BISMARCK, N.D. – Many state services will be reduced and raises for employees won’t be as generous, but North Dakota agencies will be able to cope with mandatory cuts to help close a more than $1 billion spending gap blamed largely on slumping oil activity, the state’s top budget official said Thursday.
Budget Director Pam Sharp said all state agencies met the Wednesday night deadline to submit the required cuts ordered by Gov. Jack Dalrymple on Feb. 1. Dalrymple ordered agencies that receive general fund dollars to trim their budgets by 4.05 per cent, or about $245 million. Along with the deep cuts to government agencies, Dalrymple shifted most of the money from a state rainy day fund to help make up for the record shortfall caused by a dramatic drop in North Dakota tax collections due to a decrease in oil drilling and depressed crude prices.
The Legislature’s record-high $14.4 billion budget for the two years that began July 1 was built last year on economic assumptions that were too rosy. State law requires the governor to impose spending reductions to deal with a deficit situation.
The cuts to agencies are called “allotments” and affect most state services, from prison operations to child care aid. State assistance to local schools is exempted.
“I’m confident agencies can live within these allotments,” Sharp said. “I haven’t heard anyone say they can’t do it.”
The governor will take more than $497 million from the rainy day fund, more formally called the Budget Stabilization Fund. The surplus stash of cash has been built up over the past decade largely from past oil bounty. The remainder of the shortfall will be made up by using the previous budget’s ending-fund balance of about $331 million.
There are about 11,800 state employees. Sharp said she doesn’t know of any agency cutting positions but that most are limiting raises and bonuses.
North Dakota has about 70 agencies and all but roughly a dozen receive general fund dollars and are subjected to the cuts. The Legislature and its research arm along with the State Supreme Court are not required to comply with the cuts but did so at the rate ordered by the governor, Sharp said.
The Department of Human Services, the state’s biggest agency with more than 2,200 employees, submitted required cuts totalling about $54 million. Maggie Anderson, the agency’s executive director, said cuts to her agency “have been very difficult because they do touch people’s lives.”
She said the agency sent letters Wednesday to about 500 families that will lose child care assistant subsidies on April 1. The Legislature had changed eligibility in the program from 50 per cent of North Dakota’s median income of about $53,000 a year to 85 per cent, but Anderson said the department has made adjustments and now it is 60 per cent. She said that will save the agency about $5 million for the remainder of the two-year budget cycle.
The Transportation Department, the second-largest state agency, submitted required cuts totalling $26.5 million. Sharp said the department expects to save money on transportation projects through receiving lower bids due to lower energy prices. The agency also plans to cut costs on some projects, such as paving a highway in the western part of the state with asphalt instead of more expensive concrete.