The Governor who steered North Dakota through the toughest of times
First in a two-part series. From Buffalo Commons to the billion-dollar Legacy Fund, Schafer reflects on a tenure featuring economic revival and a historic flood, ending with a difficult decision.
NORTH DAKOTA — Former North Dakota Governor and Secretary of Agriculture under President George W. Bush, Ed Schafer, is hailed by his former policy advisor, Robert Harms, as one of the most impactful figures in the state's political history. Schafer's term as governor coincided with North Dakota's most challenging times, including the 1997 flood, which caused $4 billion worth of property damage and prompted the largest mandatory evacuation in American history, prior to Hurricane Katrina.
Despite the enormity of this challenge, Schafer's unwavering commitment to the people and his ambitious free-market agenda for economic revival helped transform North Dakota into the thriving state it is today.
In exclusive interviews with The Dickinson Press, Schafer, Harms, and Rod Backman, who served as ND budget director during Schafer's time in office, offer their retrospective take on Schafer's tenure as Governor.
An important lesson
Schafer recalled a time when he really wanted to drive home his point that free market entrepreneurs drive economic growth and prosperity, not government schemes and meddling.
“I took 80 pounds of business regulations. I picked them up, struggled. And then put them up on a podium in front of a joint session of the legislature and said, ‘I want to hear from legislators and from business people. What barriers in this pile are in the way of you making new investments in North Dakota?’” he said. “I mean, it isn't like we threw good, positive, necessary regulations out the window. But we were able to clean it up a lot.”
He also praised the GOP tax cuts signed by Trump in 2017 and lauded Art Laffer for the success of his ideas.
“I spent hours on the phone with Art Laffer,” Schafer said. “Show me a time when the Laffer Curve did not work. I mean, historically the numbers are there.”
Democrats had a strong run in the Roughrider State prior to Schafer. From 1960 to 1992, North Dakota only had one Republican Governor, Allen Olson who was elected to a single term in 1980. Schafer said many Republicans in the legislature had grown accustomed to business as usual, and weren’t happy when he vetoed a major spending bill in an attempt to rein in budgetary profligacies and find a way to increase education funding without raising taxes.
“In my first legislative session I vetoed this higher education appropriations bill. And it was, I mean, the Capitol exploded. It had never been done before. Republicans, Democrats are coming in my office telling me, ‘You're never gonna get elected again, this is awful. You're trashing the Republican Party… You will never get Republicans (legislators) elected again. And I’m like, you don't have any Republicans elected now,” he said.
Schaefer said it was an important lesson because shortly after that he had a schedule full of community events in Grand Forks and was nervous about the backlash he was about to endure.
“I'm going to be black and blue coming back from this trip… I went to the convenience store, auto dealership, went to the YMCA and all this stuff. People were overwhelmingly supportive. They were like, absolutely, we live here. We live in this town, we see it, we know what's happening and not happening,” he said. “That's why it's so important to stay connected with people because people know what's going on. And they had definite views about where their government should be. If you're going to respond to and really represent the people, you have to know the people. And in that case I didn’t know.”
Schafer added that another time he went against the grain was signing a bill to make wearing seatbelts mandatory, despite the fact that it was rejected twice in popular referendums. The new law made lack of seatbelt use a secondary infraction.
“When he was President, Theodore Roosevelt, you know again, our western North Dakota heritage, he always said, ‘I'm not here to represent public opinion. I'm here to represent the public.’ And there's a vast difference between those two,” he said.
He said that need to maintain a strong connection to the people was a key factor in his decision not to run for a third term. Additionally, both his father and father-in-law were in poor health by this point so he and his wife wanted to spend more time with them.
“Going into the third term, in the position we are in, all the signals were to go for it again. We had some unfinished business,” he said. “Nancy one day sat down with me and said, you know if we run again those same things are going to be there four years from now… The intermixing with people totally changes when you're in office. And the longer you're in office, the further you get away. So my concept of servant leadership, if I'm going to serve all the people all the time, I have to be out there, Nancy has to be out there, our family has to be out there.”
He also noted that serving as governor takes a toll on family and social life.
“You get isolated. Your friends invited you five times to the gathering and you could never come so they quit inviting you. Then you get half an hour scheduled for your dad’s birthday,” Schafer said, adding that despite this he still misses it and cherished meeting with citizens. “My wife Nancy and I both loved it. I mean it’s just such an honor to serve… I miss being there right now, because I guarantee that we wouldn't be seeing that 25% increase in our budget. I miss being able to shape and direct the state in a way that I think is important.”
Schafer contested the notion that politics is nastier today than it was 30 years ago.
“People say politics is so nasty now. Well you know what, in 1992 when I ran it was pretty nasty. We got into some pretty ugly,ugly things in that campaign. Now it's more visible because it's on social media and everything, but the nastiness has always been there,” he said.
Rod Backman served as Schaefer's budget director, also for both terms. Backman noted that Schaefer’s policy decisions were never influenced by trivial considerations, and argued that he governed as a genuinely unifying figure.
“It really didn’t matter what The Fargo Forum wrote, The Bismarck Tribune or The Dickinson Press. I don’t recall a situation where he ever changed his mind because of something negative in the press. Now if the facts changed and we got more information, he changed his mind. But if it was just somebody else’s opinion, he didn’t waiver from what he thought was right,” Backman said
He added that Schaefer was inspired by the wisdom of a prior Democrat-NPL Governor, Arthur Link.
