ND Democrats call for special session to address budget issues

BISMARCK – Democratic leaders urged Republican Gov. Jack Dalrymple on Tuesday to call a special legislative session to restore about $50 million that was slashed from agency budgets in February to deal with a massive revenue shortfall, but the governor gave the idea a cool reception.

Senate Minority Leader Mac Schneider, D-Grand Forks, said the purpose of a special session would be to respond to the shortfall more strategically, “rather than just abiding by across-the-board cuts that in some cases make little sense and in many cases fall on those who are least able to bear the cost.”

In a meeting with reporters, Dalrymple said he intends to discuss the proposal with leadership from both parties and will explain to them “why we don’t think there’s really any point to having a special session.

“But I do want to hear their input and then I’ll make a decision, I think, pretty quickly about whether that will be done or not,” he said.

Vulnerable affected by cuts Democrats’ plan would leave in place about 80 percent of the budget cuts made as part of a 4.05 percent allotment ordered by Dalrymple on Feb. 1 for most state agencies.

The cuts were triggered by a revised revenue forecast that projected a $1.07 billion shortfall compared with the forecast lawmakers used to set the 2015-17 budget, mainly due to depressed oil and farm commodity prices.

Of the $50 million that Democrats propose to restore, nearly $39 million would go to the Department of Human Services, which had to slash $54 million from its general fund budget. A bill draft would undo cuts to behavioral health services, child care assistance grants, inflationary increases and Medicaid fee schedules.

Schneider and Sen. Tim Mathern, D-Fargo, said those cuts affect the most vulnerable members of society.

“While we face challenges in our state, there are individuals who face more challenges than those of us in this room, and it is those people that we want to give some priority,” Mathern said at a news conference with Schneider in Fargo.

Schneider said restoring the funding would save and transform lives.

“We have emails, numerous emails from constituents and others, people writing in who have children with autism who need these services,” he said. “These are cuts that substantially affect North Dakota families, children.”

Schneider also discussed the importance of maintaining funding to fight drug addiction, an issue that has come to the forefront in Fargo, where several young adults have recently died of overdoses. A new voucher program for substance abuse treatment services was among the programs cut by DHS.

“We’ve seen very plainly and very tragically the impact of addiction in Fargo,” Schneider said.

Governor urges caution Dalrymple said many of the DHS reductions simply deferred funding increases that hadn’t happened yet.

“The prudent thing to do seems … to be cautious about new programs and new expenditures,” he said.

He also noted that a number of newly funded initiatives have implementation dates of Jan 1, 2017, and the Legislature could still have input on those when it meets in organizational session in December, when a new revenue forecast and his 2017-19 budget proposal also will be available.

“It really is the best time,” he said.

Lawmakers were told earlier this month that the DHS cuts could mean the loss of an additional $61 million in federal and other matching funds. Schneider said the Democrats’ proposal would allow the state to capture $56 million in matching funds that otherwise will be lost.

Of the $50 million Democrats want to restore, $40 million would come from the state’s Strategic Investment and Improvements Fund, which has an unobligated balance of about $107 million and is funded largely with revenue from oil and gas taxes.

“There are few investments that are more strategic than doubling your money, which is what these matching funds would do,” Schneider said.

But Dalrymple said cuts in Medicaid spending, which accounts for much of the matching funds, are still warranted. He called North Dakota’s nation-leading Medicaid reimbursement rate, “overly generous ... for the long haul.”

Property tax relief targeted Democrats also want to restore $10 million to fully fund the $250 million approved for the state’s 12 percent property tax buydown program, Schneider said. The money would come from a tax relief fund that has a balance of about $61 million.

But Dalrymple said the roughly $240 million remaining for property tax relief after budget cuts may still be enough to cover the buydown. The buydown cost $116 million this year. The  second-year relief payments won’t begin until April 2017, giving next year’s Legislature plenty of time to address the issue after it convenes in January, Office of Management and Budget Director Pam Sharp said.

“There’s something to be said about just leaving (reserve funds) where they are until we have more information, too,” Sharp said, noting the August revenue forecast will provide the first glimpse at projected revenues for 2017-19.

Schneider said he hopes lawmakers in interim committees can start debating priorities and looking at places to restore funding as early as next week. If they can reach a consensus, he hopes the governor will call a brief special session to adjust the budget before the second year of the biennium begins July 1.

Under the state constitution, a special session must last at least three days to pass a bill. The estimated cost of a special session is $80,000 per day, Legislative Council Director Jim Smith said.

Since statehood, the Legislature has been called into special session 14 times, most recently in November 2011.

Forum reporter Adrian Glass-Moore contributed to this report.