Associated Press Writer

By DALE WETZELBy DALE WETZEL

Gov. John Hoeven wanted the Legislature to boost North Dakota's general fund spending by 24 percent. So far, for its majority Republicans, that was just a place to start the bidding.

When lawmakers return to the Capitol on Wednesday after a midsession break, they'll have to find a way to reconcile some of the mammoth spending increases and tax cuts that wriggled through the House and Senate in the session's first 32 days.

So far, the two chambers have endorsed proposals that would boost state general fund spending to $2.68 billion over two years, which is an increase of almost $692 million, or 34.8 percent, from current spending levels. Hoeven's budget proposal suggested a mere $2.47 billion.

Lawmakers have also approved tax cuts, exemptions and other breaks that would reduce state general fund revenue collections by $201 million over two years, including a sales tax exemption for heating fuels, an income tax cut for married couples, tax reductions for pull tabs and bingo cards, and an overhaul of state oil taxes.

"We were a little loose in the first half," said Sen. Raymon Holmberg, R-Grand Forks, the chairman of the Senate Appropriations Committee. "But now we know what the targets are … and we'll start whittling away."

It isn't unusual for spending and revenues to be out of whack at this point in the Legislature. The session's second half is when the intense work of balancing the budget takes place, and many prized spending and tax initiatives will disappear.

Nevertheless, the numbers are sobering, and Hoeven's plans to keep a state budget reserve of more than $400 million may be in jeopardy.

"It's halftime, and now, we're going to have to get serious," said Rep. Ken Svedjan, R-Grand Forks, the chairman of the House Appropriations Committee. "We will be nearing the point now where we're going to have to make some tough choices."

Democrats, who have watched many of their own budget initiatives vanish in the Legislature's first half, are bemused by the majority Republicans' free-spending ways.

"If they have a plan, they sure are fooling me," said Rep. Eliot Glassheim, R-Grand Forks. "Maybe when they come back and see what's going on … they'll have to deal with it. But the spending is wild, and the tax breaks are wild."

Hoeven's budget proposal to the Legislature did not include any tax or fee increases, or any newly issued debt. The governor's major building project, a $42 million renovation and construction job at the state penitentiary, was paid for in cash.

In the second half, it will be difficult for the Legislature to avoid issuing bonds for building projects. The House has endorsed spending $85 million on a new prison, which is likely to be financed at least partially by new debt.

The Senate, despite objections from the GOP majority leader, Bob Stenehjem, approved doubling the share of each motor vehicle registration fee that goes to support public transportation - from $3 to $6 annually.

The Legislature's Democratic floor leaders, Rep. Merle Boucher, D-Rolette, and Sen. David O'Connell, D-Lansford, predicted it will be difficult for Republicans to wrap up the 2007 session without a lot of acrimony.

"There's a lot of pet projects out there, and I think the session's really going to drag on because of that," O'Connell said. "Discipline hasn't been real great to this point."

Boucher predicted the Legislature's final days will have "some really ugly conference committees," when House and Senate negotiators work out the final details of bills.

"When we get to the end of this session and all of these things have to be reconciled, I'm kind of curious to see how that's going to be done," Boucher said. "Some people have some high expectations of things, and they're going to be cut short. And they're not going to like it."