A couple of weeks ago I wrote a post, based on a conversation with a state lawmaker, which raised the possibility of another round of budget cuts being needed. At the time this lawmaker told me there was a “better than 50 percent chance” that more budget cuts would be needed.
That possibility was confirmed today with Office of Management and Budget Director Pam Sharp telling lawmakers that more budget cuts could be needed. She did so in the process of telling them that revenues in February were down millions even from the new, revised revenue forecast released February 1:
State tax revenues were down $5 million, or 3.5 percent, in February compared with the Feb. 1 revised forecast that spurred Gov. Jack Dalrymple to order 4.05 percent budget cuts for most state agencies to help offset a projected $1 billion revenue shortfall.
Combined with a $1.4 million shortfall in January, revenues are more than $6.4 million behind the revised forecast.
Office of Management and Budget Director Pam Sharp said it’s too early to say if another round of budget cuts will be necessary, noting the next revenue forecast in August will provide a clearer picture.
“Certainly it’s a possibility,” she said.
There are a few take-aways from this.
First, I don’t know if it’s that North Dakota’s revenue forecasters aren’t very good at their jobs, or if we’re just in an economic situation that’s impossible to forecast accurately, but it’s becoming pretty clear that nobody really knows what’s going to happen over the next several months. That’s scary.
Second, let’s keep some perspective here. Remember that North Dakota’s budget has tripled over the last decade. The first round of allotments were a 4.4 percent reduction from a near-record state budget. I realize that, politically speaking, spending increases are easy while spending reductions are hard, but let’s try to keep these reductions in perspective. Even with another round of cuts, the state’s budget is still going to be about double what it was just a couple of budget cycles ago.
Third, can we acknowledge for a moment just how poorly Governor Jack Dalrymlpe has handled this situation? He’s our state’s top executive, yet he’s be anything but visible when it comes to handling this issue. Contrast that with the performance of his predecessor, former Governor Ed Schafer, who has been busy as the University of North Dakota’s interim president handling that institution’s budget shortfall. Schafer has been engaged, speaking extensively with the media and staff and students while attempting to balance the books.
Compounding the problems with Dalrymple’s lead-from-behind style is that he doesn’t seem to have grasped just how big a problem falling revenues are for the state. His executive budget submitted to the 2015 legislature was so out of touch that, just weeks into the session, lawmakers took the extraordinary measure of creating a revenue forecast of their own. On February 1, Dalrymple announced the 4.04 percent budget allotments to address the revenue shortfall (also choosing to drain the state’s Budget Stabilization Fund to make ends meet), but many lawmakers said Dalrymple should have opted for deeper cuts and a smaller transfer from reserves.
Looks like those lawmakers were probably right, given Sharp’s comments about the possibility of another round of cuts.
North Dakota has a hot race for governor on-going now, with three Republican candidates vying for the party’s nomination and even (finally) a Democrat joining the race. I’m beginning to think that just about any one of those candidates would be a better leader than Dalrymple is right now.
“He’s just not interested any more,” a Republican elected official told me during a conversation last night.
North Dakota desperately needs someone who is interested again.