Burgum on Business: 9 questions from FM business leaders

Written by: Fargo Inc Staff

Photos by J. Alan Paul Photography, Paul Flessland and courtesy of the Doug Burgum campaign

Whatever your opinion of Republican gubernatorial candidate Doug Burgum, one thing is certain: you can’t accuse him of missing the forest for the trees.

The Kilbourne Group founder and former chairman & CEO of Great Plains Software is a 30,000-foot thinker and understands that a complex business world requires complex business solutions. From workforce development to infrastructure to the ever-increasing role that technology plays in our professional lives, he favors a long-term approach over quick, politically expedient fixes.

Fargo INC! recently sat down with the Fargo businessman to get his best thinking on a number of the biggest issues facing Fargo- Moorhead business now and in the years to come. Our twist on it? We had you—our readers and the leaders of the FM business community—come up with the questions that you want answered.

Q: How can world-class internet make an impact for all of North Dakota?

Greg Tehven, co-founder of Emerging Prairie, in the October 2016 issue of Fargo INC
Greg Tehven Cofounder of Emerging Prairie

A: I want to broaden this. This is a great question because internet is the pipe. How do we get the pipes that are going to handle all of the data that’s going to be flowing? North Dakota is better off than most states right now because of things like the Dakota Fiber Initiative and the Dakota Carrier Network, which is a group of all the telephone co-ops that have gotten together.

Right now, you can find a farmer by Lisbon who has 100 megabits going to his farm, which is fantastic, but then you have places like Downtown Fargo that don’t even have 100 megabits, much less the gigabit that companies located here need to thrive.

In terms of order of magnitude, just because we’re ahead of other states, we still may be 10 times away from where we want to be. And at some point in the lifetime of my kids, it’s going to be another 10 times more than today so we need to be 100 times faster than where we are now.

The data world is completely changing. When the computer world started, data entry was simply humans on keyboards, which is incredibly inefficient. We’re at the very beginning of a time when you can perform voice commands instead of typing on a keyboard. You can send pictures on Snapchat and you can send videos to your friends in the blink of an eye. However, the amount of data required to send a 10-second movie versus a text is a huge difference.

Think how much more you can communicate when you’re using data like video or photo. Think about it in the context of a small business:

‘Hey, my pipe’s broken.’

‘How about you send me a picture of the pipe as opposed to texting me that the pipe is broken?’

As generations grow more fluent with the fact that everybody has a supercomputer in their pocket, people are sending more and more data. And the price of sending data is going to keep coming down. The phone companies are going to figure it out and start saying, ‘I can get more customers because people really care about their data.’ So data-transport prices will drive down.

If we want to have the best competition for innovation, we don’t just put one fiber-provider in the ground, we put multiple fiber-providers here. It’s a missed opportunity to redo an entire street and not put an empty tube in the ground to later run fiber through. It’s the simplest form of future-proofing and it costs about a dollar per foot.

You can put a tri-core tube in the ground and run three competitors down the same tube. So the first one does 100 megabits, but then the next one’s doing 500 and the next one’s going to be doing a gigabit. This is how competition brings innovation.

This doesn’t have to be government- sponsored. Other than the coordination of timing for when we’re doing the physical work of sewer, water, and streets, we can create an opportunity for low-cost rapid expansion on the internet side.

Take a look at what’s happening in North Dakota with UAVs (unmanned aerial vehicles), UASs (unmanned aerial systems) and RPVs (remotely piloted vehicles). We’re ahead in the country right now because of the combination of UND and NDSU. We have airspace. We have senators who have fought for and successfully gotten FAA approval.

They’re flying out of Hillsboro this summer, and it’s not like some little drone is flying your GoPro. It’s a 42-foot wingspan machine, and it’s flying in a 4-by-40-mile zone, recording aerial views of a farmer’s crops, and it’s collecting something like a terabyte of data an hour. It’s ridiculous amounts of data that people couldn’t even conceive of before.

