There’s a number of reasons to be encouraged about North Dakota’s economy. The oil patch has begun to hum again, state revenues are meeting forecast figures and taxable sales increased during the first quarter. It’s also going to be a better year for agricultural producers after a year of drought.
There are still cautionary signs in the state. While revenue figures are hitting goals, the state’s operating under a conservative forecast. The increase in taxable sales is due to the rebound in oil counties. Many of the major cities outside the oil patch didn’t post increases. And Gov. Doug Burgum is again offering a buyout program to state employees in an effort to cut costs.
Employees can apply for the program between July 9 and Aug. 24. They can receive a payment equal to three months of salary and health insurance or remain on the payroll for three months after the "separation date" and receive a salary and benefits as if they were still working. Last year 159 employees participated in the buyout program and the severance packages totaled about $2.9 million.
This all points to a fragile economy gaining strength. An economy that could be derailed by a drop in agricultural or oil prices or from fallout from a trade war. The state’s leaders are aware of this and the planning reflects it.
Burgum has asked state agencies to develop smaller budgets for the coming biennium. He’s seeking cuts in ongoing expenses of 5 percent or 10 percent depending on agency size, with an extra 3 percent "contingency" reduction. Agencies also are being asked to cut staffing by 5 percent, with exceptions for higher education institutions and small agencies.
There’s already talk on how best to use the Legacy Fund which has about $5.5 billion. It’s been an ongoing debate over whether to tap the principal or earnings. When the Legislature convenes in January there’s likely to be a number of suggestions related to the fund. Senate Majority Leader Rich Wardner, R-Dickinson, said he thinks there’s a plan that will work for everyone, but he’s not ready to discuss it publicly.
The Legislature has been conservative, except during the oil boom years, about budgeting. Legislators no doubt will be cautious about spending when they meet. There are concerns the employee buyouts and other cuts are taking valuable experience away from state government and that agencies won’t be able to respond in a timely manner to public requests. The Tribune believes those are valid concerns.
Legislators must find a way to improve infrastructure, fund essential social programs and do so without increasing taxes. The Legacy Fund provides an interesting challenge for legislators. It was created to fund unique programs in the future, not to resolve the budget every two years.
A lot can happen in the six months before the Legislature gathers. How well the economy does will help determine legislative decisions.