Can We Calm Down About North Dakota's Spending Cuts?
I get it. I do.
North Dakota has been able to increase spending every biennium for a long, long time. For a generation the news about the state has been, for the most part, about low unemployment and steady economic growth supporting ever-larger budgets.
When we start getting headlines about falling tax revenues prompting mandatory, across-the-board budget cuts people freak out a little bit. North Dakotans haven’t been subjected to that sort of news for a long, long time. Add to that the caterwauling we can expect from state agencies forced to adjust their budgets, and the politics of a heated gubernatorial race, and you have a recipe for overreaction.
So let’s put things into perspective. This graph shows the growth in North Dakota’s general fund appropriations going back to the 1995 – 1997 biennium. For the 2015-2017 biennium it shows both the original appropriation approved during the 2015 legislative session and the adjusted appropriation after Governor Jack Dalrymple’s 4.05 percent allotments are implemented:
That’s…not much of a change. Since the 2005-2007 biennium to the pre-allotment 2015-2017 budget, the state has been averaging a 36.8 percent biennium-over-biennium increase in general fund spending.
Even after the budget cuts we’re talking about general fund spending in the 2015-2017 biennium which is still more than 35 percent higher than the 2011-2013 biennium.
And keep in mind, even as the state cuts, a lot of what drove the legitimate need for larger budgets (growing population and more demand for government services) is dissipating. This isn’t boom-time North Dakota any more, so we no longer need a government funded at boom-time levels.
I think Dalrymple made a mistake when he responded to the more the $1 billion budget shortfall, revealed by a new revenue forecast earlier this month, by relying more on reserve funds than budget cuts. From his presentation to state agencies on February 1st, here’s how Dalrymple is making up the shortfall:
That $497 million out of the Budget Stabilization Fund (you’ve probably heard it called the “rainy day fund”) pretty much drains it, leaving only about $75 million on deposit. I’d have left more of that money in the funds, and called for deeper cuts to state agencies.
Politically speaking that might have added fuel to some of the overreaction to this budget situation, but fiscally speaking it was probably the choice.
Why put off to tomorrow budget cuts we can do today? In a state where, again, general fund spending has been average more than 36 percent growth each biennium I’m sure we can find more than 4.05 percent worth of fat to cut.
UPDATE: Here’s a list of the cuts, by department, released today if you want to get a better handle as to what’s on the chopping block:
