BISMARCK, N.D. (AP) — North Dakota Gov. Doug Burgum directed state agencies Friday to identify substantial spending cuts and efficiencies to help deal with a state economy that’s been battered as officials tried to slow the spread of the coronavirus.
Burgum said agencies must pare spending 5% percent to 15% when they prepare their plans for the next two-year budget. The state’s larger agencies are responsible for the bigger cuts, he said. The directive excludes cuts to public schools and Medicaid programs.
“This challenge has hidden inside it an opportunity and that’s an opportunity for us to innovate like never before, to cut red tape like never before, to figure out a way to transform and deliver services and serve our citizens better than ever before and do that with world-class outcomes and do that a lower cost,” Burgum said in his video address from the state Capitol.ADVERTISEMENT
The Republican governor’s move reflects an increasing downturn in tax collections largely due to slumping crude prices and production in North Dakota, the nation’s No. 2 oil producer behind Texas.
Until the coronavirus pandemic, North Dakota’s coffers had been much healthier than projected during the current two-year budget cycle due strong oil prices and near-record drilling in the state.
The governor will use the agencies’ blueprints due July 15 to draft his own spending recommendations for the Legislature when lawmakers meet in January.
Burgum said he has met with legislative leaders, including Friday morning, to discuss his directive.
The Legislature “is more open than ever to ideas about how to transform government, because they realize we’re not going to get where we need to go by counting and saving paperclips. We have to actually think about doing things differently,” he said.
Republican Senate Majority Leader Rich Wardner said he agreed in principle with Burgum’s directive.
“We’ve got to start someplace,” Wardner said. “We’re just not going to have the revenue.”
Republicans hold a more than two-thirds majority in the House and Senate.
Burgum is running for re-election this fall. His Democratic opponent, Shelley Lenz, said in a statement that the budget guidelines “are simply not practical for North Dakotans.”
“Governor Burgum is reactively prioritizing cutting investments in the people of North Dakota without looking at how we diversify our revenue resources,” her statement said.
Burgum outlined similar directions to state agency administrators in 2018, calling for cuts of up to 10%, and an additional 3% reduction as a cushion against commodity price swings.
But it did little to curb overall state spending.
North Dakota’s current two-year budget represents more than $4.8 billion in state general fund spending, up about 12.5% from what was approved by lawmakers in the previous cycle. State spending has more than doubled in the past decade.
The general fund portion of the budget is spent on an assortment of programs, including education and human services. It is funded largely by taxes on income, sales and energy.
The first-term governor took office amid a sharp downturn in tax revenues due to prolonged slumps in oil and agriculture prices. The state’s budget was balanced three years ago through layoffs and raids on state savings.
Burgum said the current economic conditions are a “bigger challenge” than at that time.