May 3, 2023

How does the Legislature balance the budget?

Topic: Issues

The 68th Legislative Session is over and legislators are back home with their families and communities. North Dakota's Legislature is constitutionally required to balance the state budget. There were a lot of things that went into this year’s budget. Straight Talk with NDFB podcast host Emmery Mehlhoff visits with Rep. Don Vigesaa about how the budgeting process works and 2023 budget priorities. The following excerpt from the podcast has been edited for clarity.

Host Emmery Mehlhoff: Welcome to Straight Talk with NDFB. Today I am at the North Dakota Capitol and I'm visiting in person with Representative Don Vigesaa. Rep. Vigesaa, this is your first time as chairman of the House Appropriations Committee, but you have sat on the committee for many sessions. Can you explain what goes into making the budget for the state of North Dakota?

Rep. Don Vigesaa: The bottom line is we have to balance the budget.

Emmery: That’s in the constitution, right?

Rep. Vigesaa: Yes. That's our primary responsibility.

Emmery: Tell us about how the appropriations process works. How do you decide between the agency and governor requests and the priorities of both the House and the Senate. Can you tell us about how that process works?

Rep. Vigesaa: Sure. At the very beginning of the session we adopt a revenue forecast.

The Revenue Forecast

We have two nationally recognized firms that come in and give us their recommendation on what our revenues will be for the upcoming '23-25 biennium. After we've gotten all that information from those two firms, we decide, as both the Senate and the House Joint Committee decides, what to establish for our forecasted revenue.

We have four primary types of taxes that we collect. The motor vehicle excise tax, income tax, personal income tax from corporations, and then sales tax. So, we project what those four will bring. Then we forecast the price of oil that we think will have over the next two years and also the amount of oil that's produced. That gives us the revenue that we'll be expecting over those two years so that's what we use as the amount of funding that we can allocate.

The First Half of the Budgeting Process

We have the base budget from the last biennium and that's where we start. The governor puts forth a recommendation for each agency of which the type of spending he is recommending. The Senate and House Appropriations committees work with the base budget and the governor's recommendation in the first half. Both decide where we think the legislative appropriation should be.

The House Appropriations committee has 23 members and we're divided into three groups and each of the groups takes on a certain number of the budgets within our state government. [The Senate has a similar set-up with fewer members.] As the overall chair, I oversee the activities of all of the House Appropriations sections. Each section works on their budgets and they add amendments or whatever they're going to do with a particular budget. Each budget section will bring their amendments to the full committee and then we vote it out as a full committee, giving final approval to the budgets.

The budget then goes to the House floor for debate and final passage.

The Second Half of the Budgeting Process

In March, we take another look at the forecast. We have two months more of data and so we give a revised forecast, and that is the final forecast that we adopt. We did reduce our projections this session. Overall North Dakota is in really good shape economically.

After crossover, the Senate and the House switch budgets and they are vetted by the other chamber. This session we discovered we were upside down by over a billion dollars. In other words, we had overspent our revenue by a billion. That's not unusual because neither house really knows what the other is doing and we came into this session with an abundance of excess revenue of approximately two and a half billion dollars. The ideas really flowed for how to use those additional dollars and we overdid it a little bit in the first half. So, starting in March when we came back after Crossover, we had to reduce the increases to try to get that billion dollar upside down balance to a positive balance.

And of course, normally there's not total agreement between what the Senate and the House did. and that's why we have conference committees, a committee made up of three House members and three Senate members to work out those differences.

Finishing out Session

Did everybody get their ideas funded? No, absolutely not. Probably one of the bigger jobs we had this session was to prioritize because there's a lot of great ideas but only so much money and we had to make some tough choices.

[After the budgets come out of conference committee, they are voted on again by both chambers. The budgets are typically the last bills voted on by the session. After the chambers finalize the budgets and vote on them, they adjourn and the budgets go to the governor for his signature.]

2023 Priorities

Tax Relief: Our caucus definitely felt the need to return some taxpayer dollars to the citizens. When you come in with that much additional revenue, it's the people's money and it should go back.

We're going to have some income tax relief. We're also going to have some property tax relief. The total relief package is approximately $515 which will be going back to the citizens in the next biennium. The tax relief affects the revenue, so we had to make our appropriations adjustments necessary to be able to afford that relief package and to be able to sustain it into the next biennium.

Infrastructure: There are several capital projects on campuses around the state and we authorized some funding for some new facilities including a lab Waldron Hall on NDSU. There is also money coming to the townships and counties for roads and bridges. There is assistance coming to help with some of the snow removal expenditures that happened this winter.

Emmery: Thank you, Rep. Vigessa for visiting with me today and working hard for the people of North Dakota.

Rep. Vigesaa: Emmery, it's always good to talk to you. Thank you for providing a way for your listeners to catch up on what's going on out here in Bismarck. Thank you again for doing the interview with me.

To learn more about the 2023 Priorities, listen to the full episode here. Be sure to listen to our season wrap up, where we discuss wins and losses in the 2023 Legislative Session.