When it comes time to unload the data, they get in the car and drive it to NDSU. They actually drive the data cartridge down. That’s great for today, but the future isn’t capturing a bunch of data and getting in your car and driving it to where it needs to go. The future is transporting data by fiber. It’s the speed of the interstate versus the speed of light.

We want to be in a spot where we can diversify our economy, create value-added agriculture, value-added energy jobs, new technology jobs and deliver rural healthcare and medicine, which all require bandwidth. We’re all walking around with supercomputers in our pockets but still have constraints on bandwidth. I’m around places in North Dakota on the campaign trail where I can’t get a cell phone connection, much less send a picture to somebody. You have to wait and drive another 20 miles and get on top of a hill.

We should have a shared vision to be the most interconnected state with the highest bandwidth. It’s like how the railroads were the infrastructure that opened the state up 140 years ago, and then we built out the highway system. With this level of infrastructure, why wouldn’t we strive to be the best?

And it’s not that expensive a thing to do. Google Fiber put gigabit internet into Kansas City, and all the home prices went up because people wanted to live there and people wanted to start software companies and people wanted to work from home because they had better connectivity.

It can be an economic driver in and of itself. People believe that if you put a new road in a town, there are opportunities. If there’s a new road and there’s a lot of traffic on that road, the land on either side of that road becomes more valuable. And you can open up new businesses and attract all kinds of people.

The same thing applies. If we have great internet connectivity, then why wouldn’t e-commerce companies, for example, want to be located here?

Q: If elected governor, what steps will you take to help the strong e-commerce business network here in Fargo continue to flourish?

Ryan Fritz CEO of Office Sign Company
Ryan Fritz
CEO of Office Sign Company
Clint Howitz of dogIDs
Clint Howitz
Founder & CEO of dogIDs

A: One of the challenges of being in North Dakota, historically, was that we were a long distance away from large population centers and large population markets. So if you wanted to start a business and your total available market was limited by the number of people who lived here, the size of your opportunity was limited because there are 750,000 people in the state.

There are about 75 metro areas (in the US) that have more people than we do. There are 17 cities that have more people than we do. Go global and that number gets much larger, in terms of the cities that are larger than we are as a state. We are big geography, low population.

It was hard to reach everybody in the state, and even if you did reach them all, it wasn’t that big of a market. Along comes e-commerce and along comes internet connectivity, and you can start a business here like RealTruck.com, like dogIDs, like Weave Got Maille. And your market opportunity is anybody who’s on the internet.

This is completely game-changing, and I think we have to figure out a way to support the entrepreneurs and the innovators.

Amazon is here in North Dakota because they bought somebody who was here. Microsoft is here because they bought somebody who was here. The reason why those companies are here is because there’s an entrepreneur who started those companies.

You look at Steiger Tractor. That was a local entrepreneur. You look at Bobcat— one of the biggest manufacturers in the state, sells all over the world— entrepreneur who started here.

If you want to have commerce here, you have to support entrepreneurs in industry. It’s making sure we have a welcoming business climate, making sure that state policies are designed around supporting and welcoming entrepreneurs and innovators.

Not everything requires state funding. One of the best things we have going in Fargo is 1 Million Cups. 1 Million Cups is amazing. The last question is always the same, ‘What can we as a community do to support you, the entrepreneur?’ I heard that and I actually cried. I sat there and I had tears in my eyes.

Because it was like, holy cow, when we were starting Great Plains in the 1980s, there was no community of support for what we were doing. People were saying, ‘Man, you’re hiring way too fast. I’d hate to see a young guy like you really hit the wall. It seems like you’re really taking a lot of risk.’

“Today, there’s a supportive entrepreneurial community here. That means a ton. You can’t underestimate what that means.”


Q: You have obviously invested heavily in Downtown Fargo over the past five years. How important is this to the city’s overall growth and how will this impact the state’s economic success?

Rock Messerschmidt Senior Vice President & Commercial Lending Manager Bell State Bank
Rock Messerschmidt
Senior Vice President & Commercial Lending of Manager Bell State Bank

A: The point of having healthy and vibrant downtowns is really three-fold.

