A new state revenue forecast shows tax collections will be about $46 million less than what lawmakers had expected in January for the current biennium.
It also shows a $103 million shortfall for the 2017-2019 biennium.
The big driver – lower than expected sales tax revenue.
"The decisions are going to become even more difficult," Gov. Doug Burgum told a joint meeting of House and Senate Appropriations Committees. "While there is hard work done, painful decisions made, many questioned the cuts made by the Legislature and the Governor. I think this indicates while those were painful, those cuts turned out to be not deep enough or soon enough."
Burgum is suggesting legislators look at using money in some of the trust funds to help make up for some of the difference. House Majority Leader Al Carlson (R-Fargo) told reporters they’ll look at that – but there will be further cuts.
"There's only a couple of big pools -- the property tax relief fund and the Strategic Infrastructure Investment Fund," Carlson said. "We're going to empty the whole SIIF fund."
Carlson said the buckets are still in place, and they will refill in the next biennium.
"But we're going to empty the ones we can empty," Carlson said. "The budgets will not get rebuilt higher."
The legislature wanted to build a budget with an ending fund balance of $100 million at the end of the next biennium. But Senate Majority Leader Rich Wardner said it will probably be a lower number than that.
"We're talking $40 to $50 million," Wardner said. "If it comes out at $30 or $25 million, don't be surprised."
Burgum suggested some ideas he proposed for budget savings should be reconsidered. One is a proposal to have state employees pay 5 percent of their health insurance premiums.
"If we don't have people engaged in their own health care, we will never turn the corner on reducing health care costs," Burgum said. "Everybody needs to be engaged in that."
Legislative leaders say that's a non-starter.
"The Senate doesn't have an appetite for that," Carlson said. "And we will not propose it unless they're willing to go along."
"It's not on the table," said Wardner. "It's an option -- but it would be way down as far as any priority."
Burgum is renewing his request for some spending flexibility so he could move money between state agencies.
"Once the budgets have been set, we would have the ability to move money around to save money," Burgum said.
Burgum said his goal is to eliminate duplication – and consolidate some services.
But Legislative leaders don’t like the idea.
"Overall, the Legislature is leery of that," Wardner said. "That's (appropriating money)n their job."
"We could craft some language to allow him (Burgum) to find ways to spend less or reduce duplication within agencies, he would have flexibility there," Carlson said. "But not across agencies."