Armstrong’s executive budget highlighted by property tax relief, infrastructure and housing investments

Gov. Kelly Armstrong today presented his executive budget recommendations for the 2025-27 biennium, highlighting significant investments in property tax relief, housing and infrastructure, education opportunities for students, and other priorities.

In testimony to the Joint House-Senate Appropriations Committee, Armstrong outlined a general fund budget of $6.6 billion and a total budget of $19.89 billion. Within that total is $483.4 million for property tax relief and reform; $464 million in bonding for construction projects; $44.3 million for Education Saving Accounts; $50 million for higher education Challenge Grants; and $16.1 million to staff and operate the Grand Forks County Correctional Center's new expansion as an immediate, temporary solution to prison overcrowding.

"Combined, these represent roughly a billion dollars in new investment in infrastructure, educational opportunities for students, and property tax relief," Armstrong said. "Without having time to dig into base budgets, we had to find other places to reduce spending in the Burgum administration's budget proposal, which had already reduced agency requests. We cut another $600 million," including reducing staff and spending on new programs and construction that wasn't scheduled to begin until the end of the 2025-27 biennium.

As he did in detail in his State of the State Address last week, Armstrong outlined a property tax reform and relief plan that will provide a property tax credit of $1,550 per year for each primary residence next biennium and cap future increases in local property tax budgets at 3% per year. Legacy Fund earnings would initially pay for part of the relief and eventually cover all the cost.

The proposed budget leaves $230 million in the general fund ending balance and over $500 million in the Strategic Investment and Improvements Fund - not including any of the SIIF revenue from next biennium, which pushes the projected SIIF balance to $1.6 billion.

"We're leaving real cushions for legislative priorities," Armstrong said.

Oil tax revenues are projected at nearly $4.9 billion in 2025-27, which is about $828 million less than the revised estimated for the current biennium. This assumes oil prices of $62 a barrel in 2026 and $60 a barrel in 2027, and oil production of 1.15 million barrels per day in 2026 and 1.1 million barrels per day in 2027.

"These are conservative projections," Armstrong said. "We're optimistic we could see higher numbers with the Trump administration's focus on responsible development of our resources to achieve not only energy independence but energy dominance,"

The proposed bonding package includes $300 million for the construction of a new State Hospital in Jamestown; $120 million for airport projects in Fargo, Grand Forks and Dickinson; and $44.2 million for a Military Gallery at the North Dakota Heritage Center, including $4.2 million to repay the line of credit authorized last session and interest on the $80 million project.

Armstrong noted Grand Forks County officials reached out in recent weeks with the idea for the state to operate the Correctional Center's new expansion, as the county is currently unable to staff the space or fund its operation. The proposed $16.1 million in state funds for staffing and operations will make 90 beds available by July 1 of this year. The proposed budget also includes $9.3 million for a temporary housing facility at the Missouri River Correctional Center in Bismarck, which will make 88 beds available by July 1, 2026, for a combined total of 178 additional beds between the two facilities.

"Between these two facilities, this is the cheapest and fastest way to relieve pressure on our overcrowded correctional facilities, not just at the state but also the local level," Armstrong said. "But we also know we can't build our way out of this. We need practical solutions that will increase access to services and not rely so much on our jails and prisons as treatment centers."

He noted the proposed budget adds $19.2 million for behavioral health programs, including $6.9 million to expand Free Through Recovery, Community Connect and peer supports; $7.8 million to increase youth crisis and intervention funding; $2.5 million to expand the Substance Use Disorder (SUD) voucher program; and $2 million for rural crisis supports.

To maintain a fully funded K-12 education system, the proposed budget provides 2% annual increases in the K-12 integrated formula at a cost of $60 million. It also proposes $44.3 million to establish an Education Savings Account program to provide supplemental services through a digital wallet that reimburses for approved services and supports such as tutoring and mental health therapy.

"This will expand educational opportunities to directly impact student learning and well-being for public, non-public and homeschool students," Armstrong said.

To help attract and retain much-needed workforce, the budget includes nearly $105 million to improve housing availability and affordability, a $10 million increase from the prior executive budget proposal. That includes $50 million for a new Department of Commerce program to address housing needs through a public-private partnership structure, which will drive $150 million in investment in housing solutions by leveraging local and private sector matches.

A copy of the governor's budget address is available here.

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