Gov. Jack Dalrymple called for a reduction in spending and replenishment of state reserve funds in his final executive budget address Wednesday, saying the adjustment from boom times to a slower period of gradual growth requires a more austere approach.
Dalrymple outlined a $13.475 billion budget proposal, $4.783 billion of which is general fund revenue, before a joint session of the Legislature in the North Dakota House chambers.
The budget proposed was a balancing act of cuts to hundreds of state employee positions, filling reserve funds, and a state takeover of county social services to make a 12 percent state-paid property tax credit permanent.
“We make the necessary budgetary reductions, yet provide the funding necessary for high-quality services. We also provide for strong financial reserves, and we do all of this with no tax increases,” Dalrymple said.
Dalrymple acknowledged the landscape has changed dramatically since he delivered his previous address in 2014. The days of massive one-time spending initiatives are behind the state for now, he said.
Sharp declines in oil and agricultural commodity prices led to reduced dollars coming into the state’s coffers. That decline led to two rounds of budget cuts this year to fix a budget shortfall of nearly $1.4 billion. A rare special legislative session was held in August as part of the second round of cuts.
“The kinds of price drops experienced in our two major industries of energy and agriculture are best described not as a correction, but rather as a collapse,” Dalrymple said.
Earlier this year, the governor ordered generally funded state agencies to submit budget requests at 90 percent levels of ongoing spending approved for the current biennium. It was the first time since 2002 a North Dakota governor had required cuts in state agency budgets.
The new budget calls for a reduction of 583 state employees: 315 in higher education and 268 in other agencies. He said a large number of these have already been addressed through open positions and retirements during the two rounds of cuts.
For higher education, an additional 5 percent cut was proposed that could be offset over the biennium by tuition increases at state colleges and universities, to be capped at 2.5 percent per year.
Dalrymple also proposed continuing funding Medicaid expansion for the more than 20,000 residents insured under it.
Another proposal was to move state tobacco cessation programs under the North Dakota Department of Health. Those programs had been placed under a different agency created by a 2008 ballot measure.
“We need to make the best possible use of our tobacco fund dollars,” Dalrymple said.
The governor drew a standing ovation mid-speech when he recognized the work of law enforcement in recent months in response to the Dakota Access Pipeline protesters camping in southern Morton County. He called their efforts awe-inspiring.
“Many of our people have gone months without a day off, ably managing the onslaught of out-of-state agitators in a situation that could never have been anticipated,” he said.
Lawmakers delivered about a minute-long ovation when he recognized Morton County Sheriff Kyle Kirchmeier, North Dakota Highway Patrol Col. Michael Gerhart and Maj. Gen. Alan Dohrmann of the North Dakota National Guard, who were seated in the House gallery.
Another of Dalrymple’s budget proposals is to replenish reserves. The Budget Stabilization Fund would increase from essentially zero to $454.2 million. He also structured the budget to create about $43.7 million in general fund reserves by June 30, 2019.
Two years ago, the governor delivered a record $15.72 billion budget proposal for 2015-17. During the 78-day session in 2015, lawmakers approved a record $14.2 billion budget.
The proposal delivered Wednesday is more comparable to the $13.7 billion passed by lawmakers in 2013.
Dalrymple also called for use of Foundation Aid Stabilization Fund dollars for K-12 education as well as Bank of North Dakota profits and Legacy Fund interest dollars to be placed in the general fund.