North Dakota's next budget could handle substantial spending increases in the next two years without dipping into an oil tax fund that may grow to $1.3 billion by June 2011, estimates say.

Documents prepared for the Legislature's interim Budget and Finance Committee show that voter approval of Measure 1 on the Nov. 4 ballot, which would create a new state fund for surplus oil tax revenues, would still leave ample room for spending growth.

Approval of Measure 2, which would cut North Dakota's individual income tax rates in half and its corporate rates by 15 percent, would force lawmakers to scale back spending increases or tap the state's surplus oil tax fund, the documents say.

"Whether you support the measures or not, there's no question that what happens to them will influence what the Legislature is able to do," said Rep. Al Carlson, R-Fargo, the Budget and Finance Committee chairman.

During the last 10 years, the Legislature has increased state general fund spending by an average of 10.8 percent every two years, according to estimates prepared by the Legislature's budget staff.

If lawmakers raise state spending by another 10.8 percent during the 2009-11 budget period, North Dakota's treasury will have a $251 million cushion when the cycle ends, the documents estimate.

That sum does not count money in an existing state oil tax fund - which could grow to $1.3 billion by June 2011 - or a state rainy-day fund that is expected to have $272.8 million in reserve.

If North Dakota's general fund spending jumped by 15.8 percent over two years, the treasury still would have $135.5 million left over when the 2009-11 budget cycle ends, the legislative estimates say.

Measure 2's income tax reductions would change those numbers by reducing North Dakota's income tax collections by $414 million every biennium.

The Budget and Finance Committee studied five scenarios Tuesday that considered the possible effect of Measure 2's approval by voters. All five would require tapping North Dakota's existing oil tax fund or other reserves for at least $100 million to raise spending a minimum of 8 percent over two years.

Carlson formed the committee in September 2007 to ride herd on state revenue estimates and future budget obligations. On Tuesday, he pushed unsuccessfully for a committee endorsement of suggested spending targets for the 2009 Legislature.

Other lawmakers balked, with some saying they felt uncomfortable with the perception they were making budget decisions outside the regular legislative session.

Sen. Randy Christmann, R-Hazen, said he wondered whether state revenue projections would hold up, given recent price declines for oil and farm crops.

"Our oil revenue is going to be down, I believe," Christmann said. "Most ag commodities have dropped dramatically … and that money trickles around this economy quite a lot."