Gov. Jack Dalrymple directed the state’s General Fund agencies to reduce their 2015-2017 budgets by an additional 2.5 percent to help offset a projected $310 million budget shortfall. The Governor’s use of the allotment process last week is part of an integrated plan developed in partnership with majority legislative leaders to balance the state General Fund through a combination of strategic budget reductions and the use of contingency funds.
While the allotment process begins with across-the-board budget reductions in all General Fund agencies, legislation developed by the Governor and majority leaders calls for the Legislature to restore funding for the Department of Human Services and the Department of Corrections and Rehabilitation. Gov. Dalrymple on Tuesday will outline the budget plan during his address to the North Dakota Legislative Assembly, which will be convened in a special session.
The allotment process authorizes Gov. Dalrymple to access the Foundation Aid Stabilization Fund. The budget plan assumes a draw of about $44.3 million from the Foundation Aid Stabilization Fund to help resolve the budget shortfall without any reductions in K-12 school funding.
The legislation excludes the Department of Human Services from the allotment by restoring $33 million in Human Services funding. Additionally, the Legislature is expected to restore about $3 million in essential funding to the Department of Corrections and Rehabilitation, leaving the agency to reduce its budget by one percent.
The Governor’s directive for an additional 2.5 percent reduction in General Fund spending will reduce the budget shortfall by $152 million, less the funding restorations for Human Services and Corrections. To cover the remaining shortfall, the legislative plan to be introduced Tuesday also assumes the transfer of $75 million remaining in the Budget Stabilization Fund and access to $100 million in accumulated profits from the Bank of North Dakota.
The bill also contains a statement of legislative intent that if additional revenues become available prior to the next regular session, the 65th Legislative Assembly should consider early in the regular session the restoration of funds that support behavioral health services, autism and long-term care.
In February, Gov. Dalrymple implemented a 4.05 percent allotment of General Fund appropriations to help offset what was then projected to be about a $1 billion shortfall. The Governor also committed the Budget Stabilization Fund to cover the projected shortfall.
Since then, depressed market prices for crude oil and agricultural commodities have continued to stifle state revenue collections, especially sales tax receipts in Western North Dakota. A revised revenue forecast issued in July projected that, without further corrective action, the General Fund would fall $310 million short by the end of the biennium. Gov. Dalrymple on July 13 called for a special legislative session and began working with legislative leaders to develop the integrated budget plan outlined.
