From:PatFinken<

pfinken@odney.com
>
Date:July13,2016at2:00:17PMCDT
To:[EMAILSREDACTED]
Subject:SpecialSessionInfofromSen.WardnerandRep.Carlson

SpecialSessionInformation
July13,2016

1.Sluggishstaterevenueshavecreatedtheneedforaspecialsession.
a.Noonecouldhavepredictedthedepthofthedownturninoilandagprices
i.EspeciallyinMarchof2015whencurrentbudgetwas
developed
ii.NDstwolargesteconomicsegmentsareimpactedbylow
commodityprices
b.Thestateconstitutionrequiresabalancedbudget
c.Theadditionalshortfallisestimatedatapproximately$300million
i.Ontopof$1.07billionshortfalladdressedinFebruary
ii.Solutionsmayincludetappingadditionalreservesand
contingencyfunds,anallotmentand/orbudgetcutsinonetimeandongoingspending
iii.Thefinalplansarestillbeingdeveloped
d.SpecialsessionplannedforAugust24,2016
2.NorthDakotaiswellpositionedtohandlecurrentbudgetshortfall

a.$75millioninBudgetStabilizationFund
b.Over$600millioninFoundationAidStabilizationFund
c.YearsofuntouchedBankofNDandStateMillprofitsnowcloseto$1billion
d.$1.2billioninonetimespendingincurrentbudget
e.Spendingreductionsarestilllessthanrecentincreases
3.Specialsessionplan
a.Streamlinedandfocusedscopeofsession
b.Somelevelofallotment(possibly2.5%)isnecessarysolegislatorscantaptheBudget
StabilizationFundandFoundationAidStabilizationFund
c.FoundationAidStabilizationFundwillkeepK12wholeandprotectpropertytaxrelief
d.WillreplaceanyHumanServicesfundinglostduetoanallotmentwithotherfunds
4.EnergyrichstatesincludingAlaska,Louisiana,Montana,NewMexico,Oklahoma,Texas
andWyomingalsofacesimilarchallenges
a.NDwithreservesandonetimespendingisbetterpreparedthanmost
Q&A
1.Whyaspecialsession?
a.Moredifficultdecisionsifwewaituntilnextregularsession
b.Moreoptionstoaddressshortfallthanjustanallotment
c.AlsocanaddressshortcomingsoffirstallotmentincludingHumanServicesfunding
2.Whydidntholddaysfromlastsessiontoaddressissues?
a.DidntneedtoGovernorcancallusbackifnecessary

3.WhynotcallaspecialsessioninFebruary?
a.Nowhavetheinformationneededtomakegooddecisions
b.Februarywastoosoonneededcurrentforecast
4.Wasincomeandoiltaxcutsamistake?
a.Wedidntcuttheoiltax.Weeliminatedalowpricetaxcuttriggerinexchangeforan
overallslightlylowerrateof10%(5%forproductionand5%forextraction).Neteffectisover
$360millionmorerevenueperyear.Withoutchange,extractiontaxwouldhavegoneto0%at
currentoilprices
b.Wecutpropertyandincometaxesbyover$1.2billionlastsession.
i.$1.1billioninpropertytaxes
ii.$123millioninincometaxcutsonly10%ofthetotaltax
cuts
5.Whydidyouspendsomuchinthefirstplace?
a.Noonecouldhavepredictedsuchadrasticdropincommodityprices
b.Growingeconomyhadsignificantneeds
c.Over$2billioncommittedlastsessionwasinonetimespending($900millioninsurge
fundingand$1.2billionisregularspending)
d.$1billionofspendingwaspropertytaxrelief
e.Hadbillionsinreservefunds
f.201517budgetwasalreadyreduced$600millionfrom201315budget

Thanks,
Pat

PatrickFinken
President

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