- Associated Press - Monday, August 1, 2016

BISMARCK, N.D. (AP) - Republican Gov. Jack Dalrymple is endorsing a bill that would impose further cuts to government agencies, skim profits from North Dakota’s state-owned bank and drain a rainy day fund to make up for a $310 million budget shortfall due to depressed agriculture and oil prices.

Dalrymple and state budget director Pam Sharp outlined the bill to statehouse reporters on Monday, a day before North Dakota’s Legislature is returning for a three-day special session summoned by Dalrymple to address the projected shortfall due to less-than-forecast tax collections.

Dalrymple has been crafting the bill with GOP legislative leaders since mid-July, after an updated forecast done by the state’s economic consultancy Moody’s Analytics predicted the deficit would swell to $310 million if nothing is done by the time the budget cycle ends on June 30, 2017.

“We have faith this bill will pass,” Dalrymple told reporters. North Dakota Republicans have supermajorities in the House and Senate.

Since the Legislature adjourned in April 2015 before passing a record $14.2 billion budget, crop and oil prices have plummeted, forcing budget writers to twice lower predictions for tax revenue from those cornerstones of the state’s economy.

In February and faced with a $1.1 billion shortfall, Dalrymple ordered agencies to cut their budgets by 4.05 percent, which saved the state about $245 million through the two-year spending cycle.

The governor also took more than $497 million from the state’s Budget Stabilization Fund, a surplus stash of cash that has been built up over the past decade largely from past oil bounty.

The bill proposed by the GOP, which holds a supermajority in the Legislature, would require an additional 2.5 percent cut to most state agencies, which will save the state about $152 million.

Cuts to the Department of Human Services, which administers and funds state social programs, will be restored by shifting about $33 million from the state’s general fund, under the proposed bill. The state Corrections Department would have additional an addition cut of only 1 percent.

More than $44 million in cuts to K-12 education will be covered by a special reserve fund that currently holds more than $608 million and is a financial backstop for elementary and high schools.

The measure to be considered by lawmakers Tuesday also would transfer $75 million from the Budget Stabilization Fund, established in 1987, as a way to force lawmakers to set aside portions of state budget surpluses, rather than spend them. It is now empty.

The measure would take $100 million the Bank of North Dakota, the nation’s only state-owned bank that set an earnings record for the 12th straight year in 2015 at about $130 million, thanks in part to the once-thriving oil industry in western North Dakota. The bank is on track to set another earnings record this year, perhaps as much as $140 million, said Eric Hardmeyer, the bank’s president.

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