Highlights of North Dakota Gov. John Hoeven's budget proposal for state government for 2007-09:

GENERAL FUND: Hoeven wants $2.47 billion in state general fund spending over two years, an increase of $478.9 million. Almost $188 million of that increase is for one-time projects, including $42 million for construction and remodeling work at North Dakota's state penitentiary. The state's general fund is financed mostly by taxes on income, sales, energy, corporations, gambling and tobacco.

BOTTOM LINE: Total state spending would rise o $6.33 billion, under Hoeven's budget plan, a 10.1 percent increase over two years. The sum includes federal aid, which accounts for 38.3 percent of North Dakota's state budget, and special state funds, which include motor fuel taxes and a variety of fees.

SURPLUS: The current state budget, which ends June 30, is forecast to have a surplus of $539.8 million, including a $99.5 million "rainy day" fund and $128.3 million in an oil tax trust fund. Hoeven's proposed 2007-09 budget has a cushion of $412.7 million. It increases the rainy-day fund to $200 million, and estimates that $178.6 million will be left in the oil tax trust fund.

WORK FORCE: North Dakota's state government work force would increase from 10,710 authorized employees to 10,809. The departments of Corrections and Rehabilitation, Commerce, Information Technology and Health as well as the Highway Patrol are among the agencies adding employees. Others may lose workers. Job Service North Dakota, for example, would see its number of employees fall from 356 to 308 under the governor's proposal.

PROPERTY TAXES: Hoeven wants to use $116.7 million in oil tax collections to finance property tax discounts. Residential homeowners would get a 10 percent break on their property tax bills in each of the next two years, while commercial and agricultural property owners would get 5 percent breaks. Special assessments, which go to finance water and sewer lines and streets, would not get the discount. Hoeven says he expects the discounts to continue in future budgets.

VETERANS: The budget continues a bonus program for North Dakota veterans of the active-duty armed forces, reserves and National Guard. Bonus eligibility is expanded to soldiers in North Dakota National Guard units who do not live in the state. It provides payments of $100 for each month of overseas service, and $50 for each month spent stateside. Soldiers who are wounded are eligible for $2,500, and the heirs of soldiers who are killed may receive $2,500.

HIGHWAY PATROL: Hoeven's budget includes money to hire six additional troopers, two of whom would provide security at the state Capitol. Three temporary Capitol security positions would also be converted to permanent jobs.

CORRECTIONS: The spending plan includes a $42 million proposal to demolish the main Bismarck state prison's east cell house and replace it with a new cell block, prisoner orientation unit, medical clinic, laundry and segregation unit, where disruptive inmates are housed. The Department of Corrections and Rehabilitation would get 29 new employees, including five guards and a business manager for the James River Correctional Center in Jamestown.

TOBACCO: Hoeven wants to set aside $551,600 for a special program to discourage youth tobacco use. It would be financed by the state's community health trust fund, which itself gets its money from a state lawsuit settlement against the nation's largest tobacco companies.

ROADS: The Department of Transportation would get an extra $20 million from the state's general fund for road repairs, maintenance equipment purchases, and information technology projects. The agency's operations are normally financed by taxes on gasoline and diesel fuel, which are not part of the general fund.

SCHOOLS: North Dakota's method of distributing state aid to schools would be overhauled. It was drafted by the Commission on Education Improvement, which Hoeven appointed in January as part of an agreement to delay a lawsuit against the state's education finance system. As part of the deal, Hoeven promised to include at least $60 million more in state spending for schools in his 2007 budget recommendations. The final proposal requests an increase of $80.5 million.

EMPLOYEE PAY: Hoeven's budget proposal includes money for a 4 percent pay increase for state workers on July 1, and a second 4 percent rise on July 1, 2008. Workers would get a minimum $75 monthly increase, and the 4 percent raise would not be distributed across the board. Hoeven is asking to continue state workers' fully paid health insurance benefits, at an estimated cost of $658 monthly. The governor's budget proposal also reserves $10 million for an "equity pool" to help remedy state wage disparities among jobs.

HIGHER EDUCATION: North Dakota's university system would get an $83 million spending increase, to $470.2 million. Hoeven said the increase should allow the Board of Higher Education to hold tuition increases under 5 percent for the next two years. The sum includes $14.2 million for building projects, and $16.1 million for one-time expenses, including computer software and deferred building maintenance.

COLLEGE INCENTIVES: Individuals would be able to deduct up to $5,000 from their state income tax for contributions to North Dakota CollegeSave, a so-called "529" plan that allows investment earnings to grow without being taxed. Couples could deduct up to $10,000. The Bank of North Dakota will also offer up to $250 in matching contributions to individuals who begin an account and have less than $20,000 in income, or couples who have less than $40,000.

OIL REVENUES: An oil tax trust fund is expected to end the current two-year budget cycle with a balance of $128.3 million, and collect another $167 million during the 2007-09 budget period. Once the money to finance property tax cuts is paid to county treasurers, the fund will be left with $178.6 million, estimates say. Another $71 million in oil tax collections is ticketed for the state's general treasury.

OIL OUTLOOK: Hoeven's budget forecasts an average oil price of $50 a barrel from July 1, 2007, through June 30, 2008, followed by a decline to $45 a barrel by June 2009. Oil production, which is now about 113,000 barrels a day, is expected to gradually rise to 119,000 barrels daily over two years.

RAINY DAY: State government now has $99.5 million in a "rainy day" fund, which may only be spent with legislative approval. Hoeven wants to increase the fund's balance to $200 million, eliminate provisions that govern when money may be put into the fund, and get the Legislature's permission to tap the fund to cover any revenue shortfall.

FLU DRUGS: The Health Department would get $2.3 million to stockpile antiviral drugs, which would be immediately available to fight flu outbreaks.

INDIAN EDUCATION: North Dakota's Indian Affairs Commission would get $125,000 to hire a full-time Indian education coordinator, who would focus on helping schools with larger Indian populations to meet federal education standards.

MEAT INSPECTION: The Department of Agriculture would get five new employees to provide inspections of state-licensed meat processors. The budget includes $666,000 for the expansion, which would come from state and federal sources.

GREENHOUSE: North Dakota State University would get $9 million to build a research greenhouse on campus.

GRANDSTAND: Hoeven's proposed budget includes $5 million in state money to help build a $10 million grandstand on the North Dakota State Fairgrounds.

PEACE GARDEN: The International Peace Garden, which straddles the Canadian border north of Dunseith, would get $1.5 million to help build a new interpretive center, and almost $1 million for deferred maintenance projects.