Tax And Spend: Hoeven Announces Plans For A 26% Increase In Government Spending

Which, if Hoeven’s budget were to be passed unchanged, would come on the heels of a 24% increase in spending from the last legislative session.

Hoeven’s budget requests $3.11 billion in state general fund spending from July 1, 2009, until June 30, 2011, an increase of 26.4 percent. North Dakota’s general fund is financed mostly by taxes on sales, income, energy, corporations, tobacco and gambling. Total spending, which includes federal funds, state gasoline tax collections, and other revenues, would rise 19 percent, to $7.71 billion.

Hoeven attempts to hide behind the “one time spending” canard, suggesting that his budget-busting increase is ok because it all goes to one-time expenditures. Of course, when our political leaders spend everything in site year after year after year that “one time spending” excuse because cold comfort, doesn’t it?
Also, take a look at the Governor’s budget in spreadsheet format. Each agency in the state made a budget request to Governor Hoeven, and Hoeven budgeted an amount greater than what the agency requested almost across the board. And all those additional increases Hoeven is budgeting for?
He’s calling them “one time spending.” Which is baloney. If you increase spending on an agency that is on going spending. Because you can bet that agency would be seeing any spending cuts. At least not under John Hoeven.
Also, notice that while Hoeven is ratcheting up spending to $3.11 billion for the next two years the state general fund is only expected to take in about $2.78 billion in revenue. He wants to fund his overspending on proceeds from increased oil tax collections:

Hoeven estimates North Dakota’s general fund will collect $2.78 billion in revenues over two years. He is recommending that the Legislature spend $2.75 billion for ongoing programs, and $357.2 million on building and road repairs and other one-time projects. Most of the $357.2 million would come from a state trust fund for surplus oil tax collections.

Of course, the problem with this is that oil has fallen to under $40/barrel. If it stays there for any length of time that’s going to have a significant impact on oil tax revenues in the state. Hoeven is gambling on oil tax revenues staying high, and that’s a dangerous game to be playing as the rest of the country sinks into a recession.
And even with the economic future of the state and the country looking a bit shaky, Hoeven wants to pretty much spend every dollar available to him:

Budget documents say North Dakota’s budget surplus should be $1.265 billion when the state’s current two-year budget period ends June 30. The figure includes an estimated $392 million general fund balance; a $311 million rainy-day fund; and $562 million in surplus oil taxes.
Hoeven wants to use $657 million of the surplus during the 2009-11 budget period, including $300 million to finance school property tax reductions and $357 million for an assortment of one-time projects.

Hoeven talks about property tax reductions, but spending state money to bailout exorbitant local spending and thus obliquely lowering property taxes (if localities can be trusted to lower property taxes, which they can’t be) is hardly “property tax reductions.” It’s a shell game aimed at making Hoeven look like a tax cutter even when he isn’t really one.
All in all, the Governor’s budget is horrendous. If I had to say one positive thing about it I’d say that it’s ok that we’re going to invest in infrastructure (roads and bridges) given how much more wear and tear we’re seeing on infrastructure due to increased economic activity (especially in and around the oil fields), but that’s cold comfort given the amount of irresponsible spending the rest of this budget entails.
But I’m quite certain the powers that be will just rubber stamp it. The media in the state will go along with it (because most of the media outlets are owned by people who get their pockets lined by Hoeven’s “economic development” nonsense). And the taxpayers will, once again, get hosed.