1. Economics
Everybody wants lower property taxes and everybody wants the value of their home to go up. As value increases, communities grow. More population and more jobs lead to demand for housing and that’s how property values go up.

And if you want lower property taxes, the secret is building efficient cities. Because property taxes are driven by the cost of the services the city provides.

The real driver of cost in a city is linear feet. And the more linear feet you have in a city, the more sewer, water, street lights, roads to plow, fire stations to man—there’s a lot of cost to spreading out. So if you want to have lower property taxes, you have to have a smaller footprint.

Take our 49 square miles that we have in Fargo—83 square miles if you add Moorhead and West Fargo—and ask how that compares to a city of similar size. Ann Arbor, Mich., and Boulder, Colo.—two vibrant, healthy cities with about the same number of college students as we have in the FM metro area—they’re getting it done in about 24 square miles. About half the square miles that we’re getting it done in.

When you have that, you have fewer roads to plow, you have less sewer pipe to fix. People who’ve paid property taxes for 40 years and have a crumbling road in front of their homes get special-assessed when the road needs to be rebuilt. You can question what you’ve been paying property taxes for. Where’d that money go? Well, that money went to subsidize growth on the edge of the city.

When Block 9 is done and comes off the incentives, it’s estimated to pay $768,000 in property taxes annually. So in four months, Block 9 will generate more revenue than it has the whole time it’s been a parking lot— for decades and decades. The payback is practically instant.

And the city had to build no new sewer and water, no new fire station, the police are already policing the route. The fire team is already covering it. They didn’t have to build a new water tower. They didn’t have to build a new arterial. Didn’t have to build a new ramp off the interstate. All the stuff you have to do on the edge, which costs tens of millions of dollars, none of that had to happen. And we’re going to have all this economic development.

So my point is that if you want to have small government and low property taxes, you have to build an efficient footprint.

2. Workforce Development

The second benefit is that when you have the efficient footprint, the city becomes more walkable. When it’s more walkable, young people want to live there. Because young people want to have livable, walkable neighborhoods. Many don’t want the gigantic living room that gets used for Christmas and Easter. They want to be able to walk to a place that has high-speed internet. And that’s why Fargo has ended up on all these “best places” lists.

And there’s a high correlation between Zillow pricing and Walk Score, in terms of where property values are. Then, with higher property values, you can have lower taxes on everybody—lower percentage—because the values are higher.

Think of the 2,000 people at the Microsoft campus. Imagine those buildings Downtown and 2,000 more people working Downtown. I don’t know what we’d be compared to, but you think Fargo is No. 1 on lists right now? I think we’d be on some kind of rocket ship off by ourselves.

There are hundreds and hundreds of these greenfield, one-story, slab-on-grade buildings surrounded by a parking lot. Employees of those places have to drive everywhere–to the lawyer, to the dentist, wherever. It’s the idea that we can have employees Downtown who park in the morning and don’t get back in their car until the evening and can still get all of their stuff taken care of.

Once they understand they can do that, it’s a fabulous recruiting tool. Whether it’s Intelligent InSites or dogIDs, the smart tech and e-commerce companies are all coming down here because it’s easier to recruit. When Microsoft is trying to recruit all the top kids out of the Raikes School of Computer Science at the University of Nebraska, which is like the MIT of the Midwest, they show them the (Microsoft) campus and the next thing they show them is Downtown Fargo. ‘Look, we have exciting things happening.’

If I’m trying to recruit someone to Kilbourne Group or Arthur Ventures, if they’re trying to recruit a professor at NDSU, if they’re trying to recruit a doctor at Sanford, you know where they bring them? They bring them Downtown. Because they want to show them something that’s different, not something that’s the same. Because if everything is the same, then the recruit is going to pick some place that’s warmer.

There’s a book written by Gallup Chairman Jim Clifton called “The Coming Jobs War.” The principle is pretty solid, which is that Millennials pick what city they want to live in first and then they find a job.

