With the drop in oil and commodity prices – and the resulting reduction in state revenues – state agencies could see some belt tightening for the remainder of the two year budget period.
But the state has a safety net – the Budget Stabilization Fund, which has more than $500 million.
"The Budget Stabilization fund can't be accessed until there's a new revenue forecast," said state Office of Management and Budget director Pam Sharp. "If the shortfall (in projected revenues) is below 97.5 percent of the original forecast, the fund could be accessed."
But before that happens, there would have to be an allotment -- an across-the-board budget cut, ordered by the Governor.
"It would be made to all general fund agencies," said Sharp. "That could be made up to 2 1/2 percent."
K-12 spending would be exempt, because there is a foundation aid stabilization fund. It has more than $300 million.
Sharp says there likely will be a new budget forecast – in light of declining oil tax revenues.
Sharp says she’s been talking with Moody’s Analytics. She says there isn't a definite timeline for a forecast.
"Once we make a decision to go ahead, the sooner the better," said Sharp. "I would anticipate the forecast process beginning in December."
Sharp says her office would want to take a look at December revenues first. But she says this shouldn't be a time to panic.
"We have plenty of reserves," said Sharp. "We're very fortunate to have good reserves."
Sharp says another positive thing is income tax collections remain strong.
"That shows there's a lot of people working out there and making good wages," said Sharp.
Legislative Management Committee chairman Sen. Ray Holmberg (R-Grand Forks) says if there is an allocation, the Legislative branch will also reduce its budget, in line with state reductions.
Sharp says the last time there was a budget allocation was a one percent cut in 2002 – in the wake of the September 11th attack on the World Trade Center.
