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North Dakota agencies OK bonuses amid bleak budget picture

July 17, 2020 GMT

BISMARCK, N.D. (AP) — North Dakota spent a record amount of cash on merit bonuses for some state workers, despite a grim financial outlook caused by the coronavirus pandemic, records show.

Nearly $626,500 in “performance bonus pay” was given to about 6% of the state’s more than 9,100 employees, according to the records obtained by The Associated Press. The bulk of the money was paid at the end of the fiscal year that ended June 30 and just weeks after Republican Gov. Doug Burgum directed state agencies to identify substantial spending cuts and ways to become more efficient to help deal with what he described as a financial crisis.

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When issuing his spending cut directive, Burgum said the state’s finances were being waylaid by declining oil tax revenue and that tough spending choices were ahead. The first-term governor, who has long vowed to rein in “runaway” state spending, said the state wouldn’t “get where we need to go by counting and saving paperclips. We have to actually think about doing things differently.”

Records show that Burgum authorized performance bonuses for three of his staffers, though a spokesman said they were authorized before the pandemic started.

The Legislature approved the bonus program about two decades ago in an effort to reward, recruit and retain employees for hard-to-fill state jobs. The program is drawing increased criticism from lawmakers and the union that represents state employees. No similar bonus programs are offered in neighboring Minnesota or South Dakota.

Senate Appropriations Chairman Ray Holmberg, a Republican from Grand Forks, said paying the bonuses to only a fraction of state employees and in times of tough budget choices was “optically, not very smart,” and that he doesn’t think many fellow legislators are aware that the bonuses were awarded.

“I think we should look at this thing going forward,” Holmberg said.

Only 26 of North Dakota’s 53 agencies participated in the bonus program in fiscal 2020, the records show. The money spent on performance bonuses last fiscal year was more than triple the amount spent in fiscal 2018, records show. It was slightly more than the nearly $606,000 that was paid out in fiscal 2019 to 638 employees.

Burgum’s spokesman, Mike Nowatzki, defended the program.

“It’s a tool authorized by the Legislature to reward high-performing state employees,” said Nowatzki, who was one of three employees in the governor’s office and one of 541 statewide to receive a bonus, which are capped at $1,500 per recipient.

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Nick Archuleta, who heads the public employee union, North Dakota United, called the program “not very fair” because not all agencies choose or are able to give out the bonuses. He also said it’s bad for morale.

“I refuse to believe only 541 employees should get this,” Archuleta said. “It’s time to revisit this whole issue.”

State employees did not get a raise in the previous two-year budget cycle due to declining revenues.

The agencies also awarded about $803,000 in retention bonuses last fiscal year, along with $439,250 in recruitment bonuses and $7,700 in referral bonuses.

In all, North Dakota agencies did return about $51 million to the state’s coffers in the past two-year budget cycle, or about 1% of general fund spending. Burgum’s office returned 2% of its budget during that cycle, records show.

Bonus money must come from an agency’s existing salary budget and agency heads are given leeway on how to spend it.

State Office of Management and Budget Director Joe Morrissette, the state’s top budget writer, said the agencies could have returned bonus money to the state.

Records show that the OMB has given performance bonuses in each of the past four fiscal years, including $61,500 in bonuses that was given to 48 of its employees last fiscal year.

Morrissette, a member of Burgum’s cabinet, called the bonuses “a small drop in the bucket as far as the budget goes. The big thing is it rewards employees.”

John Bjornson, the Legislature’s top attorney, said the bonuses “have a sense of unfairness to them” and that his agency doesn’t give them out.

“It’s not a practice we like to engage in,” said Bjornson, who heads the Legislative Council, the Legislature’s nonpartisan research arm that includes accountants and attorneys.

“We try to make our salaries at an appropriate level and remain competitive without having to pay bonuses,” Bjornson said.

Republican state Rep. Rick Becker, of Bismarck, an ultraconservative and former gubernatorial candidate, said there was no doubt many state employees are deserving of the bonuses but it is “not the role” of the governor or agency heads “to be the good guy handing out taxpayer money at their discretion.”