They want to pick a community. They pick up magazines and read, ‘What are the top 10 cities to live in in the Rockies?’ or ‘What are the top 10 cities in the Midwest?’ Pick one and go there and see if you can figure

something out. I’ve met a bunch of people, including a guy who’s down at the Red River Market selling homemade hot sauce. He used to work at Microsoft, was getting ready to leave, and then came Downtown and was like, ‘Wow, this is a cool thing. I’m going to try and figure out a way to start a business and stay here.’

The only way communities really differentiate themselves anymore is through their walkable, vibrant neighborhoods. It would be great if we had 10 walkable, vibrant neighborhoods. Turns out, right now, we kind of only have one called Downtown Fargo. But if we had more of them, that would be terrific.

3. Health

The third leg of this stool is health, which is related to walkability. The U.S. spends about $4 trillion a year on healthcare. $1 trillion of the $4 trillion—25 percent—goes toward chronic diseases that include heart- related issues and diabetes, which are often related to inactivity.

Experts used to tell you that you have to work out vigorously 20 minutes X times a week. Studies now say that if you just walk more, it has virtually the same effect as all of this working out. Yet we spent so much energy trying to design communities to eliminate—not minimize walking, eliminate walking—that it’s to the point now where ifI’m an employee and if I can’t park right by the door, then I don’t want to work somewhere.

Downtown, people walk. They walk all 12 months. They walk to lunch, they walk back from lunch, they walk wherever. There is a correlation.

When people criticize the United States for having higher health care costs than other countries, they’re not factoring in that we’ve spent 70 years designing cities around automobiles instead of people.

If we want to have lower-cost healthcare, which is a big issue, if we want to have a workforce that we can retain, and we want to have lower property taxes, then we have to build smart, vibrant cities. Those things all go together.

“They bring them Downtown. Because they want to show them something that’s different, not something that’s the same. Because if everything is the same, then the recruit is going to pick some place that’s warmer.”

Q: How do you plan to interact differently with the business community than previous administrations?

A: One of the things Brent (Sanford, lieutenant governor running mate) and I are running on is this idea of treating taxpayers like customers. Part of what we have to do is think through—in all the places where government touches business—how we can make the process as streamlined and positive as possible. Because any time you’re messing around with red tape, that’s time you aren’t spending attracting clients, coaching team members or creating a new job. You basically want to take that regulatory headache off of business owners so that they can innovate and be entrepreneurs and do the things they do to create jobs.

When people regain that time to create jobs—when they have more money to create jobs and are not sending their checks to Bismarck or Washington, D.C.—that’s when the economy is going to flourish.

I’ve been involved in making payroll every two weeks for the last 33 years. I’ve created a lot of jobs over that time period. I’ve also had a chance in the later part of my life to be involved in philanthropy. And I understand that the best philanthropic contribution people can make is creating jobs. That’s the gift that keeps on giving. That’s the contribution that gives to the entire community. And I think we have to honor the entrepreneurs and risk-takers and the people who are out there doing the job-creation.

If elected, we really want to engage the business community because we recognize that competition makes you better. How do we innovate? How do we get better at everything we’re doing? Well, many of the problems in government exist because there isn’t a whole lot of competition driving improvement in the delivery of government services. And that means that there are no forces driving innovation and cost-efficiency.

In state government, that’s going to mean having discussions and getting input from the people who are actually delivering the services. Because if people are actually delivering the services, they can probably tell you what’s wrong. They can say, ‘Hey, this is what’s goofy, but this is the way I’m told to do my job. This is the way the rules work.’

It’s also from customers. Many of the product innovation ideas we had (at Great Plains Software) came from customers. It’s the same thing here. How do we create those listening systems in government where improvements can be guided by feedback from the public?

If you’re in a monopoly, you don’t have much of an incentive to listen and adapt because you can get by just doing things the way you did them yesterday.

The exciting part is that there is a form of competition. It’s North Dakota versus the other 49 states. We’re all in it together. We’re all part of the United States of America. But when we’re competing for talent and jobs and capital…

People are mobile in this country. They can decide where they’re going to live. Why not have this be the best place to live and the best place to work and the best place to start a business? There’s nothing stopping us from doing that. If we want to get the federal government off our back, there’s nothing stopping us from being a leader in that space.

