobs at low pay to have enough to live, "that’s immoral."

He said the minimum wage should be raised.

"We’ve got to stop letting people live off the backs of poor people," he said.
Fresh outlook needed

Dorso says it’s more than party politics that messed up "Vision 2000." There is too much emphasis on preserving what he calls the "agrarian myth" and creating programs with something for everybody.

He disagrees with what he saw at meetings during "Vision 2000": "The same thing North Dakota does all the time, which is to make sure we don’t offend anybody. … Let’s make sure everybody gets a piece of the action," he said.

The result, Dorso said, is "little pots of gold spread around keeping constituents happy," and no willingness to discuss radical changes. It’s a lot of money flushed down the drain, he said.
Patrie said it’s too bad "the discussion’s gone negative" and believes a lot of it is due to bitter partisanship in North Dakota politics.

He calls for a rise of a new class of citizens who demand an end to partisanship and for politicians who will put aside political advantage for the state’s well-being.

Some North Dakotans may find that has a familiar ring to it.

In 1990, the introduction of the "Vision 2000 Kickoff Report" said: "Last October … (we) went out and asked if North Dakota was dying.

"The people of North Dakota said yes, it would, unless we change the way we look at things."

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