Forum editorial: North Dakota can handle oil slide
North Dakota is prepared to weather the collapse of oil prices and the downturn in farm commodity prices. That’s the fact-based assessment of Gov. Jack Dalrymple and his chief of staff Ron Rauschenberger, who met with The Forum’s Editorial Board on Monday. The governor, whose grasp of the state’s budget and budget history is as good as any governor’s has ever been, said all the discreet funds in place to deal with an economic downturn contain more money than was anticipated. If needed, fall-back funding is readily available. He stressed, however, that even with revenues below projections, revenue collections are higher than they were two years ago.
In other words, expectations based on higher oil and commodity prices have changed, but in real terms the state has plenty of revenue coming in and more than enough in reserves to handle a lengthy period of low oil prices, including nearly half a billion dollars in the Budget Stabilization Fund, the so-called rainy-day fund.
At this point, the near future is informed speculation. The state’s outside revenue forecaster will come up with a revised forecast in January that will be based on the lower price of oil and the decline in farm prices. It’s possible, but not inevitable, that state agencies will be asked to cut their budgets by 2.5 percent, according to a formula determined by the magnitude of a revenue shortfall. But, the governor said, it’s premature to assume that will happen. And even if it does, certain state-funded functions, such as K-12 education, will not be cut because there is more than enough money in dedicated funds to meet that obligation.
Furthermore, state revenues are derived from a diversified economy, and much of the economic base, particularly strong growth in the Red River Valley, has not been significantly affected by the energy slowdown.
Of course, there always will be Chicken Littles in the blogosphere and on talk radio who breathlessly wheeze that the state spends too much, taxes are too high, and state government has grown too big. It’s a litany of ideological claptrap from a cabal of no-nothings who have been reliably wrong since the state’s economic fortunes improved.
The reality is this: The governor and Legislature have been conservative stewards of the purse. Most of the state’s pressing needs have been funded. Reserves have been expanded a lot. The state is doing well, and is ready should that “rainy day” come.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.