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Burgum pitches 'structurally balanced' spending plan in speech to lawmakers

North Dakota Gov. Doug Burgum speaks during the 2018 State of Technology conference Friday, Nov. 30, 2018, at the Delta Hotels by Marriott in Fargo. David Samson / Forum News Service

BISMARCK — North Dakota Gov. Doug Burgum pitched lawmakers a two-year spending plan that would increase K-12 education funding, tap earnings from the ballooning Legacy Fund for projects across the state and provide long-awaited employee raises Wednesday, Dec. 5.

During a speech in the state House chambers, Burgum outlined a proposal that includes $4.6 billion in ongoing general fund spending, up from the $4.3 billion package he signed in 2017 but well below a previous record of nearly $6.9 billion in 2013-15. The overall proposal, including federal funds, clocks in at $14.3 billion, a 5 percent increase from the current budget.

Burgum’s budget doesn’t raise taxes, matching a campaign promise the Republican and former software executive made as the state struggled to balance its books amid falling revenues blamed on weakened oil and farm commodity prices. The budget also seeks to match ongoing revenues with expenses, reversing a recent trend that saw policymakers lean heavily on reserve funds, which Burgum seeks to rebuild.

But Burgum, who campaigned on curbing government spending, also unveiled a plan that would represent the largest total budget in the state's history if it passed as proposed.

“North Dakotans deserve both a structurally balanced budget and a government responsive to their needs, prioritizing innovation and reinvention,” he said in prepared remarks.

In a Tuesday evening meeting with reporters, Burgum said increases in health and human services, per-student K-12 payments as well as employee salaries and benefits accounted for almost all of the increase in ongoing general fund spending in his proposal.

The governor also pitched $1.5 billion for roads, water projects, airports, "technology investments" and other infrastructure projects. He emphasized behavioral health funding and workforce initiatives while proposing a state income tax exemption on military retirement pay.

Burgum’s budget assumes oil prices and production will stay relatively flat. North Dakota produced a record of 1.36 million barrels of oil per day in September.

Lawmakers were in Bismarck this week for three days of organizational meetings ahead of next month’s launch of the legislative session. The Republican-controlled Legislature will craft state agency budgets for the next two-year budget cycle, known as a biennium, and Wednesday’s speech represented an official start of spending negotiations.

"We're still at home plate ready to bat," said Republican Sen. Ray Holmberg, chairman of the Senate's budget-writing committee.

Wednesday also marked Burgum’s first budget proposal he built from scratch since taking office two years ago on a message of government reinvention. To that end, he suggested "aligning" 145 employees from 17 agencies into a shared information technology service and centralizing cybersecurity efforts.

"He brings a different perspective, and we need to look at that," said House Majority Leader Chet Pollert, R-Carrington. He called Burgum's budget a "good starting point."

Senate Minority Leader Joan Heckaman, D-New Rockford, found things to like in the governor's proposal, such as an extension of the Medicaid expansion program. But her colleague in the other chamber, House Minority Leader Josh Boschee, D-Fargo, raised concerns over human services and education funding.

"We’d like to see a proposal that makes a more substantial difference for our schools and community service providers," he said in a statement.

On higher education, Burgum called for an "an increase of over $94 million" for increased staff compensation, capital projects, online course development, research opportunities and a matching grant program intended to attract private dollars.

The governor suggested using $300 million of Legacy Fund earnings for nine different initiatives, including unmanned aircraft infrastructure, an expansion of the K-12 school construction loan fund and the proposed Theodore Roosevelt Presidential Library in Medora. The single largest Legacy Fund proposal is $55 million for an infrastructure revolving loan fund.

Voters created the Legacy Fund in 2010, stashing away 30 percent of oil and gas tax revenue amid an unprecedented energy boom in the western region of the state. The state constitution prevented lawmakers from spending the principal and earnings until last summer, but it didn’t specify how the money was to be used.

State employees would receive a 4 percent pay increase in the first year of the next biennium and a 2 percent boost in the second year. Agencies that find "salary savings" could offer an additional 2 percent raise in the second year.

State employees went without a pay increase during this two-year budget cycle, which ends in June.

Burgum proposed requiring employees to pay $336 per year for the current main health insurance plan while offering an existing high-deductible plan “with new incentives for participation.” He also introduced a new state-paid, non-grandfathered plan that offers expanded benefits.

Under Burgum’s plan, the state would cover a 12.7 percent increase in health insurance premiums at a cost of $59 million.

Burgum also called for the state and its employees to increase their contributions to the retirement fund by 1 percent each. That, along with a one-time infusion of $265 million and other policy proposals, is expected to help pay down a $1 billion unfunded liability.

Nick Archuleta, president of the education and public employee union North Dakota United, welcomed Burgum's compensation and benefit proposals, calling the salary increases an "important first step" that "may very well be the difference for many between staying in (North Dakota) and leaving the state to work elsewhere."

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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