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Dale Wetzel, Associated Press
North Dakota state Sen. Bob Stenehjem, R-Bismarck, the Senate's Republican majority leader, speaks to lobbyist Dennis Boyd about a western North Dakota water project in Stenehjem's state Capitol office on Monday, Jan. 3, 2011. Stenehjem was in his office a day early to sort through paperwork before the 2011 North Dakota Legislature begins at noon Tuesday, Jan. 4, 2011.

BISMARCK, N.D. — When the North Dakota Legislature begins its 2011 session, lawmakers will have plenty of money to spend and even more suggestions about how to spend it.

With the 2011 session set to kick off Tuesday, Gov. Jack Dalrymple's two-year, $9.3 billion budget includes millions for road repairs, flood control projects, medical benefits for lower-income North Dakotans and incentive pay for public school teachers, as well as property tax subsidies and a small cut in North Dakota's income tax rates.

Dalrymple's plan assumes the state treasury will have a surplus of slightly more than $1 billion in June, including $620 million in a reserve fund for oil taxes and a "budget stabilization fund" of $325 million. His budget assumes the state will collect more than $2 billion in oil taxes alone from next July until June 2013.

The numbers give an impression that the state government treasury is more flush than is actually the case, said Sen. Randy Christmann, R-Hazen, the assistant Republican majority leader..

The stabilization fund is normally reserved for budget shortfalls, and a change in state law would be needed to access the money, Christmann said.

North Dakota's prosperity also means the state will be paying a larger share of the bill for Medicaid, a state and federal program that provides medical treatment for the poor and pays the nursing home bills for elderly, indigent North Dakotans. That will require $174.2 million over two years, without an increase in Medicaid services, budget documents say.

"There's going to be a lot of pressure because of the presumption that we have all of this money," Christmann said. "But when you take away the money that is already designated or set aside, there's not near as much available as what a lot of people really think."

The Legislature begins its session at noon Tuesday. The North Dakota Constitution limits the Legislature to 80 days of meetings every two years, and the 2011 session is expected to last until late April.

Much of the Legislature's first week is taken up by three speeches. Dalrymple delivers his State of the State address early Tuesday afternoon, about an hour after the session opens.

Chief Justice Gerald VandeWalle briefs lawmakers about issues affecting North Dakota's judicial system on Wednesday. On Thursday, Tex Hall, chairman of the Three Affiliated Tribes, gives a speech about the relationship between North Dakota's American Indian tribal governments and its state government.

Legislators on Monday said they expected two of the 2011 session's primary issues will be road repairs made necessary by flooding in the soggy east and heavy truck traffic in the oil-producing west; and flood-control projects, including a new outlet for Devils Lake floodwaters and a proposed Red River diversion channel around the city of Fargo.

Dalrymple "has allowed a lot (of money) for infrastructure," said Sen. Joan Heckaman, D-New Rockford. "It's going to be how that infrastructure funding is . . . divided, that is going to be the issue."

An oil production boom in western North Dakota, and the tax collections it has generated, is one of the big reasons for the state's fiscal robustness, which is in contrast to the budget woes that will hang over most state legislatures this year.

Analysts estimate North Dakota will collect more than $2 billion in oil taxes during the state's next two-year budget period, which begins July 1 and ends June 30, 2013.

Of that sum, roughly $1.2 billion will be split among two separate accounts — a newly established savings trust fund, which legislators are barred from dipping into until 2017, and a separate fund for oil tax surpluses that lawmakers may spend at any time.

Dalrymple's budget includes a small, across-the-board reduction of 0.21 percentage points in state income taxes, which would lower North Dakota's top tax rate to 4.65 percent and its lowest rate to 1.63 percent.

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It assumes the continuation of a state program that provides property tax subsidies for local schools, which has allowed them to reduce their own tax rates. Dalrymple's budget includes more than $680 million in property tax subsidies for the next four years.

Republicans made significant gains in both the North Dakota House and Senate during the November elections, leaving the GOP with more than two-thirds control of both chambers. Rep. Bob Hunskor, D-Newburg, said he believed voters want fiscal restraint even when North Dakota's budget is in good shape.

"I think the people are saying, we want you legislators to control your spending, to spend money wisely, to keep the pork out of it as much as possible, and just do what's right," Hunskor said.