NE W S

FOR IMMEDIATE RELEASE Contact: Jeff Zent or Jody Link

December 8, 2010 701.328.2200

DALRYMPLE DELIVERS 2011-2013 BUDGET ADDRESS

Fund New and Existing Priorities, Provide More Tax Relief, Grow Reserves

BISMARCK, N.D. – Gov. Jack Dalrymple today released his 2011-2013 Executive Budget,
calling for a policy of building on proven objectives and supporting new areas of emphasis to further
grow the State of North Dakota. Gov. Dalrymple’s Executive Budget includes:

• Unprecedented funding for transportation infrastructure, housing, water supply and water
control projects and other infrastructure investments throughout the state. It also includes
investments in economic development, education improvement, agricultural research and
quality-of-life enhancements.
• A commitment to providing additional tax relief to the people of North Dakota. The Executive
Budget plan provides $900 million in cumulative tax relief over the current and the 2011-2013
bienniums.
• The Executive Budget reflects Gov. Dalrymple’s commitment to building strong reserves, while
reducing taxes and investing in infrastructure and other priorities. In all, the budget sets aside
about $1.2 billion at the end of the 2011-2013 biennium. This overall reserve is comprised of
funds held in the Budget Stabilization Fund, the Legacy Fund, the Permanent Oil Tax Trust
Fund, and it includes a projected ending balance of nearly $56 million in the General Fund.

“This budget stays true to what is working in North Dakota and at the same time it
supports new, farsighted endeavors that will become the foundation for future economic
growth,” Dalrymple said. “We are able to fund priorities, to set aside adequate reserve and
provide additional tax relief for the hard-working men and women of North Dakota.”
(Chart 1)

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 SOUND FISCAL MANAGEMENT
Revenues Exceed Expenditures

Ongoing Expenditures

The Executive Budget calls for General Fund ongoing revenues in the 2011-2013 biennium
to total about $3.197 billion, while ongoing expenditures will total $3.185 billion. This ongoing,
positive revenue flow takes into account property-tax and income-tax relief and the continued
building of reserves – all at a time when the state of North Dakota will receive $174 million less in
federal funding. (Chart 2)

Growing revenues are reflected in a projected General Fund ending balance of $80 million
for the current biennium, after a transfer of $4.6 million to the Budget Stabilization fund as required
by law.

Our 2011-2013 Executive Budget represents a 5.6 percent, per-year increase in expenditures
when compared to total 2009-2011 appropriations – excluding $295 million in property tax relief
assigned to the General Fund during the 2011-2013 biennium. The 61st Legislative Assembly
addressed the need for a more suitable, future funding mechanism by establishing the Property Tax
Sustainability Fund. Additionally, our increase in General Fund expenditures totals 2.7 percent when
we take into account the need to make up $174 million in discontinued federal funding.

One-time Expenditures

Our budget proposal includes $110 million in General Fund, one-time projects. These one-
time investments will help fund projects including educational infrastructure, public safety needs,
communications equipment and improvements to flood-prone roads. The one-time expenditures
would also fund research, development and the commercialization of North Dakota products and
services.

BUILDING RESERVES

Reserves grow from $1.025 billion at the beginning of the 2011-2013 biennium to
approximately $1.236 billion by the biennium’s end. Attached is a summary of the state’s projected
reserve fund balances and the General Fund ending balance on June 30, 2013. (Chart 3)

ADDITIONAL TAX RELIEF

It is important that the men and women of North Dakota see a substantial share of our
economic gains reflected in their tax bills.

In the last biennium, we reduced property taxes by $300 million through a reduction of
about 75 mills in school district levies, thereby raising the state’s share of school funding from about
48 percent to the long-sought goal of 70 percent. We also reduced income taxes by $100 million,
resulting in an average 12-percent savings for North Dakota taxpayers.

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 We propose expanding the $300 million in property tax relief passed in the last session to a
level of $350 million in the upcoming biennium. Additionally, we propose expanding the $100
million in income tax relief to a total of $150 million, thereby providing cumulative tax relief of $900
million during the two bienniums. (Chart 4)

FUNDING NEW AND EXISTING PRIORITIES

Statewide Infrastructure Needs
We will not realize our potential for new economic growth without investing in
infrastructure. Our budget proposal dedicates $1.7 billion for statewide transportation infrastructure
and operation, including more than $900 million for infrastructure improvements in oil country.
(Chart 5)

Our budget proposal includes, but is not limited to:

• $229 million from the Permanent Oil Tax Trust Fund for state road construction and
maintenance in North Dakota’s 17 oil and gas producing counties
• $142 million from the Permanent Oil Tax Trust Fund for county and township roads in oil
country
• $100 million in Oil and Gas Impact Grant Funds to be available for cities, counties,
townships and other entities in the oil- and gas-producing region for housing infrastructure
and other needs
• $240 million in regular state and federal highway funding for projects in the North Dakota
Department of Transportation districts of Williston, Minot and Dickinson
• $75 million in initial funding for the Red River Valley flood control project. The Executive
Budget reaffirms Gov. Hoeven’s commitment to fund the non-federal, non-Minnesota
share. The total project cost is estimated at roughly $1.5 billion, with the state’s share
estimated at $300 million over 10 years.
• Up to $120 million from the Resources Trust Fund for a major expansion of flood
protection efforts around Devils Lake
• $235 million, made available primarily through the Resources Trust fund, for essential water
projects throughout the state, plus another $149 million in carryover funds for existing water
supply projects throughout North Dakota. Included is new funding for the Valley City and
Williston water supply projects, as well as future projects in Fargo-West Fargo and
elsewhere.

