North Dakota Increases Two-Year Spending by More than 20 Percent

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April 30, 2011; Source: INFORUM (Associated Press) | North Dakota boasts the nation’s lowest unemployment and, compared to the rest of the nation, a relatively robust economy. The state government budget is running in the black when most other states are in the red.

But Republican Governor Jack Dalrymple seems to have put together a two-year budget (for 2011-2013) that looks like only a 1.4 percent increase on face value, but actually is more than 20 percent higher due to spending from a state account capitalized by surplus oil revenues (North Dakota’s booming economy is strongly correlated to its oil reserves).

In other states, that kind of increase could replenish depleted social safety net programs, alleviating some of the hardship from human service nonprofits and the populations they serve. In North Dakota, nonprofits must be apoplectic with the overflowing state spending, right?

They might want to put the corks back in the champagne bottles. The off-budget budget increase came from surplus oil revenues, according to the Associated Press frequently used as a “piggy bank for favored projects,” and in this case are going to pay for $370 million in new road construction – in the oil country of western North Dakota – and $342 million in money for local schools that will be used to lower property taxes. The budget will also put $1 billion into reserves, including the oil revenue-funded Legacy Fund, whose dollars cannot be accessed no matter what until 2017.

Is North Dakota an oil-laden harbinger of what other states will do as their economies recover? Will they use their increasing revenues to help poor families recover from the multi-year recession or will they follow the Peace Garden State and invest in roads, property tax reduction, and untappable reserves?—Rick Cohen