North Dakota Governor Jack Dalrymple has a dilemma many other Governors would love to have. Oil has created a $1 billion budget surplus and presented Governor Jack Dalrymple with a question: How to keep up with the boom while keeping the money flowing. Only North Dakota and Montana have reported surpluses from 2009 to 2011. North Dakota and its 672,591 residents grow more wheat, barley, sunflowers, canola and flaxseed than any other state, according to the U.S. Department of Agriculture. Wheat futures increased 47 percent last year, to $7.94 per bushel on the Chicago Board of Trade.
And then thereâ€™s the oil. The state sits atop the Bakken shale formation, one of the countryâ€™s largest reserves and the reason the state has vaulted to the nationâ€™s fourth-largest producer from ninth in six years.
The spot price of light sweet crude oil like that in the Bakken rose 221.78 percent from Dec. 22, 2008 through March 18.
North Dakotaâ€™s history is a chronicle of booms and busts. Grain prices have risen and fallen with droughts and floods, insects and crop diseases, recessions and wars. Residents recall when spot oil prices dropped 67 percent from November 1985 to March 1986, a bust that led to business failures and home foreclosures.
Bill Hetzell wrote a column at Bloomberg, Oil Riches Let North Dakota Governor Dalrymple Bank Surplus in Hard Time. Please read the entire article, but here are some quotes from this column by Governor Dalrymple.
Job creation is really the goal. We can have the things we want and have reasonable taxes, as long as spending is controlled. You cannot allow the urge to say yes to every idea overwhelm your sense of rational thought. The number one priority is to keep up with the infrastructure. That growth cannot continue if we do not keep up with all the impacts that happen on communities out there. This is not the typical oil boom.
Dalrymple submitted to the Legislature a two-year, $9.3 billion spending plan, including a $1 billion surplus.
He wants to cut property and income taxes by $500 million. Meanwhile, his budget would increase general-fund spending on human services by $265 million, mostly to replace federal assistance; schools by $82 million; higher education by $55 million; and employee salaries and benefits by $36 million.
The plan sets aside $958 million for infrastructure in the 17 oil-producing counties.
The North Dakota Senate has already approved the Governor’s budget, and the only holdup in the House is a desire to double the individual income tax cut from 50 to 100 million. Governors of other states might be in better financial shape if they had heeded Governor Dalrymple’s maxim that you cannot allow the urge to say yes to every idea overwhelm your sense of rational thought. Of course that same maxim was not heeded by a US President during those four years the US Federal budget was a surplus instead of a deficit.
A lot of people just look at North Dakota as fly-over country to disregard. If they paid some attention they might just learn something.