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Rep. Rick Holman, Legislative Report, August 23, 2016.

Budget Fix: Earlier this month a special session of the Legislature approved Senate Bill 2379 which made changes in the previously approved two-year budget in order to meet the constitutionally required balanced budget. Here’s a brief summary.

  • The legislation requires an additional 2.50 percent which when combined with earlier reductions (4.05 percent in February) authorizes a reduced two-year budget for all but two agencies by 6.55 percent, resulting in a $396 million reduction in general fund expenditures.  In this area we have Mayville State and are close to both UND and NDSU which have had to make adjustments in their budgets to meet the change. Mayville State has made the necessary adjustments but with increased enrollment and long term planning, MSU will continue the excellence we have seen over the past few years. MSU’s original 2015-2017 two-year budget was $16,739,145. With the reduction of ($1,096,414) the new budget amount is $15,642,731.  
  • The two areas that received lesser reductions are the Department of Corrections and Rehabilitation which will absorb a net reduction of 5.05 percent and the Department of Human Services which must adjust to the previously authorized reduction of 4.05 percent. Since that last item has a lot to do with healthcare services including long term care, the three nursing homes in District 20 have had to reduce the state funded part of their budgets by over one million dollars. All three administrators are adjusting to the new budget numbers as best they can. I would have liked to see this area have no reduction since much of the support funding is multiplied because of the federal matching funds that are tied to Medicaid services. For any agency, adjusting a budget down is difficult. Every manager of any agency or institution has contracts, salary agreements and other budget issues that are not quickly changed just because the amount available has decreased.
  • Since the legislature will be convening in January the legislation also states that if additional revenue becomes available the 65th Legislative Assembly should consider emergency legislation to restore the reduced funding for behavioral health, autism, and long-term care services. That’s a good thing.
  • Also worth mentioning is that the legislature did not reduce overall funding for the state school foundation aid program.
  • The above adjustments in agency budgets combined with transfers from reserve funds and Bank of ND profits will allow a positive general fund balance on June 30, 2017, the end of the current two-year budget cycle.

Much of the income to the state general fund comes from sales and use taxes which have seen a dramatic decrease due to the drop in price for oil and agricultural products. If either returns to a higher level, it’s likely that some of the growth we’ve seen over the past few years will return, likely at a lower level, but better than what we’ve experienced for the past year and a half. Already, we’re seeing an increase in oil well completion and the price of oil and we hope that the slump in ag prices will also rebound.

It’s hard to predict a two-year budget with the wide swings that occur in our state’s economy. Legislation was presented in a previous session to keep 80-day limit for the legislature, but break it in to two parts, say 60 days in odd numbered years and 20 days for budget adjustment in even numbered years. I predict that this may be proposed again in the 2017 session. This would give a greater voice to the people and their elected representatives when changes are needed.

School is back in session, drive carefully.

Rep. Rick Holman, ND District 20

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