An Unacceptable Proposal: A Brief Analysis of Governor Hoeven’s Budget Proposal

An Unacceptable Proposal:
A Brief Analysis of Governor Hoeven’s Budget Proposal

A quick glance at Governor Hoeven’s budget proposal for the 2007-2009 biennium raises a few questions:

  • Why is the governor recommending a total of $382 million more than the agencies themselves are requesting?
  • Why is Bismarck State College, Williston State College, Minot State University – Bottineau, UND and NDSU requesting less than they received in 2005-2007 while tuitions rates continue to increase?
  • Why is the governor recommending that his own office receive $300,000 more than it requested?
  • Why does the governor think the Executive Branch overall needs 25% more than it asked for?
  • Is there really a need to increase General Fund spending by 24%?

If the governor’s philosophy of the budget surplus is “spend it while we got it,” this proposal should simply be disregarded and the legislature should build a sensible budget from scratch with a reasonable increase. A 24% increase is by no stretch of the imagination “reasonable.”

Once state spending has been brought under control, the legislature must act to return the surplus to the taxpayers of the state; and not in the form of the governor’s proposed property tax relief to the counties, but to the people themselves. Based on the governor’s projections, revenues from individual taxpayers are up 53% ($211 million) since 2001-2003; and corporate income tax revenues are up 46% ($76 million) since 2001-2003.

The currently projected surplus of approx. $580 million affords us the ability to do some things that will improve the overall economic health of the citizens of North Dakota far more than a 24% increase in government spending will.

One such improvement would be a complete elimination of the 2.1% individual and joint tax bracket for income up to $30,650; as well as elimination of the corporate income tax which accounts for only 4% of the state’s tax revenue. This broad tax reduction would both stimulate new businesses in the state and give the average family in North Dakota a much needed break. While eliminating the corporate tax itself would be a difficult task politically, eliminating the state income taxes of basicly everyone under the median level would provide a politically positive result. With the elimination of the corporate taxes, new businesses will surely be attracted to headquarter within the state – creating high paying, white collar jobs that would likely increase tax revenues even further.

In summary, just because the surplus is there, does not mean it should be spent, just because it is not spent, does not mean it should just sit there.

The state legislature should not be in the business of giving government agencies more money that they presently have a need for based on their own requests. Their requests should be investigated with due diligence, but no agency or sector of the government should be given money and then allow to “figure out how to spend it.” That is a very poor and dangerous road to start down, and a very quick way to burn through money that is not the governments’ money, but rather the people’s money.

(Breakdown of the Governor’s Proposal – PDF)

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