Initial reactions from lawmakers on Gov. John Hoeven's $7.7 billion budget included praise for things like an increase in education spending and state employee pay, but also skepticism, especially for the sustainability of a $300 million property tax relief plan.

Bismarck Sen. Tracy Potter said he liked a lot of what he heard on Wednesday, including increasing the eligibility for families to enroll in the state health insurance program for children, among other spending recommendations by the governor.

"I said to one of my colleagues as I walked out, 'I think we won the election,'" said Potter, a Democrat. "This is the best Democratic governor we've had in a long time."

Potter still held out some skepticism for Hoeven's $100 million income tax-cutting proposal, saying he wants to see more details.

"People weren't crying out for income tax relief, but people at $50,000 or $75,000 a year, they could probably use some help, with the way the cost of living has jumped here recently," Potter said.

Senate Majority Leader Bob Stenehjem of Bismarck said he was pleased to see Hoeven's proposal to increase state employee spending, as well as plans to increase funding for K-12 education and infrastructure improvements.

"It's an aggressive budget," Stenehjem said. "Fortunately, we have some money to work with."

Stenehjem said he likes Hoeven's tax-cutting proposals, adding that he would like to see those proposals grow, but noted that lawmakers should tread cautiously in the next session amid a floundering national economy.

"I want to make sure as I see the fine details that this is truly a sustainable budget and that we don't go overboard, especially in light of what you see happening nationally," he said.

House Majority Leader Al Carlson of Fargo said he did not have initial disagreements with Hoeven's proposals on Wednesday, but noted that lawmakers should be careful in their spending in light of a sour economy.

"We need to be cautious in our spending more so now than ever," Carlson said. "Is that recession moving down on to North Dakota's economy? So far, no. But I think you need to keep that in the rear view mirror saying that baby could be coming."

Carlson said Hoeven's proposal for $130 million in education spending should help improve North Dakota schools, but noted: "The more you spend doesn't get you better results."

Lansford Sen. David O'Connell, the Senate minority leader, said there likely will be a debate over Hoeven's $100 million income tax relief plan because voters this year struck down a measure that would have cut income taxes in half.

"That could be a red flag right away," he said.

Carlson said he is in favor of Hoeven's $100 million income tax relief proposal, but added that it was too early to tell if there would be enough support in the House to pass it.

O'Connell said he wasn't surprised by Hoeven's proposals, adding many of the initiatives will likely find more opposition in the House.

"There is an ultra-conservative group over in the House, and that's where I think the battle will come more," he said.

House Minority Leader Merle Boucher of Rolette said his biggest question is whether Hoeven's $300 million property tax relief plan is sustainable for the long haul, which would provide local governments with money for education as long as the locally-levied property taxes are equally reduced.

"If it's going to be permanent, it's going to be permanent," Boucher said. "It's not going to have a sunset clause in it."

Because the $300 million in property tax relief comes from the oil trust fund, Boucher questioned if Hoeven's plan would be sustainable over time if oil prices continue to decline.

Hoeven cited market forecasts in his budget address that suggest oil prices will settle around $70 a barrel over the next two years.

(Reach reporter Brian Duggan at 223-8482 or brian.duggan@bismarcktribune.com.)