North Dakota Gov. John Hoeven might well be the envy of many of his fellow governors as he presides over one of the nation's strongest economies.
“In the long run, I think we're going to see some pretty strong agricultural commodity prices just as we're going to see stronger oil prices.”Ernie Goss
Still, when Hoeven talks about the North Dakota budget, he often uses words like prudent.
"Given the difficulty the national economy is having, it's paramount that we continue to maintain a very solid reserve," Hoeven said, "so we don't have to raise taxes or cut spending for important programs in the future."
He may be cautious on spending the budget reserve, but Gov. Hoeven says he wants the state to be aggressive in economic development and diversifying the state's economy.
North Dakota's economic growth is supported by three big pillars; an oil boom, high farm commodity prices, and strong growth in exports.
A large part of the state's budget surplus is from oil revenue collected by the state. North Dakota Petroleum Council President Ron Ness says by the end of this year, North Dakota could surpass Louisiana as the fourth largest oil-producing state.
"The industry itself paid nearly $400 million in fiscal year 2008 to the state of North Dakota," said Ness. "And that's primarily the reason this past election for North Dakotans was all about, 'What do we do with the money'"?
But with oil prices falling dramatically, will the North Dakota oil boom go bust?
Ron Ness doesn't think so. He expects oil prices to rebound in a few months. But he says it's hard to predict the flow of revenue from such a volatile commodity.
"When the legislature left in April of 2007, oil was $42 a barrel," he said. "A year later it was at $142 a barrel and they were blamed for not spending enough. Now it's back to $55 a barrel. So it's very difficult to budget over a two-year period with a commodity like oil."
North Dakota has abundant oil, wind and coal resources which Gov. John Hoeven believes will be a cornerstone of the states future economy
"That opportunity is going to be here for our state, it's going to continue," said Hoeven. "I think it is absolutely going to be one of the leaders for our economy but it can be a real leader for the national economy too."
North Dakota farmers and manufactures saw income rise in part because of a weak U.S. dollar in recent years, which encouraged the sale of farm commodities and manufactured goods to international markets. North Dakota led the nation in export growth the past two years.
But the global economic crisis is hitting hard.
Howard Dahl watches a large laser turn steel sheets into farm equipment parts at his Fargo manufacturing plant.
Amity Technology has been a bright star in the North Dakota economy, much of the farm equipment made here is sold overseas.
But Dahl says he's experienced economic whiplash in the past couple of months.
"In September we anticipated record sales in Russia, Ukraine and Kazakhstan," said Dahl. "Thirty days later we'd cancelled half the orders we'd planned on building, and we are unsure how many of our customers are going to secure credit."
Dahl will be traveling to meet with some of his customers in an effort to finalize some of the pending deals. He hasn't had to reduce his workforce yet, he says a recent shortage of skilled workers is no longer a problem. Dahl hopes to avoid layoffs, but will need to re-evaluate his business plan early next year.
Dahl says despite 30 years of experience exporting farm equipment, he has no insight into what economic changes the next few months might bring.
Creighton University Economics professor Ernie Goss says that uncertainty is the cautionary note in the North Dakota economic tale. Goss conducts a monthly economic survey of Midwestern states.
According to the most recent survey, North Dakota still has one of the fastest-moving economies in the country, but the brakes will be applied in the next few months by falling oil and farm commodity prices along with sharp cuts in exports.
"Right now, it's certainly going lower and commodity prices are going lower," said Goss. "But in the long run, I think we're going to see some pretty strong agricultural commodity prices just as we're going to see stronger oil prices. But during the next six months to a year, it is very difficult to determine what's going to happen on a week to week basis."
Goss says North Dakota politicians need to watch what's happening in China and Russia as closely as they watch the state's economic activity.
North Dakota lawmakers have already set the stage for a cautious approach to the states revenue windfall. A new law will require an amount equal to 10 percent of the state's next budget to be set aside in a rainy day fund.