AP News

$1.6 billion: ND budget surplus continues to zoom

BISMARCK, N.D. (AP) — North Dakota's estimated budget surplus has mushroomed to $1.6 billion, analysts said Wednesday, which Gov. Jack Dalrymple credited largely to sales tax collections from the prosperous oil economy.

The amount is almost 40 percent of North Dakota's present state general fund spending. In July, analysts pegged the surplus at $850 million.

As impressive as the number is — more than $2,300 for every North Dakota resident — it's an understatement of the revenue gushing into the state's treasury. It excludes $1.9 billion in three restricted state funds and $1 billion that has been set aside for public works projects and property tax cuts.

"Even the professional forecasters would not have expected the kind of commercial activity, the kind of sales tax collections, that we have seen," Dalrymple said.

The new estimates predict how much revenue the state will have when its current two-year budget period ends June 30. Dalrymple will present his spending recommendations to the Legislature in four months.

The numbers, crafted by state agencies and a national economic consultancy, were presented Wednesday to a legislative committee that has been contemplating proposals for large public-works projects.

"I hope they're correct. We certainly don't want to overestimate our income, and be in a position where it doesn't come through," said Rep. Jeff Delzer, R-Underwood, the chairman of the House Appropriations Committee. "If you look at the history of the last couple of years, it will probably come through."

The largest restricted state fund is the Legacy Fund, which voters created two years ago to stash a portion of North Dakota's oil tax collections. In June, forecasters expect the fund will contain almost $1.2 billion. It can't be touched for another five years.

North Dakota has risen to No. 2 among the nation's oil-producing states behind Texas, with a fivefold increase in production since 2007. It supplies about 11 percent of the nation's monthly oil output, according to the federal Energy Information Administration.

The surplus amount also does not include a $687 million fund for public works projects, which was created by the Legislature last year, or a $342 million fund that has been set aside to pay for local property tax reductions.

The budget estimates also attempt to forecast how much tax revenue the state will collect in its next two-year budget cycle, which begins July 1 and ends June 30, 2015.

The outlook? $4.9 billion.

"The state of North Dakota is doing very well. Not just the oil industry, but the entire economy of the state," Dalrymple said. "It gives us a lot of different opportunities."

State officials hasten to point out that the surplus will prompt some heavy spending demands when the next Legislature begins in January.

Dalrymple, a Republican running for his first full term as governor, believes much of the surplus should be devoted to one-time public works projects and tax cuts.

His Democratic opponent, state Sen. Ryan Taylor, has challenged Dalrymple's budget management, saying the governor and the GOP-controlled Legislature have been chintzy in sharing the wealth with local governments.

The Legislative Council, the research arm of the state Legislature, estimates it will cost almost $200 million over the next two years to maintain state services at their current levels.

Two of the larger expenditures would be for Medicaid ($91.5 million) and maintaining the current level of state aid to local schools ($29.3 million), the council said in a memo to lawmakers Wednesday.

Public school enrollment has grown along with the state's population as job seekers flock to North Dakota.

The Medicaid increase is expected because the federal government's contribution is shrinking as North Dakota becomes more prosperous. Poorer states have a greater percentage of their Medicaid costs paid by the federal government.

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