Gov. Rounds Sets Direction for Next Budget Process

Gov. Rounds Sets Direction for Next Budget Process

As state departments begin the fiscal year 2007 budget process, Gov. Mike Rounds gave financial direction to state department heads this week, telling them not to ask for money to fund new programs, to hold to a bare minimum their requests for increased spending for existing programs, and to review existing programs for possible elimination.

Jason Dilges, Rounds' budget director, said, "The governor has stressed to his top government leaders that we need to hold down spending in state government while our revenues rebound so that the structural deficit may be eliminated over the next couple years. We are going to continue to budget conservatively as growth and the recovery continue."

For the year ending June 30, the legislature approved a budget that was nearly $26 million short of revenue. Through spending cuts, this deficit was actually reduced to $23.8 million. "In the next couple years, our goal is to reduce the deficit to zero," said Gov. Rounds. "Because we've been good stewards with our citizens tax dollars in the past, we have reserves to draw on until the deficit is overcome."

Growth in ongoing state revenues was 4.7% for the year that ended June 30, 2005. That is higher than the 7 year average of 3.92% growth. "Our structural deficit is declining, but not fast enough," said Rounds. "We need to control state spending as well as continue to provide the services our citizens rely on every day. If our revenues do not grow as fast as the Legislature has projected, we can't responsibly propose a budget that assumes the higher revenue estimates will occur. We need to ensure that the actual deficit continues to be reduced."

Rounds told cabinet officials that Medicaid and education would claim most of the available new dollars for next year. He also told his cabinet that he does not want to see requests for programs they know he can't fund in the next budget year. His goal is to review existing programs and eliminate those that don't serve the state well. "If there are state administered programs that have outlived their usefulness, we'll propose to the legislature that we discontinue funding them," said Rounds.

Rounds, who took office in 2003, inherited a sluggish state economy and a ballot initiative which eliminated the state inheritance tax that provided $30 million annually in state revenues. These conditions created a budget deficit that was in excess of $50 million. In his first two years, the structural deficit has been cut in half.

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