Dalrymple Issues 2013-15 Budget Guidelines
2013-2015 BUDGET GUIDELINES ADDRESS
Governor Jack Dalrymple
April 16, 2012
Good afternoon. Thank you all for being here today.
We are serving the citizens of North Dakota during a remarkable period in our state’s history. It’s a very dynamic time, filled with new opportunities, growing prosperity and also the challenges that come with strong economic growth.
Today, we set out our budget guidelines which recognize the demands of a growing state and yet lay the ground work for a conservative approach to the budget process for the 2013-2015 biennium. These guidelines will aid you in developing budgets that provide the citizens of North Dakota with quality services at affordable costs. We must demonstrate that we are good stewards of the people’s money and that we will do everything we can to operate a highly efficient state government.
You have met this challenge in the past and I want to commend all of you for your dedicated service. I’m confident you will continue to do your part in our on-going commitment to holding down costs while providing quality services.
North Dakotans can take pride in the state’s prudent fiscal management and its successful long-term strategies to grow and diversify our economy. Since 2000, we have created more than 65,000 new jobs, and we currently have more than 20,000 job openings. We have one of the strongest economies in the nation; we lead the country in personal income growth and our population has grown by 50,000 people.
Our economic growth hasn’t come without challenges. And we are as committed to meeting these challenges as we are to growing the state’s economy.
The state has provided extraordinary funding and other resources to help communities across North Dakota recover from floods and to provide for long-term flood protection. At no other time in the state’s history have we fought so many flood events at the same time. In the new biennium we will remain committed to supporting flood relief efforts in the Minot area, in the Devils Lake Basin, Bismarck-Mandan, Fargo, Valley City and in other communities across the state.
We’re also committed to meeting the challenges that come with rapid development in our oil-producing counties. The state is providing more than $1 billion to build and repair roads, provide more housing and to meet the many other impacts of rapid oil development.
I sometimes wonder what our response to these challenges would have looked like if we hadn’t practiced sound fiscal management in the past; if we hadn’t worked so hard to grow and diversify our economy. North Dakotans can indeed take pride in how we have grown our economy, how we’ve managed taxpayers’ dollars and how we continue to meet our challenges.
Being good stewards of the taxpayers’ money means sticking to the principle that on-going expenditures should never exceed on-going revenue. It means providing broad-based tax relief whenever possible, and it means maintaining healthy reserves so that we can meet challenges that come our way.
It is during times of strong economic growth that we must be especially mindful not to create an overly expansive government that burdens future generations. I am committed to holding the line on on-going spending while recognizing that we must also meet the needs that come from natural disasters and rapid growth.
It is in that light that I am calling on you to develop a hold-even budget for the 2013-2015 biennium. I also ask that you develop an optional package in which you identify potential spending reductions of 3 percent from your baseline in the event that savings are needed.
Continue your efforts to find greater efficiencies and savings wherever possible. If you have developed initiatives or programs that will help us to better serve the citizens of North Dakota, submit them for consideration as optional requests or detail how you plan to offset the operational costs within your hold-even baseline.
We recognize there are some agencies facing tremendous workload increases due to the growth in our economy. If your agency is experiencing significant growth in the demand for services, first consider all other options before requesting a new FTE.
If necessary, you may include proposed staffing changes in your optional request. At the same time, remember that we must develop a sustainable budget plan.
The dynamic growth throughout our state requires that we become more creative and more efficient service providers. Consider all opportunities to leverage or reprioritize existing resources, including staffing. Programs and staffing should always be evaluated in terms of their results. Keep our best programs, consolidate when it creates efficiencies and eliminate efforts that no longer fit our priorities.
There is a misconception that any budget challenges we face can be easily remedied with our strong oil revenues. The state’s oil tax revenues are strong, but by statute, the General Fund budget includes no more than $300 million in oil tax revenues. That represents less than 10 percent of General Fund expenditures.
The rest of our oil revenue is committed to other funds. By a vote of the people, the Legacy Fund receives 30 percent of all oil tax revenues. The remaining revenue is distributed by law to counties and to other funds including the Property Tax Relief Fund, the State Disaster Relief Fund, and the new Strategic Investment and Improvements Fund.
Our budget challenges include having to sustain for a full biennium spending increases adopted during the last legislative session. And as our economy grows and personal incomes continue to rise, federal formulas will require us to pay a significantly larger share of Medicaid during the new biennium. To sustain our current Medicaid program we will have to make up $91 million in lost federal funds in the new biennium. Going forward, we have to expect to receive fewer and fewer federal dollars.
It’s important for the people of our state to also know that as we move into a new budget cycle our commitments to help provide permanent flood protection and to address the impacts associated with rapid growth will not waiver.
All of these factors require that we take a balanced approach to the budget process. The budget guidelines presented today will help us make important decisions that will affect our state for years to come. We owe it to the people of North Dakota to develop a balanced budget that funds our priorities; allows us to continue meeting unforeseen challenges; provides for prudent investments in our future and, ultimately, allows us the opportunity to consider more broad-based tax relief.
Thanks again for your dedication to the people of North Dakota.