North Dakota – Gov. Kelly Armstrong presented his executive budget guidelines for the next biennium, directing state agencies to hold spending steady or implement reductions as part of a long-term effort to align general fund spending with revenues by 2032.
“Twenty years of growth in North Dakota has come with 20 years of growth in the state budget. Much of that was necessary, but the growth rate is also unsustainable,” Armstrong said during a meeting with agency leaders and fiscal officers at the Capitol. “We have a balance problem in our state budget. The growing gap between our ongoing revenues and ongoing expenditures is a slow-building storm, and we need to start correcting deficit spending in the general fund.”
Agency leaders will use the guidelines to develop their budget proposals, which Armstrong will use to craft his executive budget recommendation for the 2027–2029 biennium. The governor is expected to present his budget to state legislators in December ahead of the January regular session.
Under the guidelines, agencies with general fund budgets under $10 million must prepare hold-even budgets. Agencies with budgets between $10 million and $20 million are required to identify base budget reductions of 3%, while those with budgets exceeding $20 million must propose reductions of 10%. Additionally, agencies in the hold-even and 3% categories must prepare an extra 3% reduction plan as a contingency for potential revenue shortfalls tied to volatile energy markets.
“Many of you weren’t here in 2015, but I was, and I remember how painful the allotment process was,” Armstrong said. “And we are going to hope for the best and prepare for the worst.”
Armstrong also said no new full-time positions or building construction projects will be approved without exceptions. Any new proposals relying on ongoing revenues must be offset by corresponding reductions in ongoing expenditures. Current agency salary budgets, however, will remain fully funded to support existing employees.
Office of Management and Budget Director Joe Morrissette outlined the state’s fiscal outlook, noting a significant gap between ongoing revenues and expenditures.
“The biennium began with an ongoing general fund gap of nearly $800 million,” Morrissette said. “While strong revenue growth is expected to reduce this gap, significant effort and collaboration across all agencies will be necessary to develop a budget that puts us on a sustainable path and ensures ongoing revenues and expenditures are balanced.”
Higher oil prices have increased state tax revenues, boosting the projected ending balance for the current biennium by approximately $318 million. However, Morrissette said most of those funds are one-time in nature and do not resolve the long-term imbalance, reinforcing the administration’s call for a sustainable fiscal strategy.
