Burgum: Higher revenue doesn’t wipe away budget challenges

September 5, 2018

BISMARCK, N.D. (AP) — North Dakota Gov. Doug Burgum said the state’s financial situation is not as rosy at it seems despite an uptick in the economy led by near-record oil production.

The first-term Republican, who campaigned on a message of controlling state spending, said while the rebound in the state’s economy is positive, the increased revenue largely from oil isn’t enough to make up for the fiscal gap from past budgets that were balanced through cuts, layoffs and massive raids on state savings.

“Balancing budgets by pulling money out of our savings was a short-term solution but is not long-term sustainable,” Burgum told The Associated Press.

State budget writers on Wednesday released an updated revenue forecast that shows oil and gas tax revenue exceeding expectations by more than $1.4 billion in the current two-year budget cycle that ends in May 2019.

And general fund revenue, which mostly comes from state taxes on income, sales and energy, also is ahead of projections by more than $136 million, or 4.4 percent higher than forecast.

The state’s current two-year budget including federal aid is $13.6 billion. It includes $4.3 billion in state general fund spending, or $1.7 billion less than the 2015 budget that had more than doubled since 2009 with the rise of oil activity in the state. The general fund portion of the budget is spent on an assortment of programs, including education and human services.

The state drained about $800 million from reserve funds to balance the current general fund budget, and those savings must be replenished, he said.

“Our revenue numbers are up but not up enough to cover the gap,” he said.

Burgum said he sticking to his April directive that agencies slash budgets 5 percent or 10 percent, with the larger ones responsible for the bigger cuts. He also called for agencies to identify an additional 3 percent reduction as a cushion against commodity price swings. Additionally, Burgum called for a 5 percent reduction in agency staffing when they begin preparing their plans for the next two-year budget.

Burgum is scheduled to release his budget proposal for the next two-year cycle in December.

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