Committee debates limits on administrative spending as lawmakers seek $25 million for Ag Diversification Fund

The Appropriations - Government Operations Division on Feb. 3 considered Senate Bill 2,327, a bill to reauthorize and appropriate funds for the Ag Diversification and Development Fund and to clarify how administrative expenses may be reimbursed. Committee members and industry representatives discussed an amendment that would remove a flat 5% administrative set-aside and instead limit reimbursements to the extent administrative costs do not exceed the most recent APUC administrative expenses.

Why it matters: The Ag Diversification and Development Fund provides grants and interest-rate buy-downs for value-added agriculture projects across North Dakota. Supporters told the committee the program leverages private investment and helps rural economies, while some committee members raised questions about the scope of "administrative expenses."

Committee discussion and amendment

Chairman Wanzek opened discussion of Senate Bill 2,327 and introduced an amendment that removes language allowing up to 5% of the fund to be used for administration and replaces it with a limit keyed to administrative expenses historically paid for the Agricultural Products Utilization Commission (APUC). Matt Perdue, speaking on behalf of the North Dakota Farmers Union, described the amendment as tying reimbursements to APUC because the two bodies meet and operate jointly when vetting projects.

Perdue told the committee that the AD committee generally meets on the same day as the APUC and that limiting reimbursements to amounts comparable to APUC's most recent biennium expenses would prevent an excessive administrative draw on the fund. He said the intent was to allow reimbursement of routine meeting expenses such as mileage, per diem, and room rental and not to fund department employees.

Support and program details

Representatives of agriculture organizations urged continuation of the fund. Haley Volmer of the North Dakota Corn Growers Association said the association supported Senate Bill 2,327 as a tool to create jobs and support value-added agriculture businesses. Peril Grossman, legislative director for the North Dakota Soybean Growers Association, said the program has supported projects such as soybean crushing and other value-added processing.

Officials described the program's 2023 appropriation of $25 million, noting that in 2021 the fund was created by House Bill 1475 with an initial appropriation of $10 million and that last session the legislature provided $25 million to meet high demand. Up to $10 million of the fund may be used for ag infrastructure grants to political subdivisions or utility providers to support last-mile infrastructure for projects; the AD committee has discretion if demand is lower or higher for specific purposes within the fund.

Bank of North Dakota data and program outcomes

Committee members heard that Bank of North Dakota (BND) interest-buydown awards from the program have totaled about $8.7 million and that those buy-downs have supported roughly $126 million of private investment in value-added agriculture. Department and BND representatives who spoke (some off the record or not named in the transcript) said the fund's interest-buydown portion generally operates in partnership with local lenders rather than through large direct loans from BND.

Outstanding questions and next steps

Committee members pressed for clarity about the phrase "administrative expenses," with one member saying that if the intent is to fund travel and per diem the bill should say so. Chairman Wanzek and others agreed to work further on drafting language to specify allowable admin reimbursements and to share a revised draft with counsel before returning to the committee.

The committee closed work on Senate Bill 2,327 for the day; no formal committee recommendation on final passage was recorded in the transcript of this session.

Ending

Supporters said the fund offers a strong return on investment for rural North Dakota and asked the committee to replenish the appropriation at the $25 million level. Committee members asked staff and sponsors to refine the amendment language to make allowable administrative reimbursements clearer before the bill advances.