ND governor orders cuts amid $1 billion shortfall

Associated Press

BISMARCK, N.D.

North Dakota Gov. Jack Dalrymple ordered deep cuts to government agencies and a massive raid on the oil-rich state’s savings Monday to make up for a more than $1 billion budget shortfall due to a drop in oil drilling and depressed crude prices.

The state had more than $2 billion in various reserve accounts just one year ago, but oil prices – a key contributor to the state’s wealth – have taken a nosedive in the past year.

North Dakota is the nation’s second top oil-producing state, behind only Texas, and has the lowest unemployment rate in the country at less than 3 percent. But the Legislature’s record-high $14.4 billion budget for the two years that began July 1 was built on oil prices and economic assumptions that have fallen “much greater than anyone would have predicted,” the governor said.

“After 15 years of receiving almost entirely good news about the growth in revenues for North Dakota, it seems strange to hear that things have gone in the other direction,” Dalrymple, a Republican, told state agency officials at the state capitol in Bismarck.

Oklahoma’s budget hole also is expected to exceed $1 billion because of poor state revenue collections and dropping oil and natural-gas prices. Oklahoma Republican Gov. Mary Fallin on Monday proposed increasing the cigarette tax and expanding the sales tax to a variety of services to help.

In North Dakota, Dalrymple ordered agencies to cut their budgets by 4.05 percent, which will save the state about $245 million through the two-year spending cycle. The governor also will take more than $497 million from the state’s Budget Stabilization Fund, a surplus stash of cash that has been built up over the past decade largely from past oil bounty.

That means about $75 million will be left in the fund, which has been tapped by only two other governors: then-Gov. John Hoeven in 2002, and former Gov. George Sinner in the 1980s, due to depressed prices for crops and oil.

Rep. Al Carlson, the North Dakota House majority leader, said he would have preferred across-the-board agency cuts of at least 5 percent instead of taking more money from the rainy day fund.

“Thank God we had the money,” the Fargo Republican said. “It served its purpose, but now it’s gone.”