With an expected $1.2 billion state budget surplus, potential House and Senate leaders said they will return to Bismarck next year with new goals: Property tax relief, new proposals for an oil trust fund and more money directed to education and the state's infrastructure.

Still, the state could be facing tough economic times down the road lawmakers said, especially as oil prices continue to fall and the effects of the national economic downturn move toward North Dakota.

Sen. David O'Connell, D-Lansford, who will run again for Senate minority leader, said North Dakota is usually a year behind national economic trends. And while lawmakers will have to be careful with the state's growing oil revenue and surplus, there is money available now to improve things.

"In the bad years you don't paint the barn and you don't shingle the house," O'Connell said. "But when you have some money you fix the place up better."

Rep. Al Carlson, R-Fargo, agrees that the state's infrastructure and human services need investments, but adds that lawmakers should set more money aside for the future.

"Even though these economic conditions are good now, we have to be skeptical," said Carlson, who said he will seek the House majority leader post next session. "It's going to be a session where we spend money, but we're going to have a good reserve when we leave."

He said spending priorities exist - roads, education, human services - and many proposals are making their way to legislators for funding next session.

"The list is very long," he said.

The national economy is also on the mind of Rep. Merle Boucher, D-Rolette, who said he will run again for House minority leader.

"We're going to have to be prudent because we have a national issue that's looming over our shoulders," Boucher said, adding the spending increases he anticipates next session will be for keeping current programs afloat in light of raising costs.

With the failure of Measure 1, which would have amended the state Constitution to make a new oil trust fund, Carlson said he expects another round of proposals to create one.

Carlson said voters likely defeated Measure 1 because it would have locked away too much money.

"Measures 1's defeat does not mean that issue is over," Carlson said. "I think you'll see various proposals dealing with that and how much money we set aside permanently."

Carlson said Measure 2, which failed Tuesday and would have cut income taxes in half and corporate incomes taxes by 15 percent, had its flaws and voters likely saw it as too aggressive.

"It tells us a lot people don't think income tax is the problem," Carlson said of the initiative's failure.

Property tax relief is what voters want, he said.

Gov. John Hoeven has proposed a plan to cut property taxes by $300 million by giving local governments money to pay for school costs with an agreement that they lower property taxes, which are levied at the local level.

The governor's plan also provides $100 million in income tax relief and another $100 million in discretionary funding for education.

Besides property tax relief, Lt. Gov. Jack Dalrymple said priorities out of the governor's office include an infrastructure package and a readjustment in the way health care providers are compensated.

As for another oil trust fund proposal, which Carlson said is likely to come up again next year, Dalrymple said the governor is open to new ideas but added that state government is already doing a lot to save money for the future.

While Carlson supported Measure 1, Boucher said he did not support it, adding the current oil trust fund is working fine but would listen to other ideas.

"I'm open to all the suggestions and I'm sure we'll probably see several bills related to the oil trust fund," Boucher said.

After Democratic leaders said they were optimistic for big gains in the Senate and a possible majority, Republicans emerged in control of both chambers after Election Day.

In the Senate, Republicans maintained their lead of 26-21. House Democrats gained three seats in the House with the GOP still in control, 58-36.

Sen. Bob Stenehjem, R-Bismarck, said he also will run for the majority leader post again.

He said the Legislature will have be careful with its growing revenue while funding property and income tax relief as well as giving more money to education and the state infrastructure.

"You can't count on (oil revenue) all the time," he said. "We have to be realistic."