The House Appropriations Government Operations division heard from North Dakota Mill & Elevator finance staff clarifying how the mill calculates transfers to the state and discussed a representative’s proposal to dedicate additional milling proceeds to agricultural breeding programs.

Kathy Duke, chief financial officer at the mill, told the committee the mill first computes net income after internal obligations such as employee profit‑sharing. The mill then transfers 5% of net income to a designated ag program (the transfer was cited in testimony at roughly $1.039 million for fiscal year 2024). After that 5% deduction the mill calculates the remaining profits and transfers 50 percent of that remainder to the general fund; the mill retains the other 50 percent for its operating and capital needs.

Representative David Fisher outlined a proposed amendment that would allocate a 6 percent amount for seed/breeding programs and other agricultural research. Under the amendment as discussed in committee, the proposed 6 percent would be deducted from profit and effectively reduce available cash. Mill staff explained how the proposal would change the math: the additional 6 percent would be taken off the top (after the 5 percent transfer), and the remaining funds would continue to be split 50/50 between the mill and the general fund — meaning both the mill and the general fund would each receive roughly 3 percent less than they otherwise would under current law.

Profit sharing and timing: Committee members asked whether employee profit‑sharing or gain‑share payments are included before the transfer calculation. Kathy Duke clarified those payments are deducted before the net‑income transfer calculation; the FY24 net‑income figure provided to the committee was reported after the profit‑share expense was recognized.

Committee reaction and next steps: Legislators expressed support for agricultural research goals but also concern about reducing the mill’s retained cash, which the mill uses for capital projects and operations. Members suggested staff and Representative Fisher rework statutory language so the mill’s necessary operating cash would be held harmless while directing new money to breeding and research — for example by changing the statutory transfer trigger or moving the allocation to a different revenue stream. The committee did not adopt formal language during the hearing and directed staff to take the comments into account for later drafting.

Ending: Mill staff said the mill has produced a long track record of profits, and they emphasized that large capital projects and ongoing operations rely on retained earnings. The committee agreed to continue the discussion and asked staff to return with alternative drafting options that would protect mill operations while advancing breeding and research funding goals.