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GOP leaders say goals met despite low oil prices

BISMARCK - Collapsing crude prices that took a nearly $5 billion bite out of North Dakota's projected oil tax revenues failed to deter state lawmakers from investing billions in infrastructure, education and tax relief, leaders of the Legislature...

BISMARCK - Collapsing crude prices that took a nearly $5 billion bite out of North Dakota's projected oil tax revenues failed to deter state lawmakers from investing billions in infrastructure, education and tax relief, leaders of the Legislature's Republican supermajority said after the session adjourned Wednesday.

"This is a very successful session coming off the fact that we had really limited money to work with compared with what we thought we had," said House Majority Leader Al Carlson, R-Fargo.

The Senate's top Democrat said the session will be remembered for the oil extraction tax cut that Republicans ramrodded through both chambers in the final days of the session.

"And that through the dysfunction of the House majority leader, the Legislature left town without getting its work done," Senate Minority Leader Mac Schneider said.

The House and Senate adjourned midday Wednesday without passing the budget for the North Dakota Public Employees Retirement System, but GOP leaders said that shouldn't detract from the good work lawmakers accomplished.

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"I know we're ending on an issue that didn't get resolved, but ... this was a great session," said Senate Majority Leader Rich Wardner, D-Dickinson.

Record budget approved

Gov. Jack Dalrymple called the session "very successful," given how the revenue forecast changed so drastically after his $15.7 million budget proposal in December. Projected oil tax revenues dropped by nearly $5 billion and general fund revenues by $419 million.

"I think it's really great news in the end that we were able to still do most of the things that we wanted to do," he said.

Ongoing spending from the state's general fund will increase by 9.7 percent to roughly $4.9 billion in 2015-17, representing the lowest increase in four biennia, Carlson said.

"All we did was reduce increases, not reduce budgets from last time," he said.

Lawmakers approved $1.17 billion in one-time general fund spending, less than half the $2.44 billion in the current biennium. Combined general fund spending will drop by 12 percent to just over $6 billion.

However, the total state budget will still jump from about $13.7 billion to a record $14.4 billion, a 4.6 percent increase, primarily because of anticipated increases in special funds and federal funds, state Budget Director Pam Sharp said.

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The budget leaves a surplus of $211 million in the general fund, just above the $200 million goal set by GOP leaders.

Western needs addressed

Lawmakers spent $1.1 billion before even hitting the session's halfway mark.

The "surge" funding bill was fast-tracked in January and February to give primarily oil-producing counties but also the rest of the state a head start on critical road and infrastructure projects this year.

Senate Majority Leader Rich Wardner, R-Dickinson, said the surge bill and the oil production tax formula bill that boosted the share of revenue going to political subdivisions from 25 percent to 30 percent "will help the oil country get back on its feet," though Democrats noted it was half the 60 percent share originally pledged.

"The people out there are grateful for what we have done," the Dickinson Republican said.

In all, lawmakers appropriated about $2.3 billion to rebuild and repair state highways, county and township roads, bypass routes and other transportation infrastructure, Dalrymple said.

The surge bill essentially drained the state's Strategic Investment and Improvements Fund created by lawmakers in 2011 and supported by oil and gas tax revenues. Carlson said it was hard to take that money off the table so early in the session, but added it was "a smart thing to do."

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"The difference next time will be if the price of oil stays down, we're going to have a real challenge because the buckets will not fill and we will not have the SIIF money like we have today," he said.

Democrats countered that the oil extraction tax cut introduced on Day 70 of the 78-day session and signed by Dalrymple on Wednesday could cost the SIIF and other reserve funds that rely on oil tax revenue billions in the long term.

"Are those needs going to go away? Absolutely not. And so it seems ironic that the source that you're using to create that (SIIF) fund, we're reducing it," said House Minority Leader Kenton Onstad, D-Parshall.

Republicans contend that lowering the rate from 6.5 to 5 percent starting Jan. 1 while eliminating the price-based tax breaks known as triggers will bring more stability and predictability to oil tax revenues.

Bipartisan successes

Party leaders celebrated some bipartisan successes, including $3 million in state grants for early childhood education programs and a $164.5 million increase in the state's commitment to K-12 education.

Lawmakers passed several bills designed to combat human trafficking, including funding for victim services and stiffer penalties for pimps and traffickers, in what Schneider called the "bipartisan accomplishment of the session."

Schneider lamented the defeat of Senate Bill 2279, which would have outlawed discrimination based on sexual orientation, saying it "sends absolutely the wrong message to this new generation of North Dakotans and to newcomers who are entering our state."

Lawmakers also approved an 80-page rewrite of the state's property tax codes as recommended by a property tax reform task force appointed by Dalrymple in December 2013.

Senate Bill 2144 repealed or consolidated dozens of levies and set levy limits for cities, counties, townships and other taxing authorities while giving them more flexibility in how property tax dollars are spent. Dalrymple said it also makes the system more transparent and understandable for taxpayers and allows for honest comparisons between political subdivisions.

"What we did was monumental, I think," said Sen. Dwight Cook, R-Mandan.

Dalrymple also praised lawmakers for approving nearly $400 million in tax relief. It includes $250 million through an ongoing 12 percent property tax credit and $123 million in individual and corporate income tax relief, which Democrats argued should have gone toward further property tax relief.

The budget sets aside an estimated $2.24 billion in reserves by the end of the biennium, not counting the state's Legacy Fund, which is projected to top $4.3 billion and can't be tapped by lawmakers until July 2017.

In the end, Dalrymple said, the Legislature didn't go into a state of panic over the drop in oil prices.

"I think they took a longer view that we're able to still continue to do a lot in North Dakota, and our growth continues, so that's good," he said.

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