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Devils Lake Journal - Devils Lake, ND
  • Economic growth, oil drives ND reserves to $2B

  • BISMARCK, N.D. (AP) — Propelled by oil revenues and sharply rising sales and income taxes, North Dakota government's financial reserves are expected to top $2 billion within a year, the state's top budget official said Tuesday.


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  • BISMARCK, N.D. (AP) — Propelled by oil revenues and sharply rising sales and income taxes, North Dakota government's financial reserves are expected to top $2 billion within a year, the state's top budget official said Tuesday.
    In a presentation to members of the appropriations committees of the North Dakota House and Senate, budget director Pam Sharp said estimates of the state's unrestricted surplus have jumped 43 percent in only three months, from $592 million to $848.9 million.
    North Dakota's treasury expects to have that sum June 30, 2013, when the state's current two-year budget period ends, Sharp said.
    Four state reserve funds already have $1.2 billion in cash, Sharp said. Those are a budget rainy-day fund ($386.3 million); an oil tax trust fund ($352 million); a fund that insures against school aid shortfalls ($204 million); and money set aside to finance local property tax cuts ($261.8 million).
    The entire two-year budget for North Dakota state government, including federal aid, is $9.9 billion. The general fund share of the budget is slightly more than $4 billion. It is spent on an assortment of programs, including education and human services, and financed mostly by state taxes on income, sales and energy.
    Legislators said Tuesday the numbers were reason for celebration — and caution. They expect massive demands during the 2013 Legislature for spending on roads, schools, public works and housing in response to western North Dakota's oil boom, and for state financing of local property tax cuts.
    Student enrollment in rural western North Dakota, which had been declining for years, have been rising steeply along with an influx of workers seeking jobs in the state's oil-producing region.
    "We need to help the schools that are rapid-growth enrollment. We've got to take care of the farm-to-market roads around the state, because the economic engine of this state is going to be our infrastructure," said Rep. Al Carlson, R-Fargo, the House majority leader. "We're so lucky to have the money."
    North Dakota recently became the nation's No. 2 oil producer, trailing only Texas. Oil companies pumped an average of 609,371 barrels of oil daily during April, the state Department of Mineral Resources reported Tuesday, a fivefold increase from the state's production in April 2007.
    The $1.2 billion in reserve funds are not immediately accessible. None of the oil-tax "Legacy Fund," for example, may be spent until 2017, according to restrictions included in the North Dakota constitutional amendment that established the fund two years ago.
    Lawmakers may use the school fund only if state aid allocations fall short, a circumstance that now appears remote. The amount of money the Legislature dedicates to property tax subsidies is likely to grow, as demand for lower local property taxes grows louder, legislators said.
    Unrestricted spending of the Legacy Fund and the school aid fund would require constitutional amendments, which gives North Dakota voters the final say about whether that would happen. The Legislature itself could spend the rainy-day fund by changing state law.
    Page 2 of 2 - North Dakota's sales tax collections were running 53 percent ahead of the Legislature's original projections through May, an Office of Management and Budget report said.
    Individual income taxes were 60 percent higher than expected, and tax collections from car and truck sales were 38 percent above expectations.
    North Dakota operates on a two-year budget. The state's current budget period began last July 1 and ends June 30, 2013. Before the Legislature's last regular session ended in April 2011, lawmakers adopted a set of revenue estimates that they used to write the current spending plan.
    "If we have the kind of money that we're hoping for, you take a good look at infrastructure first," said Rep. Jeff Delzer, R-Underwood, the chairman of the House Appropriations Committee. "You take a look at the needs of (western North Dakota), and then you also look at the rest of the state, and decide the priorities of where that money should be used."
     

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