The House Appropriations Committee on Thursday approved operating budgets for the tax commissioner and the Department of Public Instruction, expanded a disabled-veterans property tax credit and declined to advance a large, state-funded school-construction plan.

The committee voted to give a “do not pass” recommendation to House Bill 16‑04, a bill that would have created a $600 million, 10‑year grant program for school construction tied to a proposed concurrent constitutional amendment and additional distributions from the Common Schools Trust Fund. Committee members instead advanced a package of other education and tax measures, including House Bill 11‑29 (a study and task force on chronic absenteeism), House Bill 12‑66 (an increase to the disabled-veteran property tax credit), House Bill 01‑2006 (the tax commissioner budget) and House Bill 10‑13 (the K‑12 budget as amended).

Why it matters: The school-construction proposal generated the longest debate of the morning because it would have tapped the Common Schools Trust Fund for long-term distributions tied to a voter-approved constitutional change. Supporters called the plan a way to standardize and lower construction costs while sending steady funds to districts; critics warned it would open the trust fund to ongoing withdrawals and risk long-term stability of distributions for K‑12 aid.

Committee action and key details

House Bill 11‑29 — absenteeism study: Representative Mitscog, sponsor, explained that an amendment adopted in another bill creates a working group composed of the Department of Human Services, Department of Public Instruction, legislative members and other stakeholders to study truancy and chronic absenteeism and report to Legislative Management and the Children’s Cabinet. Representative Steeman moved a “do not pass” recommendation; Representative Murphy seconded. The committee approved the do-not-pass motion by roll call (22 yes, 0 no, 1 absent). Representative Mitscog asked that a committee member carry the bill to the floor; Representative Steeman agreed to carry it.

House Bill 16‑04 — school construction financing: Representative Murphy described an amended approach that would initially appropriate $200,000 to stand up a program (instead of an immediate $600 million distribution) and included a concurrent resolution to amend Article IX of the North Dakota Constitution to authorize supplemental distributions from the Common Schools Trust Fund if voters approve in 2026. The sponsor presented modeling of projected fund balances and long-term costs. Committee staff noted the fiscal modelling assumed a long‑term interest/return assumption and used the fund’s five‑year average balance to compute distributions.

An amendment (5,001) that would have altered timing and funding in the bill failed on a roll call (5 yes, 17 no, 1 absent). After debate about preserving the trust fund and concerns that creating a large recurring draw would be hard to unwind, a motion to give HB 16‑04 a “do not pass” recommendation carried on a roll call (majority recorded; committee minutes show the do-not-pass motion carried and the bill will not advance from this committee).

House Bill 12‑66 — disabled-veterans property tax credit: Representative Pyle, sponsor, asked the committee to increase the taxable-valuation amount used to compute the credit (the bill raises the taxable-valuation exemption applied for disabled veterans). The fiscal note estimates the change would cost the state approximately $7.4 million on a biennial basis; staff explained that the statewide dollar impact reflects the taxable-value reduction multiplied by mills across many taxing districts and the number of existing beneficiaries. Representative Steeman moved a do-pass recommendation with a second from Representative Brandenburg; the motion passed by roll call (22 yes, 0 no, 1 absent). The bill was incorporated into the tax-commissioner budget the committee later moved forward.

House Bill 01‑2006 — tax commissioner budget: Representative Fisher offered the agency’s operations budget (no new FTEs) and an amendment that adjusts funding lines and removes $103.225 million of tax-credit costs that will now be carried in separate policy bills. The committee adopted the amendment and voted to advance the budget as amended (roll call recorded; amendment and final passage recorded as 22 yes, 0 no, 1 absent). Representative Fisher will carry the bill to the floor.

House Bill 10‑13 — Department of Public Instruction and related K‑12 budgets: Representative Richter, carrying a multi‑agency education package, described changes to the Integrated Funding Formula (an increase of roughly $116 million driven by enrollment averaging, changes to in‑lieu-of-tax treatment for certain property, and adjustments to the distribution formula) that raise the integrated funding formula to about $2.4 billion for the upcoming biennium. The committee also adopted a policy change to raise state eligibility for free/reduced school meals from 200% to 225% of the federal poverty level; that amendment passed 13 yes, 9 no, 1 absent. The committee adopted other program-level adjustments (literacy and dyslexia funding, Centers of Excellence technical assistance, teacher retention programs and one-time facility repairs for the schools for the blind and deaf) and moved HB 10‑13 as amended (roll call recorded; bill advanced with substantial majority).

Quotes from committee members and staff

Representative Mitscog on the absenteeism effort: “This will be a working group … a collaborative effort that they can find some solutions along the way and report back to legislative management and the children’s cabinet.”

Representative Murphy on the school-construction plan: “It does it in a way where we’re … controlling construction costs. And the reality is, we’re gonna put that $3,000,000,000 over 10 years into the economy, into the construction economy, throughout the state.”

Committee staff on trust-fund modelling: “Distributions from the fund are based on the five‑year average balance of the fund, and so it kind of complicates the calculation … it’s not just simple math.”

