With reduced reserves, Burgum calls for cuts in state agency budgets
BISMARCK — Warning previous financial woes cut deeply into the state’s reserves, North Dakota Gov. Doug Burgum asked agencies to craft smaller budgets for the next two-year funding cycle Wednesday, April 18.
Burgum’s 2019-21 budget guidelines asked smaller state agencies to submit a base budget with a 5 percent cut in ongoing expenses, while larger agencies must shrink by 10 percent. He also asked agencies to identify an extra 3 percent “contingency” reduction to account for an economy that’s largely based on volatile oil and farm commodities.
Medicaid and K-12 state school aid aren’t subject to the cuts under Burgum’s guidance.
“This is no longer a path of who can get the biggest budget and the most staff,” he said during a presentation at the state Capitol. “To be great stewards of taxpayer dollars, it’s not just how much we spend, but what we spend it on and where we spend it.”
State agencies were also asked to cut staffing by 5 percent, although higher education institutions and small agencies were excluded from the requirement.
Burgum highlighted bright spots in the state’s financial picture, such as healthy oil tax collections and general fund revenues that are slightly outpacing forecasts. But previous efforts to close large budget gaps left reserve funds “significantly depleted,” and ongoing general fund expenses still exceed revenues.
“We solved the problem last time,” Burgum said after his speech. “We balanced the budget with $800 million of savings, but that $800 million isn’t going to be here this time.”
State agencies will begin meeting with Burgum’s office and the Office of Management and Budget in May to discuss how to meet the budget targets. Burgum will propose a budget in December, before the Legislature meets in early 2019 and the new biennium starts that July.
House Majority Leader Al Carlson, R-Fargo, called Burgum’s 10 percent target “pretty aggressive” but supported his focus on making government more efficient.
The guidelines offer a chance for Burgum, a Republican and former software executive first elected in 2016, a chance to put his mark on the state’s budget.
Two years ago, then-Gov. Jack Dalrymple called for cuts as the state reeled from reduced oil drilling activity and a sharp downturn in sales tax revenue. It was the first time since 2002 that North Dakota’s governor asked for reduced budgets for the following biennium.
Lawmakers later plugged a budget gap during a special session, a move that came months after Dalrymple ordered across-the-board cuts to offset a large shortfall.
Amid that fiscal gloom, Burgum campaigned on “reinventing government.” In his first legislative session last year, state lawmakers cut general fund spending by more than 28 percent.
General fund appropriations for the 2017-19 budget cycle totaled $4.3 billion, down from a peak of nearly $6.9 billion in 2013-15. The total budget this biennium, including federal and state special funds, is almost $13.6 billion.
State Sen. Erin Oban, a Bismarck Democrat who was in attendance for Burgum’s presentation, didn’t think “his proposal is realistic in delivering the good government that North Dakotans deserve.” Nick Archuleta, president of the education and public worker union North Dakota United, was glad Burgum indicated state employees could see “much overdue” raises but worried about cutting positions.
“These aren’t just numbers, these are people’s lives,” he said.