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Agencies see new normal coming for state funding

BISMARCK--State agency heads see North Dakota returning to a new pre-boom normal following two rounds of budget cuts and further reductions being required for the 2017-19 biennium.

Lorne Campbell, chief engineer for the western region of Prairie Public Radio in Bismarck, monitors the signal transmission on Tuesday, Aug. 23, 2016. BISMARCK TRIBUNE PHOTO
Lorne Campbell, chief engineer for the western region of Prairie Public Radio in Bismarck, monitors the signal transmission on Tuesday, Aug. 23, 2016. BISMARCK TRIBUNE PHOTO

BISMARCK-State agency heads see North Dakota returning to a new pre-boom normal following two rounds of budget cuts and further reductions being required for the 2017-19 biennium.

Following several years of record revenues flowing to the state's coffers, agencies realize they need to pull back and realign themselves to remain efficient while providing services residents have come to expect.

"Nothing was normal during those (previous) two bienniums," Office of Management and Budget Director Pam Sharp said.

Generally funded agencies were required to cut 2.5 percent from budgets following a projected $310 million revenue shortfall unveiled last month. Rainy day funds and Bank of North Dakota profits were also used during a special session to plug the remainder of the gap.

The cuts follow a $1.074 billion shortfall in February plugged with rainy day funds, turnover dollars from the previous biennium and 4.05 percent in budget cuts.

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Gov. Jack Dalrymple in May ordered agencies to deliver budget proposals at 90 percent levels of ongoing spending from the current biennium.

"They're going to need to cut deeper than this and they're going to have to assume that one-time expenses aren't going to happen unless they're absolutely critical," Sharp said.

North Dakota Tax Commissioner Ryan Rauschenberger said July revenue collections, the first reported since the new forecast, show general fund collections were nearly $1.7 million ahead of forecast.

The next revenue forecast in November will provide a clearer revenue picture for 2017-19 and will be what the governor's executive budget proposal is based off of.

Rauschenberger said a lot can still happen and revenues are being watched closely.

"These next three months, August, September, October will be very critical," Rauschenberger said.

Making cuts

For the tax department, nearly $355,000 in salaries and wages were cut. Unfilled positions as well as staff that retire before the end of the biennium won't be replaced; a total of eight positions will be impacted.

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The tax department also will be cutting more than $422,000 in operating expenses, which will result in fewer mailings and a reduction in printing costs.

A $500,000 reduction in funds for the Homestead Tax Credit and nearly $192,000 for the Disabled Veteran Credit are also among the cuts.

In the past, the Homestead Tax Credit usually has a few million dollars left over at the end of the biennium, according to Rauschenberger. If there's a shortage in the veterans tax credit a deficiency appropriation could be made by the Legislature and shift money from the Homestead Tax Credit during the 2017 session, he said.

"We'd really been planning this all along," said Rauschenberger, adding earlier this year he'd figured a second round may be coming. "We kind of had a head start."

Sharp said OMB cuts total $1.1 million. No salaries or wages were cut in this round, but more than $349,000 for what was listed as capital assets, $200,000 in contingency fund dollars and $100,000 in funding for Prairie Public Broadcasting were cut.

In the previous round of budget cuts, four open positions were left vacant, which Sharp says might be eliminated in OMB's 2017-19 budget.

Public Service Commission members during their regular meeting earlier this week outlined $198,000 in cuts.

A total of $135,000 in funds for reclamation and grain warehouse insolvencies litigation will be cut. More than $47,000 in salaries and wages and $16,000 in operating expenses also received the axe.

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For the 2017-19 budget, a restructuring of some PSC divisions and consolidation of a management position are among the items to be proposed to lawmakers to improve efficiencies.

"Probably the hardest thing I've ever been involved in. It was very challenging," Commissioner Brian Kalk said of the 2017-19 budget proposal.

Cuts to the North Dakota Department of Transportation total $16.4 million and largely will be dealt with through changes in scope to 2017 road construction projects, department spokeswoman Jamie Olson said.

"That doesn't really effect any of those (underway) right now," Olson said.

Cost reductions can come from using asphalt instead of concrete. More competitive bids also have been coming in for projects during the slowdown in oil activity.

"This does affect not only the state highway projects, but it does impact some dollars that are going to the counties," Olson said.

Nearly $13.1 million of the DOT cuts come from general fund transfers for statewide road projects. Another $2.8 million will come from a funding pool for non-oil producing county road projects.

State Auditor Robert Peterson's budget is largely salaries and wages, which led to cuts of more than $261,000.

"We actually had enough (room) left so it's not impacting anyone," Peterson said.

During the first round of budget cuts, two of six positions in the agency's North Dakota University System Performance Audit Division were left vacant that hadn't yet been filled. The six positions were authorized by the Legislature last session. For the 2017-19 budget, two more positions would be left open, though his office will submit a request for funding all six positions.

Peterson said tight budgets are nothing new to him.

"I remember coming in and having 97 percent budgets under Gov. Schafer," Peterson said. "I think we'll be OK."

Prairie Public looks to cut $100K

When every dollar counts, a cut of $100,000 in state funding as part of a round of budget cuts will create some pain that will have to be addressed, the head of Prairie Public Broadcasting said this week.

John Harris, president and CEO of Prairie Public, says the cuts in state funding will likely come from areas such as programming for television and radio as well as on educational workshops the organization puts on across the state.

"We haven't targeted anything specific yet. We should be able to tighten our belts," said Harris, adding that the annual budget is typically from $7.5 million to $8 million.

The $100,000 is a small part of the $1.1 million in cuts to the Office of Management and Budget this month as part of a 2.5 percent budget cut to generally funded agencies ordered by Gov. Jack Dalrymple.

Prairie Public has several public and private funding sources, including state and federal dollars, as well as grants and member dollars.

"It's tough, and you just have to make adjustments," said Harris, explaining that the most important assets are programming and staff.

The organization operates on a fiscal year that begins Oct. 1; he estimated about $25,000 of the cut will be for 2016 and the rest for fiscal year 2017.

Harris said decisions on cuts will be made in the fall.

"It's $100,000. It's tough. Any amount is to be honest," Harris said. "Every dollar counts."

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