ND Human Services unveils ‘very difficult’ cuts from $1 billion revenue shortfall
BISMARCK – Hundreds of families on child-care assistance will be among those feeling the pinch of budget cuts made by North Dakota state agencies to help offset a projected $1 billion revenue shortfall blamed on the current oil industry downturn.
Fifty-six agencies that receive money from the state’s general fund met a Wednesday deadline to submit 4.05 percent budget cuts ordered by Gov. Jack Dalrymple on Feb. 1.
State Budget Director Pam Sharp said Thursday she wasn’t aware of any agencies laying off employees, but many are scaling back raises, holding vacancies open and delaying expansion of programs to cover the $245 million in cuts.
Agency heads indicated they can live within the smaller budgets, Sharp said.
“Just about all of them have tapped into salaries and operating. I’m glad to see that because that is ongoing expenditures, and looking forward to next biennium when we might also have a tough budget, they might need to look at these same very things,” she said.
Cuts 'very difficult’
The budget cuts meant a nearly $54 million reduction for the Department of Human Services, the state’s biggest agency with about 2,060 employees and a two-year general fund budget of $1.3 billion.
Executive Director Maggie Anderson said the department approached the cuts carefully and “left no stone unturned.”
“Certainly, the budget changes have been very difficult because they do touch people’s lives,” she said.
Letters went out Wednesday to about 500 families who will lose their eligibility for the child-care assistance program on April 1 in a change estimated to save DHS about $5 million, Anderson said.
Lawmakers in 2013 expanded the eligibility from 50 percent to 85 percent of the state’s median income, but that will now be adjusted back to 60 percent, Anderson said. The average monthly cost per child has been $370 since the current biennium began July 1.
In general, programs and services already in place won’t change because the DHS cuts were accomplished mainly through delaying program increases, Anderson said.
Those delays included not filling 10 slots in the autism voucher program and delaying increases for behavioral health services.
“We expect there will be people who will be disappointed,” she said.
The department will save $940,000 by limiting employee raises to 2 percent for the second year of the biennium. Employees were eligible for annual raises of 2 to 4 percent this biennium, and agencies were funded at 3 percent each year, Sharp said.
Anderson said the department also won’t replace computers or printers and will postpone the demolition of an old unoccupied building at the Life Skills and Transition Center in Grafton and installation of a key-card access system at the State Hospital in Jamestown.
Concrete swapped for asphalt
The Department of Transportation, which had the next-biggest budget cut after DHS at $26.6 million, said it will reduce its $100 million appropriation for local road construction projects in non-oil producing counties by about $4.5 million.
Most of the DOT’s remaining $22 million in savings will come from lower-than-expected bids on projects because of lower energy prices and by making adjustments such as using asphalt instead of concrete on the U.S. Highway 85 project in Watford City.
The Legislative Assembly, Legislative Council and Supreme Court also volunteered to turn back an equal percentage of their general fund budgets, though they weren't required to do so because they’re not executive branch agencies. The Supreme Court reduced its budget by more than $4.5 million, largely through staff vacancies.
The biggest agency cut was $72 million from the Department of Public Instruction’s state aid to school districts, but that’s covered by the Foundation Aid Stabilization Fund created by voters in 1994.
Agencies meet deadline
State law required across-the-board budget cuts of at least 2.5 percent, known as an allotment, after an updated revenue forecast released Feb. 1 projected tax revenues will fall $1.07 billion short of the forecast lawmakers used last spring to set the 2015-17 budget.
After the $245 million in budget cuts, the remainder of the shortfall is being offset by a $498 million transfer from the state’s Budget Stabilization Fund and by draining the nearly $332 million ending balance that was built into the budget.
State officials have blamed the shortfall primarily on a worse-than-expected drop in crude oil prices and its effects on tax revenues, especially sales tax collections, which fell $193 million below forecast from July through December.
Some lawmakers had called for cuts of 5 percent or more before tapping the rainy-day stabilization fund, saying there was plenty of room in agency budgets after several years of growth. Even after the 4.05 percent cut, the remaining general fund budget of about $5.8 billion will be 42 percent bigger than the roughly $4.1 billion budget approved for 2011-13.
In an emailed statement Thursday, Dalrymple said he appreciates the “significant work” of agency leaders to identify savings “that offer the least possible impact on public services.”
“The allotment is meant to be a temporary measure, and with the Legislature returning in about 10 months, they will have an opportunity to make longer-term decisions based on new revenue information,” he said.