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North Dakota state budget (2008-2009)

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State Information

Unlike most states, North Dakota was not facing a deficit for fiscal year 2009 or 2010.[1] The state of the state was "strong," said Gov. John Hoeven of North Dakota's economic stability. "When I say the state of our state is strong, however, I am mindful of the fact that as many as 41 other states are facing budget deficits this year or next. Clearly, our nation's economy is in a down-cycle, and we in North Dakota are not immune from its effects," he added.[2] According to state officials, North Dakota was expected to end its fiscal biennium with a $1 billion surplus.[3] Additionally, the governor announced in 2009 that he had proposed a $500 million Tax Relief and Education Funding Reform initiative, including $300 million in property tax relief, $100 million in income tax relief, and $130 million in additional K-12 education funding.[2]

Impact of budget woes

See also: State budget crisis, 2009-2010
  • For the first time in 15 years, North Dakota saw an unemployment rate of more than 5 percent in January 2009. More than 18,000 North Dakotans were jobless in January. January's unemployment rate hit 5.1 percent, compared to 3.4 percent in December, a 50 percent increase.[4]
  • North Dakota legislators denied a bill that exempted clothing from the state's 5 percent sales tax in March 2009. "Although it sounds really great on the surface, to maybe save a few bucks on sales tax of clothing, it really is detrimental to our cities," said Sen. David Oehlke. According to North Dakota's Tax Department, the exemption would mean $34 million less in sales tax collections over two years and $3 million less revenue for a fund that distributes a share of state sales tax collections to local governments.[5]
  • About 43 percent of the cash in the state's Budget Stabilization Fund was invested in corporate bonds that had been declining in value. On January 31, 2009 the fund was worth almost $183 million rather than $200 million, said Steve Cochrane, director of the state Retirement and Investment Office. Gov. John Hoeven proposed transferring $111.1 million into the fund on June 30, which was estimated to increase its balance to $311.1 million; however, in light of the declining value, legislators proposed increasing the transfer because of losses in the fund's investment portfolio.[6]

Budget background

See also: North Dakota state budget and finances

North Dakota operates on a biennium budget. The biennium includes a 24-month period from July 1 of odd-numbered years to June 30 of odd-numbered years, such as the 2007-09 biennium, which ran from July 1, 2007 to June 30, 2009. North Dakota’s legislature meets for up to a total of 80 days beginning in January and usually concluding in April of each odd-numbered year. Prior to the completion of the governor's recommended budget the governor takes into account individual agency requests, prior budget figures and projected revenue data. Both the House and the Senate receive the governor’s executive budget recommendation during the legislature's organizational session in the December preceding the legislative session. Once passed by both chambers of the legislature, each bill is delivered to the governor for signature. According to the North Dakota Century Code, which includes the State Constitution, the Emergency Commission has the authority to approve agency requests for line item transfers, for acceptance of additional federal and other funds, and for use of state contingencies appropriations.[7]

Budget figures

The following table provides a history of North Dakota's expenditures and gross domestic product (GDP).

Fiscal year Expenditures (billions) GDP (billions)
2000 $4.0[8] $17.8[8]
2001 $4.1[8] $18.5[8]
2002 $4.2[8] $19.9[8]
2003 $4.3[8] $21.7[8]
2004 $4.5[8] $22.7[8]
2005 $4.8[8] $24.6[8]
2006 $4.9[8] $25.9[8]
2007 $5.1[8] $27.7[8]
2008 $5.2[8] $29.7[8]
2009 $5.3*[8] $31.9*[8]
  • NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.

The state of the economy

  • In 2007 the oil industry brought more than $8 billion to the state in revenue, but since then revenues had dropped significantly. Oil was trading at $100 a barrel, hitting an all-time high of $140 in the summer of 2008. The number of oil drilling rigs totaled 98 in the state, but since the end of 2008, the rig count had dropped over 40 percent.[9]
  • Due in part to the state's diversified economy, North Dakota's state revenue and unemployment rates had not dipped as low or increased as significantly as other states. Standard & Poor's Ratings Services in March 2009 upgraded the state's issuer credit rating to "AA-plus" from "AA," citing in part its "ability to generate surpluses with little impact from the current economic downturn."[3]
  • Revenue exceeded projections over the last four months and the state was looking to end its fiscal 2008-09 biennium with a $1 billion surplus, according to Pam Sharp, North Dakota's budget director. According to Sharp, North Dakota's economy included more than just energy and agricultural sectors; it had a stable housing market that did not take a hit from the subprime mortgage crisis and conservative financial management.[3] The state's surplus consisted of $64 million in the General Fund Ending Balance, $311 million in the Budget Stabilization Fund and $603 million in the Permanent Oil Tax Trust Fund.[10]
  • The lowest mortgage delinquency rates were found in North Dakota at 1.21 percent, as compared to the highest rate in Florida at 9.52 percent. Additionally, North Dakota had seen a decline in its rate since the 2008 fourth quarter. The average national mortgage debt per borrower rose slightly, 0.26 percent, to $192,789 from the previous quarter's $192,287.[11]