We’re fortunate in North Dakota. We had Ed Schafer, we had John Hoeven, we had Jack Dalrymple. We’ve had 24 years of business leaders in the governor’s office. And that’s one of the reasons I’m running for governor is—Ed Schafer, his first elected office was governor. John Hoeven, his first elected office was governor. That doesn’t happen in other states. It can happen here.

I’ll continue to be very pro-business and pro-free market. The differentiator I can bring to North Dakota is an understanding of how technology is affecting every industry—how it’s affecting energy, how it’s affecting ag, how it’s affecting how we should be designing cities.

“I understand that the best philanthropic contribution people can make is creating jobs. That’s the gift that keeps on giving. That’s the contribution that gives to the entire community.”

Q: Over the past couple years, the biggest issue I have heard about from business owners is difficulty in finding employees, from general laborers to skilled professionals. It is one of the major issues I see stifling the area’s growth. As governor, how would you address the issue?

Dan Hicks in the October 2016 Fargo INC
Dan Hicks
Commercial Realtor at Property Resources Group

A: Part of it is recruiting people and part of it has to do with education. We have to shift education so people learn the skills needed to thrive in the 21st-century economy. We can’t have an entire K-12 system that’s built solely around memorization and regurgitation of answers. Those aren’t the skills needed when everyone has a smartphone in their pocket.

My son is a senior in high school, and my other two kids just came through high school. The high school they just experienced looked a lot like what I experienced 40 years ago in Arthur, N.D.: a teacher and some books and some knowledge transfer. You go back to the one-room schoolhouse on the prairie, and you see something similar: a teacher transferring knowledge to eight kids. In a lot of ways, we’re doing it the same as we did 120 years ago.

Yet what’s available today, which wasn’t available when I was growing up in Arthur, is access to all of the world’s information and most of it for free. When you have access to the world’s information for free, why are we doing bond issues to build school buildings to continue doing education the way we’ve always done it? We’re spending all this money on bricks and mortar, and it’s not necessarily producing better outcomes for students.

How do we do project-based learning? How do we let kids collaborate? When you hire someone at a job, everyone works together, right? Nobody’s solo. You have a deadline, you have a project, you bring in all the different resources.

We’re not teaching them the skills on how to do collaborative-, team- and project- based learning. Sports and the arts are probably teaching kids more of what they need than other areas of the classroom right now because it’s a team-based approach.

We have to really rethink how we educate. But we have a chance. In North Dakota, it’s very exciting. We have 750,000 people. We can be more nimble, we can be faster and we can adapt more quickly than other places.

And there can be collaboration between the teachers union, the business community and the department of public instruction.

Ted Dintersmith, funder of the film ‘Most Likely to Succeed,’ talks about the need to revamp education. He says that he’s never seen a state like North Dakota where those three groups are all working together. We can be very optimistic that we can get this thing figured out before everybody else, and we could be the leader in creating skills for the 21st century for kids.

Because this workforce problem isn’t only here. It’s everywhere in the country. Everybody has the issue that the skills people are learning in school don’t align with the skills needed to build these new- age businesses.

That’s why e-commerce businesses are having problems, that’s why Microsoft always has a bunch of jobs open. The same thing in healthcare. We’re not producing enough healthcare professionals here. Education really has to be focused on creating the skills we need for tomorrow, not the skills for yesterday.

Q: Healthcare education programming and infrastructure need to be addressed to meet skyrocketing workforce challenges. How would you help grow more healthcare educational opportunities for college students in North Dakota?

The Office of Sanford Policy
The Office of Sanford Policy

A: I think Sanford here in Fargo has, what, 600 jobs available? Altru up in Grand Forks has 60-some jobs available. It’s a constant thing. We’ve expanded the (UND) medical school, which I believe went from 62 to 78 students per class. We’re only in the second year of that.

