Governor Burgum's Budget Hits On County Priorities

Governor Burgum presented his budget recommendations to the Legislature on December 5^th.  The governor began the presentation with an overview indicating he is recommending a balanced budget with the dedication of $1 billion in oil tax revenues – more than the current biennium, but less than in 2015. His budget includes an overall $4.6 million in General Fund spending, with increases primarily in human services, K-12 and state salaries. He also stressed the need to replenish reserves, emphasizing how important those funds were to have in 2017 to make up for shortfalls as a result of dramatic changes in commodity prices.

“Fiscal responsibility means more than just balancing the checkbook. Given our revenues remain largely dependent on commodity prices we cannot control, we absolutely must replenish reserves,” said Governor Burgum.

Social Service Redesign

Governor Burgum kicked off his budget outlook by sharing details of county social service funding, a top priority for NDACo in the upcoming session. During the last session, the legislature approved using state funding to pay for county social services as a method to deliver property tax relief. It was approved as a two-year pilot. Burgum is recommending sustaining the project and delivering permanent property tax relief. His plan also includes an increase of $22 million for the funding of county social services, raising the total level of funding to $182 million.

“This additional funding will focus on increasing access to child and family services, particularly in behavioral health,” Burgum told lawmakers. “Combined with specific policy recommendations, this funding will come with greater flexibility to specialize services, thereby increasing efficiencies.”

He also alluded that those efficiencies could include moving 47 independent delivery areas to no more than 19 collaborative areas. But he stressed, this move would be made while preserving all access points to service.

Infrastructure 

Regarding infrastructure, Burgum’s plan includes an investment of $1.5 billion for critical infrastructure. Burgum made reference that technology projects fall into this category of “critical infrastructure.” Governor Burgum did not reference the legislative driven infrastructure plan often referred to as “Operation Prairie Dog,” which would use oil and gas tax revenues to create a fund that would provide statewide, permanent infrastructure funding. The bill being supported by Republican legislative leaders has been drafted.

Behavioral Health

County members have repeatedly expressed concern over the lack of services available to treat individuals with behavioral health concerns. Governor Burgum highlighted several priorities he is recommending in order to address the behavioral health crisis. One of those investments includes an expansion of the Free Through Recovery program to extend it beyond the criminal justice system to other individuals in their communities across the state. Expanding behavioral health crisis services was also a priority of Burgum’s that is earmarked to receive funding.

Corrections

NDACo was surprised to learn of structure shifts involving the Department of Corrections and Rehabilitation (DOCR). Burgum is proposing building a new Behavioral Health State Hospital and Clinic in Jamestown using earnings from the Legacy Fund. The existing State Hospital would be repurposed and used as a minimum-custody correctional facility for men. In turn, he proposes relocating the women’s prison from New England to the Missouri River Correctional Center south of Bismarck.

As you can see, several county-related issues were highlighted in the governor’s speech. After further review of his budget, we have identified additional items that are of county importance.

Burgum’s recommendations of county importance:

• Funding county social services at $182 million – as compared to $160 million this biennium – to preserve access and enhance services.
•  $2.9 million to support children in the care of tribal social services
•  1% yearly increase for healthcare provider payments from DHS
•  Public guardianship funding held even
•  $19 million in new funding for behavioral health support
•  $35 million for new state hospital in Jamestown, rehab of existing for penitentiary system use, and then moving women’s prison to Missouri River Correctional Facility
•  $11 million for election equipment (includes $3 million federal funds already received)
•  $40 million for Statewide Interoperable Radio Network (SIRN)
• $55 million infrastructure revolving loan fund for political subdivisions, plus $25 million school construction revolving loan fund using Legacy Fund earnings

The Governor spent a great deal of attention in reviewing his funding plan for education, state employees and workforce development, as well as other state investments.

General highlights from Burgum’s recommendations:

• $14.3 billion budget for 2019-2020 biennium; the largest in state history
•   2% annual increase in support to K-12 education 
•   Infusion of $265 million into NDPERS retirement fund, plus “policy changes” to address the unfunded liability, including increases of 1% in employee and 1% in employer contribution to NDPERS retirement
• Annual increases of up to 4% and 4% for state employee salaries, although in the second year the agencies must find 2% within existing budgets
• A $28/month state employee contribution for current NDPERS health plan, or two higher deductible plans with no contribution
• Military incentives to include income tax exemption for retirement pay, fully funding      National Guard Tuition Assistance Program, expansion of training range at Camp        Grafton
•  $50 million to build Theodore Roosevelt Presidential Library and Museum using Legacy Fund earnings
•  $30 million statewide UAS infrastructure network using Legacy Fund earnings
•  IT unification, aligning employees throughout state agencies into one shared IT service
•  Investing in cybersecurity and cyber defense
• Numerous workforce development related investments

This is the governor’s first budget address to North Dakota lawmakers. Burgum said he has had numerous working sessions with state agencies to identify cost savings, efficiencies and needs. This review process identified more than $107 million in general fund savings. That’s on top of the unprecedented $1.7 billion in savings that have been realized even after the 2017 Legislative Session.

This is also the first time a governor has recommended the use of Legacy Fund earnings. The Legacy Fund was created in 2010 and has a grown to $5.6 billion. The earnings and principal were only available for use after June 30, 2017 with a vote of at least two-thirds of each house of the legislative assembly. Burgum proposes using $300 million in earnings from the Legacy Fund for projects that would have state and national impacts. None of the Legacy Fund principal is spent in Burgum’s budget.

“We should strive to set the bar high in this first class of Legacy projects, and dream of what they can mean to the future of the state,” said Burgum.

Overall, the governor’s budget is a starting point for legislators. Legislative leadership has indicated they will refer to the governor’s recommendations but plan to move ahead with their own budget and bills. Lawmakers will surely be making adjustments to the budget as they prepare for the 2019 Legislative Session, which begins January 3^rd.

Click here to view more details of Governor Burgum’s 2019-2021 Executive Budget.