‘It’s A Balancing Act’

Kempenich talks budget

Rep. Keith Kempenich (Far Right) is seen talking to constituents in Bowman. Kempenich recently talked to the Record in Bismarck about the state of the budget. (Record File Photo)

By COLE BENZ | Record Editor
cbenz@countrymedia.net

Now that crossover is finished, and the second half of the North Dakota Legislative session is in full swing, the hard decisions on balancing the budget will have to be made as the early forecasts are released.

Rep. Keith Kempenich, a republican out of District 39, told the Record that oil, gas and petroleum leaders will meet with the state leaders soon, and better projections from those in the industry will give the legislators a clearer picture of the budget outlook with an update on what’s happening in Western North Dakota. Kempenich said the oil tax money will be the only funds freed up for this biennium.

“That will kind of indicate what the rest of the session will look like,” Kempenich said. “Truthfully I don’t think anybody expects it to change a lot, but who knows, it could.”

The budget is roughly $400,000,000 off balance. The state had formed a budget stabilization fund to forecast a dip in the economy, but that fund was about $600,000,000, according to Kempenich.

Early forecast estimates have been set at $48 per barrel of oil, with an estimated 900,000 barrels a day for production, Kempenich said. According to him, the state hasn’t gone below that threshold. In January production dipped to 960,000, but in November it hit 1,000,000 barrels. Kempenich thought that dip in numbers could be attributed to the cold temperatures the state saw in December and January.

It’s just projections he said, “and that’s why we’re in trouble today,” Kempenich said. “Because we projected x amount of dollars that never showed up, and so you’ve got to start pulling back.”

Kempenich said they are in an odd place this session, because they are more accustomed to managing budget increases, and this year they are having to go back to the previous years’ budgets, and lower those dollar amounts for the upcoming biennium.

At the top of the priority list when it comes to balancing time, according to Kempenich, is vulnerable law enforcement. But beyond that he wasn’t sure.

A big concern was education. And while it’s been widely reported that higher ed could see a reduction, Kempenich said K-12 should stay the same. There will be a cost-to-continue fund boost, but other than than, it should stay the same.

Measure 2, voted on in November, protected some of those funds. The measure allocated “excess revenues from oil extraction taxes from the foundation aid stabilization fund for education purposes.” That passed with 64.3 percent of the vote.

District 39 shouldn’t see much of a change. Over the last four years the political subdivisions have been getting a share of the oil money, and for this biennium the state is keeping everyone at what they were designated two years ago.

“They won’t see increases, but they shouldn’t see decreases either,” he said.

Kempenich added that the only way you can work out of a budget crisis like this is to cut budgets, raise taxes (which many legislators, and the governor, have said they don’t want to do), or hope the economy grows.

“And the economy of this state has to build in $1 billion basically,” Kempenich said.

Finding $1 billion can be difficult in an economy that is primarily driven by two volatile industries, oil and commodities.

And a big part of Gov. Doug Burgum’s campaign message was diversifying North Dakota, to add to the oil and agricultural industry.