Context and next steps

Committee members who opposed the school-construction approach said they were concerned about opening the Common Schools Trust Fund to sustained distributions and preferred interim study and smaller, targeted steps. Supporters said the program would standardize design and save construction costs for smaller districts and that a concurrent constitutional amendment limits the window for the supplemental distributions to a finite period tied to voter approval.

The committee chair recessed the panel to allow floor work and expected to return to finish two remaining policy bills after lunch. Several bills the committee advanced contain amendments or fiscal provisions that must be reconciled in the full House and with the Senate before final enactment. Representative Richter and others said some technical or one-time funding requests might be revisited in the second-half agency budget hearings or on the Senate side.

Votes at a glance

- HB 11‑29 (absenteeism study) — do-not-pass recommendation adopted; mover: Rep. Steeman; second: Rep. Murphy; committee vote: 22 yes, 0 no, 1 absent.
- HB 16‑04 (school construction grant program) — amendment 5,001 failed (5 yes, 17 no, 1 absent); committee recorded a do‑not‑pass recommendation on the bill after debate (majority recorded; procedural record retained).
- HB 12‑66 (disabled‑veterans property tax credit) — do‑pass recommendation adopted; mover: Rep. Steeman; second: Rep. Brandenburg; committee vote: 22 yes, 0 no, 1 absent.
- HB 01‑2006 (tax commissioner budget) — amended and advanced; amendment and final passage recorded (22 yes, 0 no, 1 absent); Rep. Fisher will carry the bill to the floor.
- HB 10‑13 (DPI and K‑12 package) — amended (including meal-eligibility increase to 225% FPL) and advanced (committee roll call recorded; majority in favor). The bill carries multiple program and formula changes, including a roughly $116 million increase to the integrated funding formula and a $2.4 billion integrated formula total for the upcoming biennium as presented in committee.

Speakers (selected)

- Representative Mitscog — Representative; sponsor/comment on HB 11‑29 (first on record 00:10:44).
- Representative Steeman — Representative; moved the do-not-pass motion on HB 11‑29 (first on record 00:13:19).
- Representative Murphy — Representative; sponsor of HB 16‑04 (school construction) and lead floor explainer for that bill (first on record 00:16:40).
- Representative Richter — Representative; carried the DPI/K‑12 budget package (HB 10‑13) and spoke to the integrated funding formula (first on record 00:31:06).
- Representative Pyle — Representative; sponsor of HB 12‑66 (veterans credit) (first on record 00:42:05).
- Representative Fisher — Representative; moved the tax-commissioner budget (HB 01‑2006) (first on record 00:57:00).
- Vice Chairman Kepnick — Vice chairman, Appropriations Committee (first on record 00:09:40).
- Chairman Vegasaw — Chairman, Appropriations Committee (first on record 00:09:31).
- Adam (staff) — Budget/fiscal staff; provided modelling and interest/assumption explanation during school-construction discussion (first on record 00:27:53).

Authorities cited (as referenced in the hearing)

- Common Schools Trust Fund — referenced repeatedly in HB 16‑04 discussion as the proposed source of supplemental distributions; referenced_by: ["HB 16-04"]
- Concurrent resolution to amend Article IX, Section 2 of the North Dakota Constitution — described by the sponsor as the vehicle that would authorize supplemental Trust Fund distributions if approved by voters; referenced_by: ["HB 16-04"]

Clarifying details extracted from the hearing

- HB 16‑04 sponsor-proposed alternative: initial $200,000 appropriation to stand up program administration, then larger distributions tied to a successful constitutional amendment and subsequent biennia.
- Amendment 5,001 (to HB 16‑04) failed on recorded vote: 5 yes, 17 no, 1 absent.
- DPI integrated funding formula change noted in committee: approximately $116 million increase; sponsor stated the integrated funding formula total would be about $2.4 billion for the upcoming biennium.
- HB 12‑66 fiscal note: approximately $7.4 million (biennial) increase in state cost; staff explained this reflects taxable-value reductions multiplied by mills across taxing districts and beneficiaries (about 5,600 disabled-veteran claimants reported for 2023 payments in staff data cited to the committee).
- School meal eligibility amendment: committee raised the state threshold from 200% to 225% of the federal poverty level; the amendment passed 13 yes, 9 no, 1 absent and committee directions noted DPI should update associated dollar estimates in the bill language.

Proper names referenced

[{"name":"Common Schools Trust Fund","type":"other"},{"name":"North Dakota Constitution, Article IX, Section 2","type":"other"},{"name":"Department of Public Instruction","type":"agency"},{"name":"Department of Human Services","type":"agency"},{"name":"Children's Cabinet","type":"agency"},{"name":"Tax Commissioner","type":"agency"}]

searchable_tags:["education","school construction","trust fund","veterans tax credit","tax commissioner","absenteeism","DPI","budgets","appropriations"]

ending: The committee recessed to allow floor business and planned to reconvene after lunch to finish remaining items. Several of the bills and amendments advanced by the committee will require reconciliation in the full House and with the Senate before final enactment; sponsors and staff said they expect some fiscal numbers and bill language to be adjusted in that process.