“He got some advice early on from Art Link that said something along the lines of Republicans elected you, but now you're everybody's governor. That was one of his principles. He was governor for everybody, not just the people who voted for him,” Backman said.
These days Schafer is still staying active. He was in Nashville this week visiting family. He also teaches a course on leadership at NDSU. In 2013 he delivered a speech on why Ronald Reagan was such a prime example of trailblazing leadership.
Ed Schafer on Ronald Reagan by inforumdocs on Scribd
Schafer explained the flood of '97 was the most trying time of his tenure. It was caused by record high snowfall levels and the breach of a levee, with the people of Grand Forks completely devastated.
“We had 10% of the people in North Dakota displaced from their homes… Eventually the floodwaters recede. You have no electricity, no water, no communications,” Schafer said, adding that recovery seemed like an impossible task. “There's a silver lining in those problems where you see the humanity come to the forefront and people gather together with a common problem. Educational barriers, financial differences, family feuds and that stuff all go away, because you've got this big common problem that everybody gets shoulder to shoulder, elbow to elbow… That was the toughest time in the administration, but it also ended up being a really, you know, a blessing in the administration too, to be able to see how the community could come together here with a common cause.”
Harms served as Schafer’s legal counsel and policy advisor for both of his terms after working on the campaign.
“My wife and I worked on Shafer’s campaign because we just loved his can-do message, because it was that North Dakota can make itself better, pull itself up by its own bootstraps if we just believe in ourselves,” Harms said.
Harms elaborated on how the state's economy of the late 80s and early 90s “sucked,” and that people were mocking it as the Buffalo Commons. He noted younger generations were fleeing to big cities for more lucrative job opportunities out of state, and that locals were concerned their communities would turn into ghost towns with so few staying behind to repopulate them. He said Schafer rolled into Bismarck with an ambitious free market agenda for economic revival and it worked.
“Overall it was anything for economic development: changing the tax code, maintaining a decent worker’s comp coverage system, trying to lower unemployment taxes — anything to spur the private sector,” Harms said. “He was more of the mindset that you have good policy, set the table for the private sector and get out of the way; and less about… $100 million grants and $100,000 programs.”
The 1990s also saw a nationwide push for tough on crime policies. Many ND state lawmakers pushed bills imposing mandatory minimum sentencing through the Legislative Assembly.
“He signed some of it but he pushed back and resisted some of that stuff. He finally told some of the proponents, ‘No more. I’m done with these mandatory sentences. We have judges that we train and elect to make those kinds of decisions,’” Harms explained.
He also said he’s proud of their role in creating the State’s now booming Legacy Fund, which currently holds $8.8 billion.
“We were spending oil revenues as if they were never going to go away. So we came up with the idea that if we’re taking a depletable resource out of the ground we should take some of that oil, convert it to cash, put that cash in the bank and let that oil money generate revenue long-term. So he created the permanent oil trust fund in 1997,” Harms said. “We didn’t have a lot of oil revenue in 1997, but it started to accumulate a little money.”
Taxes on petroleum in North Dakota account for approximately 55% of state government revenues. Forum columnist Rob Port recently accused Schafer of “complaining about how the fund is used when he did nothing to prescribe a use in law.” Schafer argued this misses the entire point. He said the only restriction was they set it up to remain untouched for the first five years, then in 2003 30% of earnings were put into the general fund and the rest would be saved.
“Specifically we didn't want to restrict it. It was like no, put (some of) it in the general fund so that legislators deal with it for the needs, and requirements of the people in North Dakota. They change every legislative session, they're different every time. What you don't want to do is say, we're going to spend this specifically on increasing education,” Schafer said.
He explained that during the oil boom in the 1970s, lawmakers tied education funding directly to oil revenue. That put succeeding leaders in a precarious position the following decade when oil prices plummeted.
“When that finite resource crashed you didn't have enough money to pay for education and you couldn't do it. That's just the perfect example of why we have to have the Legacy Fund. Because at some point in time, it's going to go down,” Schafer said. “What's going to happen 20 years from now, 50 years from now? What happens next year, or two years from now if President Biden gets reelected and shuts down oil production? Our revenues go down the tank.”
Harms said one of the reasons their primary focus was economic growth was a difference in the political and cultural climate of the time. For example, transgenderism wasn’t really an issue in the 90s.
“The social issues we’re talking about today, we didn’t have a bunch of that. Most of what we saw was probably more domestic violence concerns,” he said.
Harms praised Schafer as a great leader who placed significant trust in him and the rest of his small staff to carry out Schaefer’s agenda. He explained that Schaefer was a principled conservative on seeing his vision executed to the furthest extent legislators would allow it. He said Schaefer led the ND Republican Party from a relatively weak position in 1992, to a dominant one by the time he left office in 2000.
“He would always talk about, you know, get the policy right and the politics will take care of itself. I think too often today’s politicians worry in reverse… They don’t get the policy correct. Ed would preach that: get the policy right and the people will take care of the politics, they will support you if you are doing the right thing, promoting and developing policy that’s good for the people of North Dakota. He just drilled on that kind of philosophy. It made it easier to work for him,” Harms said. “I never had a cross word with the guy in eight years.”