There’s going to be a big shortage of doctors. With the nursing shortage we have right now, NDSU wants to expand their nursing program. But if the path is having to build a new building before they expand the program, then that’s four years away. How do you get the certifications? How do you get the skill sets? How do you do it faster? None of it’s fast enough.

We also have an aging population that’s requiring more care and nursing, and direct human-to-human care isn’t something that can be outsourced. So from that standpoint, it’s a great career because demand is going to be there for a long time.

We have to think again about how technology affects healthcare because part of the context of the need for all these positions is institutionalized care, where you’re either in the hospital or you’re in a long-term care facility. And if we’re taking care of people in their own homes, which is where the elderly population wants to remain as long as they can be independent and safe, then how does technology play a role?

Family members today provide probably as much in-home health care as anyone. And they’re unpaid and untrained. So how do we train up the family members who are providing care for the older people? And in a rural state like ours, sometimes the answer we have for Fargo isn’t going to work for a smaller town. We have to make sure we’re thinking about the whole state when we address these issues.

We’ve touched on an area here where we have supply-and-demand constraints, and part of the reason we have that is because the federal government is too involved and is distorting these markets. The market forces themselves aren’t resolving all of the issues because of the tremendous overregulation in healthcare, which creates a lot of inefficiencies and increases in costs.

Q: Regulations are major hurdles in the supply chain and in adding cost to products. What is your position on issues such as WOTUS (Waters of the US), GMO labeling and the Food Safety & Modernization Act?

Bob Majkrzak, President and CEO of Red River Commodities
Bob Majkrzak, President and CEO of Red River Commodities

A: This is another area that could fall under the category of federal overreach.

Understand that in this question, some of these regulations are not coming to the legislature. This is not coming through the Senate and the House where a legislator is saying, ‘My constituents have come to me, and there’s a problem. We need to pass a law to fix it.’ This is coming from the current (presidential) administration the last eight years—working through agencies like the EPA, food safety—saying, ‘Here’s a new rule. We think this new rule is going to apply. We’re issuing a new rule.’

So when I say ‘federal overreach,’ it’s not some buzzword. It’s agencies creating rules and regulations like they’re law, but they’ve never gone through Congress and been passed as a law. I don’t think the original intent of these agencies was to be their own law-making organizations, and that’s where a lot of the cost is coming from. They think they’re solving a problem and they’re actually creating problems.

The Waters of the USA is particularly egregious because it would effectively turn almost every pond in North Dakota into something that’s a federally managed waterway. If that’s the case, then basically every farmer is going to have to have a direct relationship with the federal government to decide whether he can farm around his slough or not. Some of this stuff, when you explain to people what it really is, they’re like, ‘Well that can’t be. That’s too goofy.’

Some of the regulations for the coal industry that are hitting North Dakota were designed for people in West Virginia who were moving a mountaintop and pushing it into a stream. Whereas, you drive in western North Dakota on lignite mines from 30 years ago and you can’t tell because it’s been reclaimed back to farmland. They save the topsoil, put it back, contour it, and it looks like it did before.

Different topography, different places. If some place else is recovering coal at a mile deep and we’re doing it at about 40 feet deep, why try to apply the same rule to both?

The whole point of having 50 states is that each state should be a platform of innovation as opposed to us being one monolithic thing where the federal government decides everything.

Maybe there’s going to be a time in the next couple of decades where there can be some seriously meaningful rebalancing of the federal-state power dynamic because the status quo isn’t working. The federal government comes up with mandates, which are unfunded, and thus put a burden onto cities, counties and states. And then they fine you if you don’t do it. By creating the mandate, they’re basically directing how local people are supposed to spend locally generated taxes. That’s offensive and wrong.

Take a look at where we’ve had huge increases. Tuition: rising faster than inflation because of the $1.3 trillion in student loans. Name another area that’s growing faster than inflation. Healthcare costs are going way up. Where’s the government really involved? They’re involved in healthcare with a bunch of mandates while simultaneously providing subsidies for insurance. So they’re pushing a lot of loose, free money at healthcare and then guess what? The part that’s still in the private market keeps raising their prices.

