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| B- | North Dakota |
• Population (rank): 635,867 (48)
• Average per capita income (rank): $22,619 (35)
• Total state spending (rank): $3,633,349,000 (49)
• Spending per capita (rank): $5,714 (15)
• Governor: John Hoeven (R)
• First elected: 11/2000
• Senate: 47 members: 21 D, 26 R
• Term limits: None
• House: 94 members: 33 D, 61 R
• Term limits: None
You might almost forgive a state for feeling a little complacent at a time when an oil- and gas-price boom and an increasingly diversified economy have combined to provide a biennial budget 24 percent larger than the previous one.
But complacency isn't really part of North Dakota's governmental culture. The state has lived through enough boom-and-bust energy cycles to recognize that balloons are made to be burst. In line with their tradition of fiscal conservatism, budgeters here have used some of their extra cash to put $200 million — about 8 percent of general-fund revenues — into the state's rainy day fund. That complements a number of other trust funds in which the state conserves cash to fund schools, health care and fiscal emergencies.
Aside from that, much of the windfall has gone toward one-time expenditures, including $14 million on an integrated tax-information system that went live last year, replacing 40-year-old technology that was inefficient and difficult to maintain. Plans also are underway for replacement of the state's 28-year-old, mainframe-based Medicaid management system.
In fact, there are quite a few areas of North Dakota government that could use some help right now. Blessed with the nation's lowest crime rate, North Dakota's Department of Corrections used to rent out excess beds to other states. Now, however, it is trying to cope with a rapidly growing prison population and overcrowded facilities, created in large part by drug offenses. A debate rages about whether to expand existing facilities or to build a new prison, but either way, the price tag will stretch into the tens of millions.
It may be easier to find the money for new beds than to adequately staff the prison hallways. The department routinely receives approval for fewer positions than it needs. Pay levels are low, and turnover among correctional officers is edging up. In the last budget, lawmakers approved $1.5 million for salary increases; the department had requested $4.2 million.
In fact, salary levels pose a significant challenge across state government. In the last legislative session, lawmakers approved a package readjusting some of them to make the pay scale more consistent across agencies. Overall, though, compensation remains uncompetitive. Some states close that gap by offering generous benefit packages, but North Dakota falls behind there, too, with benefits worth about half as much as the nationwide average. Agencies do have some flexibility to offer higher starting salaries to attractive candidates, but without more competitive pay across the board, the state will continue to struggle to fill open positions.
Human resources management is largely decentralized in North Dakota, so some agencies have pushed ahead to address personnel needs on their own. The Department of Transportation, facing a pending crush of retirements, started a career-path initiative last year to help lower-level employees develop skills they will need to move up within the department. It's a program other departments would be well served to emulate. With the difficulty in finding new employees, North Dakota needs to try especially hard to make the most out of the ones it has, investing more to train and develop them for bigger, better jobs.
As for the state's infrastructure, the budget surplus has helped funnel new money toward maintenance; DOT bonded for two major maintenance projects in 2005. Building maintenance is still more than 50 percent underfunded, though, and routine roadway upkeep has been set back as a result of dramatic increases in the cost of asphalt. The department expects this year's assessment may show some decline in road-condition ratings as a result.
For additional data and analysis, go to pewcenteronthestates.org/gpp.