North Dakota — one of the few states to escape the recession relatively unscathed — is increasing general fund spending by 20 percent over the next two years, according to The Associated Press, which finds that the huge increase was hidden by an accounting maneuver.
The biennial budget that state lawmakers approved last week includes several big-ticket spending items, such as $370 million in road repairs and another $342 million to reduce local property taxes. But those projects were paid for through a special account financed by excess oil-tax revenues — rather than the general fund — allowing Governor Jack Dalrymple and the Legislature to mask their effect on overall spending until after lawmakers had approved a two-year general fund budget last Thursday (April 28), according to the AP.
"Those programs were financed by a fund for surplus oil taxes that has often been used as a piggy bank for favored projects," the AP reports. "The Legislature abolished the fund, which is called the Permanent Oil Tax Trust Fund, and ordered that the money be transferred to the general fund."
The result is that the $3.3 billion budget that Dalrymple originally proposed in December became a $4.1 billion budget by the time it was approved by lawmakers.
"Dalrymple's budget was trying to be sneaky," Dustin Gawrylow, director of the North Dakota Taxpayers Association, tells the AP. "It comes down to creative accounting. What happened was that the Legislature had to clean up the governor's budget because it was not presented in a straightforward way."
Dalrymple, however, expressed confidence that the North Dakota economy could support the huge spending increase. "I believe that we have enough optimism in this Legislature, and enough confidence in where we're going in the next two years," he said," that they felt they absolutely could sustain this budget."