BISMARCK — North Dakota Gov. Doug Burgum told state agency leaders they won't have to identify potential cuts in their budget requests for the next two-year budget cycle as tax revenues come in above expectations.
An optimistic Burgum said Thursday, May 5, agencies can base their 2023-25 budget requests on the appropriations lawmakers approved for the current budget cycle. In previous years, Burgum asked agencies to find potential cuts in their budget requests amid harsher economic conditions.
The Republican governor also said agencies can request funding for "high return-on-investment programs” that aim to address problems like labor shortages and outdated technological infrastructure.
The state should boost general fund spending from its current $5 billion mark for the next budget cycle to “take full advantage of the opportunities that are in front of us," Burgum noted. The general fund is spent on a number of public programs, including K-12 education and human services.
North Dakota's growth in population and booming economy justify greater public investments in citizens going forward, Burgum said.
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“We’re proposing, for this next biennium, investments in our future,” Burgum said. “This may run counter to what might be a current political wave that the only best government is government that’s shrinking. I think the best government is one that’s efficient, effective and produces great outcomes and one that operates and performs better than all the other governments.”
Chris Jones, director of the state's largest agency, the Department of Human Services, said he "couldn't be happier" with Burgum's guidance for agencies, noting that he's excited to continue funding programs that best serve North Dakotans.
Two years ago, Burgum instructed agencies to cut 5% to 15% from their budgets amid an early pandemic collapse in oil prices that led to depressed state revenues. Oil prices later recovered, and lawmakers passed a record-high budget for the 2021-23 cycle, cushioned by unprecedented levels of federal money.
The budgeting process looks as though it might be smoother this time around.
With oil prices hovering above $100 a barrel, oil tax revenues are now forecast to come in around $6.7 billion for the current budget cycle — about $3 billion more than previous projections, said Office of Management and Budget Director Joe Morrissette. General fund revenues, which include sales and income taxes, are running 13% ahead of forecast.
However, rising price inflation has made materials and labor more expensive.
Though North Dakota is in a good position economically, thousands of jobs remain unfilled, limiting the state's potential, Burgum said.
In addition to promoting traditional avenues for attracting workers, Burgum said he plans to ask budget writers in the Legislature to fund record amounts of automation tax credits to help businesses fill open positions with machines.
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The state must also offer raises to its own employees to compete in the tight labor market, Burgum said.
Burgum and the Office of Management and Budget will evaluate budget requests from state agencies over the next few months and decide on figures to put in Burgum's executive budget, which will be released in December.
However, state lawmakers ultimately hold the authority to write the budget, and in the past, they have declined to use Burgum's proposed budget as a starting point. The Legislature will consider the agencies' budget requests when it convenes for its regular session beginning in January.
Underwood GOP Rep. Jeff Delzer, chairman of the House Appropriations Committee, said lawmakers will look at Burgum's budget proposal, but he added the session is too far out to comment on agency budgets, general fund spending increases or employee raises.
Delzer is the only appropriations chairman or majority leader running for reelection this year.
