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Published December 08, 2010, 08:38 PM

Dalrymple Wants Spending for Flood Control, Roads

During his second day on the job, North Dakota Gov. Jack Dalrymple on Wednesday presented the Legislature with a $9.3 billion proposed budget for state government for the next two years.

By: Dale Wetzel, Associated Press

BISMARCK, N.D. (AP) — During his second day on the job, North Dakota Gov. Jack Dalrymple on Wednesday presented the Legislature with a $9.3 billion proposed budget for state government for the next two years.

The blueprint includes more than $600 million for road repairs in western North Dakota, which has been battered by heavy truck traffic that has accompanied the region's oil boom, and state backing for flood-control projects in Devils Lake and Fargo.

It features a small reduction in North Dakota's income tax rates, 3 percent increases in state government employee compensation in each of the next two years, and $7.5 million to encourage public school districts to negotiate merit-play plans with their teachers.

"We must take a first step in beginning to reward teachers for good performance in the classroom," Dalrymple said.

Dalrymple became governor Tuesday after the resignation of Gov. John Hoeven, who goes to the U.S. Senate next month.

The new governor offered his budget plan to a joint session of North Dakota's House and Senate on Wednesday, saying it includes enough aid for North Dakota's university system to freeze tuition costs at the state's two-year schools for the next two years, while limiting increases at four-year colleges to 2.5 percent annually.

"Our budget continues to fund our most important priorities for growth, and provides ongoing tax relief," Dalrymple said. "Further, it creates a strong reserve for the future, so that we can better preserve our advances, even in challenging times."

Democrats in the Legislature, who are badly outnumbered by GOP lawmakers in both the House and Senate, disputed some of Dalrymple's spending choices but said they supported his general themes.

"It's hard not to have a favorable budget when you have a billion-dollar surplus," said Sen. Ryan Taylor, D-Towner, the Senate's Democratic minority leader.

Soaring tax collections on North Dakota's oil production, which has tripled to more than 340,000 barrels a day in the last five years, have fattened the state's treasury, and Dalrymple's budget proposes spending a healthy chunk of oil revenues on road repairs and other public works in the 17 western counties that produce the crude.

His suggested budget would tap a state fund that is a repository for surplus oil revenues for $371 million over two years for repairs to state, county and township roads in the oil patch.

Another state fund that offers grants to local governments to help alleviate the local effects of energy development would get $100 million in oil taxes. The fund had only $8 million in grants to distribute during its current two-year budget period.

"We cannot keep up the level of (oil) activity that we have . unless we get our roads to where oil trucks can drive on them," said Rep. Shirley Meyer, D-Dickinson.

"I think it's finally coming home to people that we have to do this," Meyer added. "It's a huge cost, but it has to be done, and it will continue giving us a lot of income in the future."

Dalrymple's $9.3 billion budget raises state spending over two years by 5 percent. North Dakota state government runs on a two-year budget; the next biennium begins July 1 and runs through June 30, 2013.

The current $8.84 billion budget was a 36 percent increase over its predecessor, in part because of the inclusion of federal stimulus spending. Republican lawmakers said Wednesday they were pleased the spending growth rate had slowed, but they promised close scrutiny of the Dalrymple plan's details.

"The overall spending looked pretty good until you added up all of the myriad of funds being moved around," said Rep. Al Carlson, R-Fargo, the House majority leader. "I think it's a good blueprint for us to start from."

Dalrymple is proposing cutting state income tax rates by 0.21 percentage points for all five of North Dakota's tax brackets, with a savings of $50 million to taxpayers over two years. The lowest rate would fall to 1.63 percent, while the highest bracket, which is applied to taxable income greater than $372,950, would drop to 4.65 percent.

The budget provides money to give North Dakota government workers a 3 percent pay rise this year and next, although 1 percent of the raise would go to shore up a financially shaky pension fund for state employees.

Stuart Savelkoul, director of the North Dakota Public Employees Association, said the package offered 2 percent annual salary increases for workers, after the 2009 Legislature endorsed 5 percent raises this year and last.

"It's a little bit lower than we were hoping for," Savelkoul said. "It will be a disappointment for a lot of state employees."

The teacher merit-pay idea was endorsed by the Commission for Education Improvement, of which Dalrymple served as chairman during his 10 years as lieutenant governor, and has the support of the North Dakota Education Association.

"The plan will be developed locally by teachers and school boards," Dalrymple said. "We can no longer compensate teachers solely on the basis of years of service."

Dalrymple's preferred budget includes $75 million in state backing for a proposed Fargo flood diversion project that could cost $1.5 billion. Dalrymple said the money was a down payment on what he expects will be $300 million in state backing for the diversion, which is meant to ease the risk of Fargo being overrun by spring flooding along the Red River.

His Devils Lake flood-control package includes construction of a new outlet on the lake's east end to divert water into the Sheyenne River, and a water-control structure on the Tolna Coulee, east of Devils Lake, to prevent water from rushing through the coulee into the Sheyenne.

Fed by unusually large amounts of snow and rain and farmland water drainage, Devils Lake has risen almost 30 feet since the early 1990s, flooding more than 200 square miles of land. A water outlet has been operating on its west end since 2005 and has recently began pumping more water; it took almost 4 billion gallons from the lake in October.

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