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AS I SEE IT

Posted 3/21/17 (Tue)

By Neal A. Shipman
Farmer Editor

After several legislative sessions where members of the North Dakota Legislature were able to seemingly spend from an endless pot of money, they are now learning that cutting budgets isn’t nearly as much fun as growing them.
Thanks to the development of the Bakken Formation in western North Dakota in 2013 and 2014, the state’s coffers were overrunning with revenue as the oilfields of the western part of the state almost single-handedly propelled the state’s economy to record levels.
Rich with the infusion of hundreds of millions in new tax dollars, the Legislature was quick to start building new buildings at our colleges and universities, hire new state employees to meet health and safety concerns and launch new programs. And they funneled money into special “rainy day” funds to help keep state government and programs running, if and when, the oil economy went south.
Well, as everyone had thought possible, oil prices in 2015 did begin to fall from their record levels of over $100 a barrel. But what no one had predicted was how quickly the fall would come. Nor how low oil prices would plummet.
And that is where the North Dakota Legislature now finds itself in a very troubling financial dilemma. Other than the Legacy Fund, which was created by a vote of North Dakotans, every one of the state’s “rainy day” funds has been drained dry over the past two sessions. And to make matters worse, if the Legislature was hoping that somehow the state’s economy was gong to instantly rebound with oil prices now hovering in the $50 per barrel range, they just got some more very bad news.
According to the latest revenue estimates by the North Dakota Legislative Council, the state is projecting a general fund revenue for the 2017-2019 biennium at $3.7 billion and expenditures at $4.3 billion, leaving a deficit of $672 million.
And that means just one thing. With the Legislature not leaning toward crafting any new taxes or increasing existing taxes, the state is going to have to go on a rather strict diet.
What that means as the Legislature grapples with ending this session with a balanced budget is that they are going to have to cut at least $672 million from existing state budgets. Not an easy task. And it’s a task that is going to be made even more difficult as the Legislature hopes to wrap up its work before Easter.
Where the cuts are going to come from are still very much in the works as every state agency budget bill has been in limbo pending last week’s budget forecast numbers.
But what is certain is that, unless the Legislature can pull a rabbit out of a hat, cuts are going to be made that will impact the level of services and in programs that North Dakotans have grown accustomed to.