You cannot eliminate price forces from a market and have the market function well. But the federal government keeps forgetting that.

“When I say ‘federal overreach,’ it’s not some buzzword. It’s agencies creating rules and regulations like they’re law, but they’ve never gone through Congress and been passed as a law.”

Q: What role do international sale and trade play in the diversification and modernization of the North Dakota economy?

Dean Gorder Executive Director at North Dakota Trade Office (NDTO)
Dean Gorder
Executive Director at North Dakota Trade Office (NDTO)

A: Our two big industries in the state are energy and agriculture, and the majority of the production of those two things leaves the state and a lot of it leaves the country. Our value-added manufacturing—farm machinery, in particular—is going all over the world. Ukraine, Eastern Europe, Australia, everywhere. So one thing that we have to continue to build in our North Dakota businesses is an understanding of international trade—how to do it, where to do it and how to be effective at doing it. It’s critical.

When Great Plains (Software) was acquired in 2001, we had 2,000 team members and 400 of them were located outside of North America. If you want to build a really diversified customer base, you go global. And so it needs to continue to play a very important role going forward.

Are we teaching kids enough when they’re coming out of NDSU, UND and the other colleges? Because I’ll bet you global trade didn’t get mentioned once in K-12. These kids in a small town are going home, and every crop they’re driving by is going to India, China or somewhere else around the world. No one talks about the supply chain that we’re participating in, but we should be.

Q: With the recent issues the North Dakota economy has seen with the decrease in crude-oil prices and agricultural markets, what change would you make to the state’s budget to make North Dakota’s revenue less dependent on strong oil and ag prices? With commodity markets being very cyclical and hard to predict, how will future budgets accommodate this issue?

Randy Martinson, Owner & Market Analyst at Martinson Ag
Randy Martinson, Owner & Market Analyst at Martinson Ag

A: To be less dependent on strong oil and ag prices, you’re really talking about changing the state’s revenue. Changing the state’s revenue involves changing the state’s tax policy. I don’t think we have a revenue problem, I think we have a spending problem.

One issue we intend to address when we get to Bismarck is figuring out how to balance the budget without raising taxes. That’s job one, and it’s going to be a big job. The general fund last time was $6 billion. Revenue might be coming in this time at $1.5 billion below that.

No legislature has ever faced having to remove this much cost out of a general fund in the history of the state. It will be a big, all- consuming thing, but I certainly think there’s a way to do it by right-sizing government, streamlining what we’re doing and setting priorities. That means everything has to be on the table. It’s going to be a very interesting session.

We have to do a better job of forecasting and a better job of risk mitigation. The state’s revenue is very dependent on high oil and ag prices, and when the prices were high, we didn’t do any hedging. Business hedges. My family’s business grain elevator hedges every night. You can’t be in the business of commodities if you’re not doing hedging. The state has become a commodity-dependent business and wasn’t doing any risk management. I think it’s something we have to look at to help dampen some of the cycles by using the tools that are available.

We’re going to end up with a balanced budget, but the question is: how do we have a balanced budget that still produces the most positive impact for the dollars spent?

We’ve spent more and more on education every year. If there aren’t more kids who are high school- and college-ready, then if the budget goes down, I don’t see what the problem is. Because the budget going up didn’t make it better. Is the budget going down going to make it worse?

Everybody assumes more money equals better, less money equals worse, but we have to unhinge ourselves from that thinking. The biggest change we’re going to face is getting people to unhinge themselves from this idea that more money equals better. Because actually better ideas equal better and better processes equal better. If more money equaled better, then we wouldn’t have any problems because we’ve spent so much money on everything.

As we look forward, my vision for North Dakota is to diversify our economy, which will take time but pays great dividends. I know that North Dakota talent can compete with anyone in the world. At Great Plains/ Microsoft, we hired thousands of people from more than 220 towns and cities across North Dakota, and they delivered the best products and services in the world.

By supporting our entrepreneurs, innovators, and companies committed to growth, we will expand our tax base and create a stronger, more diversified economy for North Dakota that will create great jobs and attract and retain talented people for the future.


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