BISMARCK, N.D. (AP) — President-elect Donald Trump has given his pick for Interior secretary a “baby drill” drilling mandate, and on Wednesday his pick, North Dakota Gov. Doug Burgum, offered a rosy budget picture to lawmakers which were largely based on his state’s success in extracting near-record levels of oil and gas from the ground.
Burgum, whose term ends next week, noted North Dakota’s status as the nation’s third oil-producing state in his final proposed budget before he begins his role in Trump’s administration, pending Senate confirmation. In addition to his role as Secretary of the Interior, Trump has chosen Burgum to lead a newly created National Energy Council that aims to ensure American “energy dominance.”
“We look forward to the next four years where we believe there will be a shift toward innovation over regulation and an opportunity for North Dakota and our mineral owners to more quickly and easily obtain permits to access those natural resources for our country,” Burgum told a packed House of Representatives audience, also complaining about dozens of energy-related federal regulations that his state is fighting.
Burgum, a two-term governor and a wealthy software entrepreneur, appears a good choice to carry out Trump’s mandate for both the new council and Interior, where he would oversee public lands and natural resources. Environmentalists are concerned about what Trump’s second term will mean for climate change initiatives. Trump has said he will reverse President Joe Biden’s policies.
Oil and gas are critical to the economy of North Dakota, where an oil boom began in the late 2000s through hydraulic fracturing and horizontal drilling.
State officials estimate a preliminary record high of 19,200 producing oil and gas wells in September. According to a November report, oil taxes in the 2023-2025 budget cycle have been 13% higher than expected, or $475 million more than expected. Oil production was almost 1.2 million barrels per day in September.
North Dakota set its record annual oil production in 2019 – under Burgum – at 524 million barrels, according to a landmark report. Last year was the state’s fourth year in oil production.
Burgum’s two-year $19.5 billion budget recommendation assumes oil production of 1.1 million barrels per day in the 2025-27 budget cycle, with oil prices of $62 and $60 per barrel in each year of the next two budget years, respectively.
Oil tax revenue is a huge driver of the state budget, which relies on oil taxes for everything from school funding to property tax relief assistance, health and human services, and infrastructure projects across the state, said former Republican Rep. Mike Nathe, a House budget writer.
“Oil revenues touch every community in the state,” Nathe said.
Oil taxes also fuel the state’s sovereign wealth fund, which has grown to more than $11 billion since voters created it in 2010. Hundreds of millions of dollars in revenue come from that fund for lawmakers to tap.
But oil volatility hit the state hard in 2016, resulting in a massive revenue shortfall that led to budget cuts and a depletion of reserves. Oil forecasts are critical to the Legislature’s budget process.
Other states’ revenues are healthy. Total general fund revenues are 12% higher than forecast, or $392 million, according to a report last month. Sales tax is 12% higher, or $182 million.
Burgum’s budget includes a $6.5 billion general fund, the state government’s main operating account. The 2023 Legislature passed a record $19.6 billion budget for 2023-2025, with a $6 billion general fund and billions in federal money. That total budget was more than $1 billion more than what Burgum recommended.
His latest template for lawmakers includes increases in state employee salaries and benefits and K-12 education. He outlined the focus areas of workforce, housing, infrastructure, information technology and other major topics. His recommendations include millions for child care initiatives, addiction treatment and housing programs and subsidies.
The Legislature’s budget writers will include Burgum’s budget in their work, but they will also receive a budget proposal in mid-January from Burgum’s successor, newly elected Republican Governor Kelly Armstrong, who takes office on December 15.
Parliament will meet in early January. The Republicans have the majority in the House of Representatives and the Senate.
