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Initiative amendment wins in North Dakota

June, 2004

AP - Dale Wetzel
"Initiative amendment wins, stockholder measure defeated"
June 9, 2004: North Dakotans strongly rejected a proposed state constitutional amendment to lift the requirement that corporations use the full representation method of cumulative voting. 

North Dakotans walloped a proposed constitutional amendment despite support from business interests and former Republican Gov. Ed Schafer, while resoundingly endorsing another amendment despite Democratic objections.

Backers of the defeated Measure 1, which sought to give corporations more leeway in deciding how shareholders may elect their boards of directors, said they hoped to have another chance at the polls.

"We were not successful in getting the word out to the people that this is
an economic development issue," Secretary of State Al Jaeger said.

Jaeger and Schafer held a news conference in Fargo last week to promote the measure, with Schafer saying it was necessary to encourage more businesses to incorporate in North Dakota. The Greater North Dakota Association, the state's chamber of commerce, and local business groups also supported it.

Voters in Tuesday's primary didn't think the amendment was necessary. With all of the precincts reporting early Wednesday, 43,855 voters, or 58 percent, rejected the measure, while 31,307, or 42 percent, supported it.

Separately, North Dakotans overwhelmingly approved Measure 2, another amendment that gives the Legislature specific authority to set up a method for estimating the financial impact of initiated measures, and publicizing the information.

With all of the precincts reporting in unofficial returns Wednesday, the
amendment was approved, 53,777 to 23,678, or 69 percent to 31 percent in favor.

Rep. Al Carlson, R-Fargo, the amendment's principal legislative sponsor,
said it will help give North Dakotans a broader understanding of the financial impact of initiatives.

"This doesn't, by any means, slow down (the initiative) process," Carlson
said. "What it does, is give voters accurate information about what they're voting on."

The 2003 Legislature agreed to put both amendments on Tuesday's primary election ballot. North Dakota voters must approve any amendment before it becomes part of the state constitution.

Democrats had opposed Measure 2 in the Legislature, and two Democratic statewide candidates, Agriculture Commissioner Roger Johnson and Jaeger's Democratic opponent, Doug Melby, spoke out against it in the run-up to Tuesday's vote.

Johnson said the measure had a favorable description of what it did on the ballot itself. The explanation may have been the first information most
voters read about the measure, he said.

"Ballot titles on measures that don't get a lot of attention tend to have a
lot of influence," Johnson said.

Legislators who supported the idea said cost estimates will be drafted in
nonpartisan fashion, and should provide important information for North
Dakotans to use in judging the worth of a ballot measure.

The amendment was pushed in the aftermath of contentious public arguments two years ago about a proposal, called the youth initiative, that was designed to provide income tax breaks and college loan subsidies for North Dakotans younger than 30.

Political fights over the measure often focused on the multimillion-dollar
differences in rival estimates of its impact on North Dakota's tax
collections. It was soundly defeated, with 67 percent of voters saying no.

Carlson said the Legislature would have to work out details of drafting
cost estimates for initiatives.

The job perhaps could be handled by the Legislative Council, the
Legislature's nonpartisan research arm, or, a West Chester, Pa., consultancy that North Dakota government uses to help forecast tax collections, Carlson said.

"It's very important to know that we are not trying to usurp any of the
power of the initiative," he said. "We just want the voters to have
accurate information."

Advocates of Measure 1 had hoped to erase constitutional provisions that require North Dakota-based corporations to allow shareholders to
concentrate their votes in electing their boards of directors.

For example, when there are races for three openings on a corporation's
board, each shareholder now has the right to cast three votes for one
director, instead of single votes for three directors. Critics of the
"cumulative voting" provision say it gives too much power to minority

The proposed amendment also abolished the constitution's requirement that a corporation get permission from its majority shareholders before issuing new debt, or shares of stock.

Kelvin Hullet, president of the Bismarck-Mandan Chamber of Commerce, said the amendment may have been difficult for voters to figure out.

"It probably didn't get enough exposure to explain just how important it
was," Hullet said. "If you looked at it blind on the ballot, you might have
a tougher time understanding what it meant."


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