Governor says North Dakota “stronger than ever” in State of the State Address
BISMARCK - North Dakota is "stronger than ever," and depressed oil prices shouldn't prevent the state from boosting tax relief and continuing the progress made on roads, housing and other priorities, Gov. Jack Dalrymple said Tuesday in his State ...
BISMARCK – North Dakota is “stronger than ever,” and depressed oil prices shouldn’t prevent the state from boosting tax relief and continuing the progress made on roads, housing and other priorities, Gov. Jack Dalrymple said Tuesday in his State of the State Address.
“In the end, our growth may be slowed, but it will not stop,” he said.
Senate Minority Leader Mac Schneider, D-Grand Forks, said lower oil prices should give rise to concern but not panic, and that North Dakota’s world-class oil play will outlive market swings.
“Does that mean you cavalierly go on a spending spree? Absolutely not. It is something that we want to watch very closely in the near term, but there’s no cause to push the panic button here,” he said.
Dalrymple outlined the state’s challenges and priorities to a joint session of 141 lawmakers and other dignitaries who packed the Capitol’s House chamber as the biennial legislative session got under way.
The Republican governor said the state is making major investments to meet the needs of its growing population. His $15.7 billion budget proposal for 2015-2017 is more than triple the state’s $5 billion budget in 2003-05, and he said “some may ask if spending is getting out of control.”
He said it’s a fair question, given the recent drop in oil prices and its potential impact on revenues in the No. 2 oil producing state behind Texas. The price of West Texas Intermediate crude, a benchmark against which North Dakota oil prices are measured for the purposes of triggering oil tax exemptions that could cost the state billions in lost revenue, dropped to about $48 a barrel Tuesday, down from over $100 last summer.
But Dalrymple said the state is committed to a structurally balanced budget “where ongoing spending never exceeds our available ongoing revenues.” His budget proposal calls for general fund ongoing revenues of $5.4 billion and ongoing expenditures of $5 billion – a 5.4 percent increase over the current biennium – plus $2.2 billion in one-time general fund expenditures.
“There are risks associated with any economy that relies on the value of commodities, and those risks must always be carefully considered,” he said. “We guard against these risks in several ways, including directing the vast majority of our oil and gas revenues – about 96 percent – to special reserve funds that are not used for ongoing operations.”
A revised state revenue forecast is expected to be released in February or early March, and Dalrymple said he’s confident that if adjustments to his spending plan are needed, the Legislature will make “prudent decisions based on the best available projections.”
Schneider, whose party is outnumbered by Republicans 32-15 in the Senate and 71-23 in the House, called Dalrymple’s speech “appropriately optimistic” but said attention will turn Wednesday morning to keeping the state strong for future generations.
He said Democrats will push to address immediate needs, including fast-tracking millions of dollars to alleviate impacts of rapid energy development in western North Dakota, but also to make permanent investments that will pay off long after the oil boom has subsided, such as a college scholarship endowment.
Democrats also called on Republicans to abandon proposals to cut income tax rates to zero, warning it could make the state more dependent on oil revenues, and urged a focus on property tax relief instead.
Dalrymple’s roughly 40-minute address highlighted the state’s reversal of fortunes, recalling how North Dakota was the only state to lose population from 2000 to 2003 and referring to a USA Today article from 2004 that reported on the state’s economic development strategies gaining traction.
A U.S. Census Bureau estimate released the day before Christmas pegged the state’s population at a record 739,482, up 2.2 percent, making it the fastest-growing state in the nation. Personal income also has risen steadily since 2004, from 13 percent below the national average to 19 percent above it, and North Dakota was the only state to show personal income gains in every county from 2007 to 2012, Dalrymple said.
“Our economic progress has not been confined to oil country,” he said.
House Minority Leader Kenton Onstad, D-Parshall, said he was “a little disappointed” not to hear more of a long-range vision from Dalrymple, and he noted not everyone is sharing in the state’s good fortunes, citing problems such as increased rents, property taxes and cost of living.
“We have people living here for 50 and 60 years, and they will tell you, ‘I don’t see any benefits,’ ” he said.
Dalrymple acknowledged the growth has come with challenges, and he touted an unprecedented campaign to improve roads and highways, expand water supply systems, advance flood control projects and develop affordable housing. The state is spending about $2.7 billion in oil and gas producing counties this biennium, he said, and lawmakers applauded after he said he’s recommending increasing that support by another $1 billion in 2015-17.
He also highlighted the state’s investments in public safety, including $20 million in energy impact grants to law enforcement agencies in oil-producing counties in the past four years. He said the state continues to strengthen oversight of the oil and gas industry, noting he’s recommending 22 additional positions within the Department of Mineral Resources’ Oil and Gas Division and 19 more in the Department of Health.
Senate Majority Leader Rich Wardner of Dickinson said he found the address “uplifting and positive,” and he agreed with Dalrymple that lower oil prices won’t stop the state’s growth.
“We feel that it’s coming back. And just so you know, nothing has slowed down out there,” he said.