Resources for Quality Education

K-12 Education

No responsibility is more important than preparing our children for the future. Our budget
proposes an increase of $102 million to improve the quality of instruction in our schools. (Chart 6)

The funding includes $54 million for the Commission on Education Improvement to
complete its work on educational adequacy. Our budget also sets aside $32 million to increase the
per-student payment of $100 for each year of the biennium.

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 Now that we have strengthened our core curriculum and established student scholarships
based on academic performance, our budget includes funding to establish a program of Alternative
Teacher Compensation. The program will provide teacher pay based on factors including their
teaching proficiency, added responsibilities and students’ academic growth. The program will be
voluntary and developed locally, by teachers and school officials. (Chart 6)

Higher Education

Our budget proposes an increase of $82 million in ongoing funding and $45 million to cover
one-time funding for the 11 campuses of the North Dakota University System. This should enable
the university system to hold tuition at its current level at two-year institutions and no more than a 2
½ percent increase at four-year institutions.

In our ongoing budget, we include $10 million in new merit-based scholarships for well-
performing high school students. Combined with $19 million already in the base budget for needs-
based scholarships, we provide nearly $30 million to help students cover the cost of a quality
education in North Dakota.

Our one-time expenditures include funding for a shared system-wide data center on the
University of North Dakota campus; for the Stoxen Library at Dickinson State University; and for
the final phase of construction for the North Dakota State University greenhouse. Additionally, our
budget includes funding for a new science center at Valley City State College and to renovate Old
Main at North Dakota State University.

The Executive Budget also recommends for higher education a salary increase of 3 percent
per year, with 1 percent directed each year to the teacher retirement fund. We propose that the state
of North Dakota match that 1 percent and fully fund an increase in employee health insurance.

Our proposal for K-12 Education includes funding that will allow school boards to provide
teachers with a salary increase and retirement benefits similar to that proposed for Higher
Education.
IMPROVING OUR QUALITY OF LIFE
While we take measures to build a strong economy, we must not lose sight of the ultimate
objective: a higher standard of living and improved quality of life for all North Dakotans.

Law Enforcement and Public Safety

Our budget recommends $2.2 for equipment needed to expand the communications
capabilities for state radio. This investment in six communications towers will also improve the cell
phone service for our citizens who currently experience poor coverage in some areas of our state.

We also commit $4.1 million to build and equip a new Highway Patrol Training Academy
and to fund the addition of three new Highway Patrol officers. With this funding, we can maintain
the highest standards in professional law enforcement training and better manage the state’s
increased roadway traffic.

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Health and Human Services

For each year of the 2011-2013 biennium, our budget includes a 3-percent increase in
Medicare and Medicaid reimbursements for our hospitals, nursing homes and other health care
providers. This increase is followed by the last legislative session’s passage of $67 million in
increased Medicaid reimbursements for hospitals, doctors, dentists, chiropractors and ambulance
services.

Our proposal to increase Medicare and Medicaid reimbursements by 3 percent per year
during the 2011-2013 biennium will bring rates more in line with the actual costs of caring for
nursing home residents, people with developmental disabilities and mental illness and citizens in
need of other health care.

Military and Veterans

We owe our active military personnel and veterans our deepest gratitude and support.
In the past 10 years, we worked with the Legislature to establish a Veterans Appreciation program
that includes bonuses for overseas and domestic service, scholarships, counselors and other services
that support them in tangible ways. Our budget maintains full funding for these programs and
includes a new outreach center in Fargo for our veterans and our service men and women.

Public Employees

Our budget proposes a 3-percent salary increase in each year of the new biennium and fully
funds the increase in public employee health-care premiums. As with teachers, we recommend that 1
percent of the three be directed each year to the public employee retirement fund, with a 1-percent
match from the state.

AGGRESSIVE ECONOMIC DEVELOPMENT

Creating an Office of Energy Development

As the next step in further developing all of our energy sectors, we propose investing
$600,000 from the General Fund to establish an Office of Energy Development, a new division
within the North Dakota Department of Commerce, dedicated solely to the development and
promotion of all North Dakota energy sources. The Director of Energy will work with communities
on infrastructure and administer energy programs to help the energy industry move their projects
forward rapidly for the benefit of all North Dakotans.

Centers of Excellence

Our budget recommends extending the Centers of Excellence program with an additional
$20 million during the biennium. An economic impact study shows that the centers are successfully
partnering the research capabilities from our public colleges and universities with the private sector
to create new jobs and business opportunities. In a 2010 study, North Dakota State University
research found that Centers of Excellence program have successfully leveraged $26 million in state
funding into an economic impact of more than $329 million.

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 Our budget also includes $2 million for grants to develop state Centers of Workforce
Excellence and $490,000 to enhance the global commercialization of North Dakota products and
services.

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