Credit Where It Is Due

It’s pretty easy to be the most popular governor in the universe when your have a billion dollar state budget surplus and when the Legislature, controlled by your party, cuts taxes by a few hundred million dollars.

And it’s pretty easy to decide to run for the United States Senate when the seat is being vacated by the state's longest-running most popular politician.

So Governor John Hoeven owes Senator Byron Dorgan two thank you notes this month, with a brief one to Senator Kent Conrad as well. Here’s why.

A week or so ago, John Hoeven was comfortably ensconced in the Governors office, his feet up on the desk, reading a paper showing North Dakota government has the best balance sheet in America, comfortable in the fact he could just cruise through his last three years as Governor and then slip quietly into the chairman’s office at First Western Bank to serve out his working years. Never mind the cries from North Dakota and national Republicans to take on Byron Dorgan for the U.S. Senate. Way too much trouble. No fun to risk this incredible popularity in a bloody battle with Dorgan.

And then, the unthinkable . . . Dorgan quits. Well, now, that’s a different story. All of a sudden you’re the odds-on favorite to go to Washington D.C. as North Dakota’s junior U.S. Senator next January. Yikes. No way out now. Here we go.

Thank you, Byron. Card’s in the mail.

But what of that second thank you card? Take another look at the first sentence above. A billion dollar surplus. You can thank Byron Dorgan for that as well.

You see, while Dorgan and the pundits all talk about Dorgan’s legacy of Red River Valley Research Corridors and Devils Lake flood protection and energy policies and aid to Indian reservations, Dorgan’s legacy goes back much farther than that. It goes back to a Good Friday morning in 1977, and Election Day 1980.

In the early morning hours of Good Friday, April 8, 1977, the North Dakota Legislature enacted the state’s first real coal severance tax after an all night session. North Dakota Democrats, led by Tax Commissioner Byron Dorgan, held out through a bitter, and arguably the most interesting, legislative session in all of state history to enact a hefty tax on lignite coal to be strip mined from North Dakota’s shallow underground coal beds. A bill likely written by Dorgan’s chief lieutenant in the tax department, Kent Conrad (HB 1360), was the impetus for the beginning of what was to become a critical revenue source for North Dakota state government. Dorgan huddled with Democratic-NPL Legislators Richard Backes and Buckshot Hoffner for three and a half months, in the end bringing Republican leaders Earl Strinden and David Nething to the table to negotiate a reasonable tax on coal (more about this session in a future blog).

Three and a half years later, late in the evening on November 4, 1980, the North Dakota news media reported that North Dakota voters had approved an initiated measure, Measure 6, which levied a new 6½ per cent tax on oil extracted from North Dakota’s oil fields. The measure, sponsored by a committee composed of the North Dakota Farmers Union, the North Dakota REC’s, the North Dakota Education Association, and the North Dakota AFL-CIO, and written in the office of Tax Commissioner Byron Dorgan (likely by his chief lieutenant Kent Conrad), was overwhelmingly approved, more than doubling the state’s tax on oil from 5 per cent to 11½ per cent. Dorgan and Conrad staked their elections that year, for Congress and State Tax Commissioner, respectively, on that measure, championing its cause as the basis of their campaigns. They were the only two Democratic-NPL statewide candidates to win election that year.

It was Dorgan’s genius, in both cases, to recognize that mineral extraction was going to be an important piece of North Dakota’s economy and that putting a reasonable tax in place while those industries were in their infancy could prove to be an important source of revenue to the state for many years.

Make no mistake: Dorgan (with help from his strategist Conrad) gets the credit for the coal severance tax and the oil extraction tax. Period. Republican Legislatures have whacked away at those taxes in the years since, lowering the coal tax and creating myriad exemptions from the oil tax, but they remain in place today, and when the numbers are in for 2009, they may be providing nearly half a billion dollars annually to state government. Who’da thunk it?

Oh, absent Dorgan and Conrad, we might’ve gotten some kind of a coal tax, but we’d not likely have gotten the oil extraction tax. And today, North Dakota would be like every other state, struggling to keep its financial head above water. And we would not have all those other wonderful amenities that make governors of any party popular, like great schools and roads and parks and museums and universities and well-paid state employees and $400 million in property tax relief.

So take a pause, Governor, along the campaign trail, and get out your pen, and dash off a note to Byron. No, make that two. You owe him.