Burgum wants to keep 'conservative' budgeting approach even as projected revenues rise
BISMARCK — A preliminary forecast released Wednesday, Sept. 5, showed a bump in expected North Dakota tax revenues for the next two-year budget cycle, but Republican Gov. Doug Burgum maintained his push for a "conservative approach" to budgeting.
Revenues for the 2019-21 biennium, excluding oil taxes and transfers, are projected to total $3.38 billion, up 9.5 percent from a May 2017 forecast, Burgum's office announced in a news release. Revenues for this budget cycle, which ends in mid-2019, will exceed $3.2 billion, 4.4 percent higher than last year's projection.
"While this recent revenue growth is a good sign for our economy and is on track with the estimates we have used for budget planning purposes, it does not diminish the need for a structurally balanced budget and a conservative approach to spending," Burgum said in a statement.
Office of Management and Budget Director Joe Morrissette presented the preliminary forecast to a legislative committee at the state Capitol Wednesday.
“We’ve got to be conservative, but yet we’ve got to be reasonable too,” he said after his presentation. “There’s some reason to be optimistic … (but) it doesn’t fully close the gap that we have.”
Burgum, citing deep cuts in the state's reserves during previous budget woes, has asked state agencies to identify cuts of 5 percent or 10 percent depending on their size, with an extra 3 percent "contingency" reduction, for the next biennium. Agencies were also asked to cut staffing by 5 percent, although higher education and smaller departments were excluded from the guidance.
Burgum, a former software executive who campaigned against “runaway spending,” will present his proposed budget to the Legislature in early December, which will include another revenue forecast. Lawmakers will start the next legislative session in January and craft budgets for the 2019-21 biennium.
House Minority Leader Corey Mock, D-Grand Forks, said Wednesday’s forecast provided some “breathing room” but he expressed concerns about how lawmakers will balance the state’s budget. Burgum’s office noted policymakers used budget cuts and about $800 million in reserve funds and transfers to accomplish that last year.
“This conservative yet reasonable preliminary forecast shows we still face a significant challenge as we seek to balance ongoing revenues and expenditures, fund our priorities and provide salary increases to team members next biennium,” the governor’s statement said.
Legislators will receive their own revenue forecast next week, said Republican Sen. Ray Holmberg. A legislative committee last year voted to contract with a consulting firm over objections from the executive branch.
“At the end of the day, the Legislature will have two to pick from,” Holmberg said. “They might be very similar. They might be very different.”
Wednesday’s forecast predicts oil tax revenues will be 31.9 percent higher this biennium than previously projected, sending more money to political subdivisions, the Three Affiliated Tribes and the Legacy Fund. Those revenues are also expected to grow by 5.1 percent to $4.8 billion in 2019-21.
The forecast predicts a 10 percent bump in sales tax, the biggest contributor to the general fund, and a 6.4 percent increase in individual income tax revenues next biennium, but corporate income taxes are expected to drop by 42.1 percent. Morrissette attributed that decline to changes the Legislature previously made, federal tax cuts and projected economic conditions.