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Yesterday marked the end of the first half of the legislative session. Photo: Richie Diesterheft via Flickr.

Things to know about North Dakota’s special budget session

BISMARCK, N.D. (AP) — The North Dakota Legislature is returning to Bismarck on Tuesday morning for a three-day special session, summoned there by Republican Gov. Jack Dalrymple to address shortfalls in the state treasury.

Dalrymple made the announcement last month after an updated forecast predicted tax collections will continue to drop due to depressed oil and farm commodity prices. The forecast, done by the state’s economic consultancy Moody’s Analytics, says the deficit will swell to $310 million if nothing is done by the time the current budget cycle ends on June 30, 2017.

A rundown of how the state’s budget woes, what’s already been done to address it and what lawmakers are likely to do:

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HOW DID WE GET HERE?

North Dakota for several years had been riding a wave of unprecedented growth — and spending — due to generally healthy commodity prices and an explosion of oil development in the western part of the state that made it the No.2 oil producer behind Texas. But crop and oil prices have plummeted since the Republican-led Legislature planned its two-year budget that began July 1, 2015, on far-too-rosy revenue projections.

The current budget, including federal aid, is a record $14.2 billion — nearly doubled since 2009 — and is funded largely by state taxes on income, sales and energy.

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MASSIVELY MISSED MARK

Oil prices began nosediving while the Legislature was in session last year, though it did little to dampen spending because lawmakers relied on forecasts that predicted better times ahead.

Those forecasts, however, have proven as scientific as chimps throwing darts. Reality hit hard in February, when Dalrymple ordered across-the-board 4.05 percent cuts in state government, as well as a raid on the state’s rainy day fund to make up for about $1.1 billion in shortfalls for the current budget cycle.

Since then, tax collections are down an additional $310 million.

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THE POTENTIAL FIX

Dalrymple and Republican legislative leaders, who have been crafting a bill to address the budget, have not given specifics on how they plan to solve it. A draft of the bill is expected to be made public Monday.

The governor has hinted about a third of the shortfall may come from the Bank of North Dakota, the nation’s only state-owned bank that set an earnings record for the 12th straight year in 2015 thanks in part to the once-thriving oil industry in western North Dakota.

Further cuts to most state agencies will be “in the ballpark of 2.5 percent,” according to Senate Majority Leader Rich Wardner, R-Dickinson, and Fargo Republican Rep. Carlson, his House counterpart. That would amount to about a $151 million savings for the state.

Other funds being eyed are:

— The remaining $75 million balance of the state’s Budget Stabilization Fund, which held more than $572 million in January and before Dalrymple dipped into it. Established in 1987, it was intended to stash extra tax money from industry booms to be used in leaner times to protect state programs.

— The state’s Strategic Investment and Improvements Fund, which is supported with oil and gas taxes. The fund held more than $1 billion but was depleted last year to pay a “surge funding” bill intended to fast-track money for highways and communities affected by oil development. The fund is projected to hold about $325 million at the end of the current budget cycle.

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THE PROCESS

The Legislature will convene at 9 a.m. Tuesday, and Dalrymple is slated to address a joint session 30 minutes later.

To introduce bills, lawmakers must get approval from a Republican-controlled delayed-bills committee in either the House or Senate. Republicans hold two-thirds majorities in both chambers.

The process will limit introductions of any other bills, particularly those offered by minority Democrats. Senate rules, however, give Democrats leeway to attempt to attach their proposal to related legislation.

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DEJA VU

North Dakota’s Constitution allows the governor to call a special session on “extraordinary occasions,” and it’s been used 15 times since statehood.

This is Dalrymple’s second. He last called a special session in 2011, where lawmakers endorsed, among other things, $30 million in public works grants for local governments whose infrastructure was strained by oil development.

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TAXPAYERS’ BILL

The Legislative Council, which is the Legislature’s research arm, estimates the three-day special session will cost taxpayers about $174,000, or $58,000 daily. Lawmakers each are paid $177 daily, plus lodging and mileage, but are on their own for meals.

 

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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