JBC staff propose using severance-tax reserves and targeted cuts after revenue forecast drops

Mark Ferrendino, SPV director, told the Joint Budget Committee that the state’s severance-tax forecast has fallen sharply since the last projection and that staff are proposing a package of reserve draws, transfers and targeted general‑fund spending to keep programs running.

"We are in a place ... significantly less severance tax than what we had forecasted," Ferrendino said, adding the proposal would use reserves and some general fund to bridge funding gaps for programs that depend on severance tax.

Ferrendino said staff propose using the Department of Natural Resources (DNR) operational account reserve — drawing the reserve from 200% down to 100% — to continue funding operations the department considers core. He urged the committee not to carry out an earlier-authorized sweep of $15,600,000 of this year’s revenue, saying that doing so combined with reserve draws would leave the operational account near a 50% reserve.

The staff package includes roughly a $90,000,000 request to balance competing needs and an overall balancing target of about $55,800,000, Ferrendino said. Key elements described to the committee included:

- Water projects: staff asked for a general-fund appropriation of $37.5 million combined with expected severance tax receipts to reach about $40 million for water project funding (described as a historical average). - Energy Impact Fund: staff reported a projected $55.7 million but proposed requesting roughly half in general fund ($25 million) plus expected severance tax to reach approximately $28.2 million for programs. - DOLA transfer: staff asked to take only $10 million of a previously discussed two‑year $20 million transfer from the Department of Local Affairs (DOLA) (i.e., $10 million this year only), saying the second $10…