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BISMARCK, N.D. – Gov. Kelly Armstrong today presented his executive budget guidelines for next biennium, calling on some agencies to prepare hold-even budgets and others to reduce their budgets as part of a long-term strategy to bring general fund spending in line with general fund revenues by 2032.
“Twenty years of growth in North Dakota has come with 20 years of growth in the state budget. Much of that was necessary, but the growth rate is also unsustainable,” Armstrong said in a meeting with agency leaders and fiscal officers at the Capitol. “We have a balance problem in our state budget. The growing gap between our ongoing revenues and ongoing expenditures is a slow-building storm, and we need to start correcting deficit spending in the general fund.”
Agency leaders will use the guidelines to develop their budget proposals, which Armstrong will then use to craft his executive budget recommendation for the 2027-2029 biennium. Armstrong will present his budget to state legislators in December ahead of their January regular session.
The guidelines call on agencies with general fund budgets of less than $10 million to prepare a hold-even budget. Agencies with budgets between $10 million and $20 million must identify base budget reductions of 3%, while agencies with budgets over $20 million must identify base budget reductions of 10%. In addition, agencies that fall within the hold-even or 3% categories must submit an additional 3% reduction package as a contingency against potential revenue shortfalls due to volatile energy markets.
“Many of you weren’t here in 2015, but I was, and I remember how painful the allotment process was,” Armstrong said. “And we are going to hope for the best and prepare for the worst.”
No new full-time positions or new building construction projects will be granted without an exception, and any new proposals that rely on ongoing revenues should be offset by a corresponding reduction in ongoing expenditures, Armstrong said. Current agency salary budgets will be fully funded, he said, citing the need to take care of existing employees.
Office of Management and Budget (OMB) Director Joe Morrissette outlined the gap between general fund ongoing revenues and ongoing appropriations.
“The biennium began with an ongoing general fund gap of nearly $800 million,” Morrissette said. “While strong revenue growth is expected to reduce this gap, significant effort and collaboration across all agencies will be necessary to develop a budget that puts us on a sustainable path and ensures ongoing revenues and expenditures are balanced.”
Higher oil prices have generated additional state tax revenues, increasing the general fund’s projected ending balance for the current biennium by approximately $318 million. But most of that will be for one-time use and doesn’t close the gap, Morrissette noted, echoing the governor’s call for a long-term strategy.