The Appropriations - Education and Environment Division opened a hearing on House Bill 1020 with testimony from Department of Water Resources Director Reese Hawes and senior department staff about the agency’s budget request and statewide water‑project priorities.

Hawes said the department’s water development plan identifies the state’s near‑term water needs and that the commission uses that plan as a prioritization tool, but that the State Water Commission ultimately votes on which projects receive funding. “This does not guarantee that the water commission will approve all of these requests,” Hawes said.

The committee heard that the department projects substantial water‑project needs this biennium and over the next 10 years and faces a gap between project needs and resources available. Hawes described a priority system (high, medium, low) used to classify projects and said the executive recommendation includes funding buckets for water supply, flood control, rural water and discretionary purposes but that a shortfall remains.

Why it matters: The discussion focused on whether the department has the staffing, legal capacity and budget structure to move large, multi‑year projects to construction within North Dakota’s limited construction seasons. Lawmakers pressed staff for timelines and for clearer splits between recurring operating costs and one‑time project costs.

Key facts and requests
- Agency leadership. Reese Hawes, director of the Department of Water Resources, said the department currently has 93 full‑time equivalent positions and is requesting seven additional FTEs in the executive recommendation. Pat Frygian, Planning and Education Division Director, and Chris Katamus, Director of Administrative Services, joined Hawes for technical questions.
- FTE requests. The seven requested FTEs include positions described in testimony as: a deputy director, an additional NAWS (Northwest Area Water Supply) operator, in‑house general counsel (partially federal funded in the department’s presentation), a risk‑map program specialist (federally funded), support for the Board of Water Well Contractors’ administrative services, and an additional accountant for the department’s accounting workload. Hawes said two of the optional FTEs are federal funded and that the Silver Jackets coordinator previously received funding but not formal authorization; HB 1020 seeks that authorization.
- Capital and project funding. The executive recommendation discussed state‑owned projects including Southwest (pipeline), NAWS, Devil’s Lake outlet and the Red River Valley water supply. The budget presentation identifies a recommended two $50 million lines of credit—one for the Southwest project and one for the Red River Valley water supply—totaling $100 million in recommended line‑of‑credit authority.
- Discretionary and one‑time items. Hawes said the recommendation includes a $5,000,000 discretionary bucket, and multiple one‑time capital requests such as replacement emergency pumps, an excavator replacement and subsurface groundwater data loggers (the presentation referenced 60). The department also requested $100,000 for an internship program.
- Budget presentation and accounting questions. Committee members asked why certain one‑time items (for example, the Missouri River intake study) appear in operating expenses rather than separated from base operating costs; Hawes and Katamus said they would review that classification and provide follow‑up. Katamus explained some project costs are split between operating (engineering and professional fees) and capital (construction), which is why totals span multiple line items in the agency budget documents.
- Funding sources and trust fund mechanics. The department described the state’s resources trust fund as receiving a share of the oil extraction tax and said projected receipts were insufficient to meet all listed project needs. The presentation noted the Water Project Stabilization Fund (created in the 2021 special session) and carried‑over appropriations as sources the bill would address.
- Bill language requested. Hawes walked the committee through sections of HB 1020 included in the executive recommendation: language to appropriate additional amounts from the resources trust fund to the department (section 3), carryover authority (section 4), transfer and appropriation of funds from the Water Project Stabilization Fund (section 5), restrictions and permitted uses for discretionary funding (section 6), line‑item transfer authority (section 7), line‑of‑credit provisions (section 8), an amendment to Century Code 54‑12‑08 to permit in‑house counsel (section 9), and a provision to allow hiring flexibility notwithstanding the department’s FTE cap (section 10). Hawes said the department is seeking an emergency clause to allow work to begin within the state’s construction window.

Questions from lawmakers and staff follow‑up
Committee members repeatedly asked for follow‑up materials. Chairman Naithi and Representative Swantek pressed staff for timelines and a breakdown of the seven requested FTEs, and Hawes agreed to provide more detailed schedules and an explicit breakout of the FTEs and their funding sources. Representative Lausser asked about the $66,000 figure tied to absorbing administrative duties for the Board of Water Well Contractors; Hawes said he would research whether licensing fees might cover the cost.

On unobligated funds, Katamus said the State Water Commission had roughly $43,000,000 of unobligated water‑supply funds at one point in the 2023 biennium and that historically most unobligated funds are later obligated once project sponsors meet permit and funding requirements. He estimated carryover could range substantially depending on expenditures.

No formal action recorded
This hearing was an overview presentation; the transcript records no motion or vote on HB 1020 during the session. Staff were asked to return with more detailed timelines, project readiness assessments for several high‑priority projects, and a clearer separation of one‑time project costs from base operating expenses.

Ending: The committee closed the hearing on House Bill 1020 and scheduled further budget review meetings; no committee votes on the bill were recorded during the hearing.