Economic Development

State of the State: North Dakota

In a balmy 3 degrees Fahrenheit, North Dakota Governor Doug Burgum delivered his first State of the State address in Bismarck on January 3. Burgum was sworn into office on December 15, replacing former Governor Jack Dalrymple. Governor Burgum covered a wide variety of topics in his speech, including technological innovation, education reform and the Dakota Access Pipeline. The underlying theme throughout was the need to make government more efficient, decrease spending and reduce tax and regulatory burdens on hardworking North Dakotans.

The state of North Dakota has weathered the effects of the Great Recession relatively well, largely due to the development of the profitable Bakken oil fields. However, the state also benefits from many pro-growth policies, including comparatively low income, property and corporate tax rates. Its economic outlook and economic performance score are both in the top five in Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

Governor Burgum commended past administrations for their hard work in placing North Dakota on a successful economic trajectory. But Burgum made it clear he expects even more:

Gov. Dalrymple’s proposed budget for 2017-19 would reduce general fund spending by roughly $1.2 billion dollars. This is a great start, and I want to genuinely thank all the agencies and everyone in the Office of Management and Budget for their tremendous effort in putting forth these significant reduction proposals. But given the revenue uncertainty, we must dig deeper.

Governor Burgum plans to reduce spending in a variety of ways, citing the tripling of the state’s general fund budget in the past decade. He highlighted the need to design infrastructure keeping in mind the more widespread a locale, the higher the costs of building and maintenance. For example, placing a new school on the outskirts of town requires school buses to travel longer distances and higher costs for maintaining and clearing roads (the state regularly gets more than 50 inches of snowfall per year). Burgum committed to working with local leaders to ensure commonsense infrastructure designs, which will result in lower spending and property taxes.

Governor Burgum also plans to implement zero-based budgeting, as opposed to incremental budgeting, when crafting the next full budget. With incremental budgeting, government agencies begin with their previous appropriation amount in order to determine additional funding needed. Zero-based budgeting requires every expense to be examined and justified. This tends to increase transparency, uncover cost-saving efficiencies and siphon spending to the areas with the highest return. Relatedly, Burgum emphasized the need to consider state and local agencies as “a network of programs with overlapping areas.” He challenged his fellow public servants to work more closely with one another in order to identify and reduce redundancy. The ALEC State Budget Reform Toolkit is a great resource for legislators or stakeholders looking to implement these types of meaningful changes to their budget.

Governor Burgum also discussed the need to utilize dynamic technological advancements to improve the state’s approach to the biggest budgetary line items, including health care and education. Beyond providing basic services, Burgum does not believe the government should play a large role in the lives of North Dakotans:

For the most part, government needs to get out of the way and let the powerful, positive forces of free markets – including competition, price and consumer choice – shape our future.

ALEC applauds Governor Burgum for focusing on the need to reform the state’s budget, reduce taxes and make government more efficient for citizens of North Dakota.

In Depth: Economic Development

The United States is among the most developed economies in the world. This has led to a standard of living that is simply unmatched throughout the world or throughout history. Even in such a developed and comparatively wealthy nation, policymakers still must allocate resources appropriately to encourage further economic development…

+ Economic Development In Depth