BISMARCK – Gov. Doug Burgum presented legislative leaders Monday with an executive budget proposal that recommends additional cuts and realigns spending priorities to spur innovation, creativity and the reinvention of government.

Burgum recommends ongoing spending of $4.62 billion, or about $159 million less than the 2017-19 budget proposed by Gov. Jack Dalrymple in early December.

“Gov. Dalrymple’s budget was a good starting point. Unfortunately, revenues continue to fall short of projections, already lagging more than $15 million behind November’s revised forecast,” Burgum said. “This budget proposal reflects that reality while prioritizing K-12 education and support for our state’s most vulnerable people.”

The structurally balanced budget would cushion the general fund with an ending balance of approximately $100 million, including a $90 million transfer from the Strategic Investment and Improvements Fund (SIIF).

Achieving that positive balance required finding about $100 million in further savings, including an additional 5 percent, $31 million reduction to higher education and an additional $19 million in cuts to state agencies. The total reductions would necessitate eliminating about 633 full-time positions.

To help offset the additional reduction to higher education, Burgum proposes increasing funding from $3 million to $10 million for higher education challenge grants, which will generate $20 million in matching funds through public-private partnerships.

In the second year of the biennium, Burgum’s budget would eliminate 1 percent increases in three areas: state and campus employee salaries, the per-pupil payment for K-12 schools and an inflationary adjustment for Medicaid providers.

State employees would pay 5 percent of their health insurance premiums, saving the state $11 million and engaging state employees in the rising costs of health care.

“These measures, while difficult in the short term, will position our state for long-term success with a leaner budget that is more adaptable to volatile swings in commodity prices,” Burgum said.

The budget replenishes the rainy-day Budget Stabilization Fund with a $300 million transfer from the Tax Relief Fund. Dalrymple’s budget had also proposed a $154 million transfer from the SIIF to the Budget Stabilization Fund, but Burgum’s budget removes that transfer, as well as removes a $25 million transfer from the SIIF to Valley City State University for a new Communications and Fine Arts building.

“We need to think strategically during the next interim about how we deliver higher education to students through existing infrastructure,” Burgum said.

Burgum also recommends not using the SIIF to repay the $17 million borrowed from the Bank of North Dakota for costs related to the Dakota Access Pipeline protests. The state will seek reimbursement for those costs from the federal government and other responsible parties.

In addition, his proposed budget reduces the transfer of Bank of North Dakota profits to the general fund from $200 million to $140 million, as the state has previously utilized $100 million to cover revenue shortfalls in the current biennium.

With the flexibility provided by voters through the passage of Measure 2, Burgum also recommends using $200 million from the Foundation Aid Stabilization Fund to maintain state aid to K-12 schools at current levels – an increase of $60 million over the previous executive budget.

At the same time, his budget removes a proposed $200 million transfer from the Foundation Aid Stabilization Fund for school construction loans. Other options are available for school construction financing, including Bank of North Dakota funds, an interest buydown program and bonding.

The budget takes a more conservative approach toward oil, assuming $337 million less in oil tax revenue and an average price of about $48 per barrel, compared with $52 to $53 per barrel in Dalrymple’s budget. The oil production assumption remains unchanged at 900,000 barrels per day.

Oil tax revenue available to the general fund would decrease from $1 billion in Dalrymple’s budget to $900 million in Burgum’s budget.

Highlights from Dalrymple’s budget that Burgum has retained include:

Continued funding of Medicaid expansion.

Support for a long-term care provider assessment, which is used by more than 40 states and will ensure quality care continues in North Dakota’s nursing homes.

A combined $250 million to address behavioral health issues, including funding for adult and youth corrections programs.

SIIF funding for the Williston and Dickinson airports ($24 million), Unmanned Aerial Systems ($2 million) and lignite coal research ($3 million).

Transferring $275 million to transition the cost of county social services to the state, ending the 12 percent property tax buydown. The administration will emphasize the need to find efficiencies in social services as the legislation moves forward.

“We recognize this is a collaborative process and will continue to work with the Legislature to find the very best solutions that benefit the people of North Dakota,” Burgum said.