Burgum proposes record-high budget as North Dakota sees huge oil tax windfall
Gov. Doug Burgum's proposal would be the biggest budget in state history, though the Republican noted that high inflation and massive infusions of federal money drive up the dollar figure.
BISMARCK — Amid higher-than-expected oil tax collections, North Dakota is well-positioned to cut income tax, spend big on infrastructure projects and tackle persistent labor shortages, said Gov. Doug Burgum during an address to lawmakers on Wednesday, Dec. 7.
The Republican governor released an $18.4 billion state budget proposal for 2023-2025 that would raise spending by 3.4% over the current two-year budget. The blueprint includes a $5.9 billion general fund, up from the $5 billion spent from the state's main checking account in the current budget.
Burgum's proposal would be the biggest budget in state history, though the governor noted that high inflation and massive infusions of federal money drive up the dollar figure.
The Legislature will convene for its regular session in January to craft the budget, which will become active on July 1, 2023.
Oil and gas tax collections — a primary source of revenue for the state — have benefited from high oil prices and are on pace to hit $6 billion by the end of the budget cycle in June.
That windfall, along with steady sales, income and motor vehicle tax collections, would leave North Dakota with a significant budget surplus, including a projected $3 billion in cash that can be carried over to the next budget, Burgum said.
“I’m pleased to report that our state’s balance sheet has never been stronger,” Burgum said.
Burgum proposed spending $2.4 billion on repairs to roads, bridges and other infrastructure, though more than $1 billion for those projects could come from the state’s share of a mammoth federal infrastructure package.
The governor’s budget also dedicates $600 million to water infrastructure, including flood-prevention projects near Minot and Valley City.
New Republican budget leaders told Forum News Service earlier this week they would prefer to use the state’s bulging coffers on infrastructure upgrades.
Burgum touted a plan announced in August that would eliminate personal income tax for single filers making $54,725 or less and married filers making $95,600 or less. Higher wage-earners would pay a flat 1.5% rate.
In addition to saving taxpayers money, the more friendly tax environment would help attract workers from other states, Burgum noted.
“When our state is doing well, citizens should share in that prosperity,” Burgum said.
The governor’s tax plan is slated to compete during the legislative session with a proposed property tax cut backed by several Republican lawmakers. Burgum said reducing property taxes has the effect of growing local government spending.
Burgum said solving North Dakota’s severe labor shortage requires a holistic approach. He pitched legislators on a $167 million package that would invest in a variety of workforce programs.
The governor previously proposed a $50 million workforce development package that set aside funding for recruitment campaigns and local grant programs. Legislators should also beef up training programs and research grants tied to the state’s colleges and universities, while increasing funding for tourism site development, he said.
In previous years, Burgum’s budget plan has encountered a major roadblock in House Appropriations Chairman Jeff Delzer, but the longtime budget chief lost his bid for reelection in June.
Burgum’s budget also earmarks funding to raise K-12 teacher salaries and to increase the state’s overall investment in the education system. The governor suggested lawmakers need to correct a funding inequity for a handful of Native American-majority school districts.
Incoming appropriations leaders Rep. Don Vigesaa, R-Cooperstown, and Sen. Brad Bekkedahl, R-Williston, said they will be receptive to Burgum’s ideas, but they noted that budget writers will also consider their legislative colleagues' designs for spending and saving state funds.
Vigesaa said Burgum's proposal sounds like "an awful lot of spending" and he may favor a more measured approach to maintain reserve funds for future economic downturns. However, Vigesaa noted that the programs suggested by Burgum would benefit the state.
Bekkedahl said he agrees with Burgum's emphasis on workforce development and K-12 education.
Democratic-NPL leaders applauded the governor's willingness to fund K-12 education at a greater rate and to pay state employees more. However, House Minority Leader Josh Boschee, D-Fargo, criticized the proposed tax cut, saying it would take money off the table to fund child care, education and workforce development programs in future years.
"Enhancing our budget’s dependence on fluctuating oil and gas taxes is the wrong solution for the future of our state," Boschee said in a news release.
The finer points of Burgum’s budget blueprint
- The governor called on legislators to allocate $550 million to the “Clean Sustainable Energy Fund,” a program created in 2021 that offers loans and grants to private-sector energy projects. The program, which has been criticized by environmentalists, has been aimed largely at funding carbon capture ventures, which rely on an expensive technology favored by the coal and oil industries.
- Burgum’s proposed budget calls for significant performance-based raises for state employees and a $250 million transfer into a pension fund that could run out of money in the future if budget writers don't take action. The state has struggled to attract workers amid the tight labor market.
- Legislators should dedicate about $160 million to create a new women’s prison in Mandan, Burgum said. A privately run women’s prison in New England, North Dakota, has drawn criticism for its poor facilities and understaffing.
- Burgum called the State Hospital in Jamestown "outdated" and requested a $10 million allocation to cover an architectural design for a new facility.
- A $76 million package proposed by Burgum would be aimed at making child care more affordable and available.
- The governor would like to increase funding for addiction services and in-home care for older and disabled adults.
- Burgum wants to reserve $20 million for a proposed North Dakota military museum in Bismarck. He asked legislators to put $15 million up for upgrades to Camp Grafton's military training and housing facilities, as well as $5 million for police recruitment and retention.