Proposed actions

Governor John Hoeven

Unlike most states that were making severe budget cuts and implementing higher taxes, in early 2009 the governor proposed a $500 million Tax Relief and Education Funding Reform initiative, which included $300 million in property tax relief, $100 million in income tax relief, and $130 million in additional K-12 education funding. According to state officials the property tax relief would be funded by a dollar for dollar reduction in local school mill levies throughout the state. In the biennium, the state set aside $200 million in the Budget Stabilization Fund and another $200 million in the Permanent Oil Tax Trust Fund as a reserve for the future. For the next biennium the governor proposed setting aside between $800 million and $1.2 billion in reserve funds. "Building our reserves, combined with our major initiatives — reducing the burden of taxes, reforming and strengthening our education system, helping families, and above all, pursuing aggressive economic development efforts — these are the right investments and the right balance to move our state forward," Hoeven said. "The results — the return on investment — will be a more prosperous, more secure North Dakota," said Gov. Hoeven.[12]


A group of Republican lawmakers said that Gov. Hoeven should reject a portion of the federal stimulus money that was intended for unemployment benefits. According to legislators, the state would have to pay the increased costs that resulted from the benefits once the federal funds ended. In order to strengthen their point, on March 16, 2009 eight Republican members of the House's Industry, Business and Labor Committee signed a statement saying North Dakota should not "at this time" accept $14.5 million to increase unemployment benefits. According to the governor the state could wait until August 2011 to accept the unemployment funds and on March 16 added that he favored conducting a study to determine whether to take the money.[13]


Despite hesitation by Republican lawmakers, Democratic legislators said that the governor of North Dakota should accept the federal stimulus money that would be directed towards unemployment benefits. "It would go to people who need it the most, people who were unemployed, to buy the very things that stimulate the economy - groceries, gas, get the car fixed, clothes," said Rep. Jasper Schneider. The House Industry, Business and Labor Committee's five Democrats declined to sign a statement to reject the funds on March 16, 2009. Schneider said, "First of all, those (benefits) should be expanded anyway." He added that if the federal government picked up the cost for the first four years of the expansion then it's something that the state should accept.[13]

Economic stimulus package

North Dakota was expected to receive approximately $650 million of the $787 billion dollar economic stimulus package.[14] According to White House officials, the package was expected to create approximately 8,000 jobs.[15]

According to preliminary reports North Dakota was expected to receive:

  • $485,000 for senior nutrition programs[16]
  • $32 million for education funding[10]
  • $175 million for transportation infrastructure[10]
  • $76 million towards Medicaid[10]
  • $19 million for Clean Water[17]
  • $25 million towards weatherization[17]
  • $10 million for energy efficiency and conservation[17]

Budget transparency

As of 2009, North Dakota had no statewide, official spending database online, although in May 2009, legislation (Senate Bill 2018) passed that mandated a website be created by June 30, 2011.[18]

On March 3, 2009, Joshua Culling of the [[National Taxpayers Union] issued a letter to support transparency in North Dakota. Representative Thoreson's transparency legislation, House Bill 1377, mandated that the Director of the Budget create a searchable online database of state expenditures by January 1, 2010. This bill passed the ND House in the spring of 2009, but did not move past the Senate. The bill that the governor signed in May 2009, North Dakota Senate Bill 2018, required that a website be created by June 30, 2011.[18]


In the spring of 2009, North Dakota's governor signed a bill requiring a transparency website to be placed online by June 30, 2011.[18]

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State database Searchability Grants Contracts Line item expenditures Dept./agency budgets Public employee salary Exemption level
None n/a n/a n/a n/a n/a n/a n/a

Economic stimulus transparency

  • The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[19]
  • North Dakota was expected to receive an estimated $460 million.[20]

Public employee salary information

See also: North Dakota state government salary

See also

External links

Additional reading


  1. Center on Public Policy and Priorities, "State budget troubles worsen," March 13,2009
  2. 2.0 2.1 Gov. Hoeven, "2009 State of the state address," January 6,2009 (dead link)
  3. 3.0 3.1 3.2 Reuters, "Recession woes? Not in North Dakota," March 20,2009
  4. WDAY, "Battered economy impacts ND unemployment rate," March 12,2009
  5. Associated Press, "ND clothing sales tax exemption killed in Senate," March 13,2009 (dead link)
  6. Associated Press, "Value of ND 'budget stabilization' fund sinks," March 9,2009 (dead link)
  7. North Dakota Legislative Branch, "Budget Process," December 5,2008
  8. 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 US Government Spending, "North Dakota State and Local spending," accessed March 29,2009
  9. KFYRTV, "North Dakota`s Oil Economy," March 11,2009 (dead link)
  10. 10.0 10.1 10.2 10.3 Gov. Hoeven, "General Fund Revenues Steady, Oil Revenues Lower Reserve Below November Projection, Above Conservative Scenario," February 9,2009
  11. ACA International, "Mortgage Loan Delinquency Rates Rise for Eighth Straight Quarter," March 9,2009 (dead link)
  12. Gov. Hoeven, "Making the Right Investments to Build Our State," January 6,2009
  13. 13.0 13.1 Associated Press, "ND GOP lawmakers wary of jobless stimulus money," March 17,2009
  14. Associated Press, "North Dakota share of federal stimulus money now $650 million," March 17,2009
  15. American Recovery and Reinvestment Act, "Estimated job effect," accessed March 29,2009
  16. Minot Daily News, "Senior meals receive stimulus money," March 20,2009
  17. 17.0 17.1 17.2 State of North Dakota, "Economic Stimulus," March 27,2009
  18. 18.0 18.1 18.2 North Dakota Policy Council, "State to post expenditures online," May 10, 2009
  19. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  20. Wall Street Journal, "Stimulus Spending by State," March 12,2009