BISMARCK, N.D. – A preliminary revenue forecast released today by the state Office of Management and Budget (OMB) underscores the need to budget conservatively while also providing reasons to be cautiously optimistic about the next biennium, North Dakota Gov. Doug Burgum said.
The forecast estimates tax and fee revenues, excluding oil taxes and transfers, for the current 2017-2019 budget cycle will total just over $3.2 billion. This amount is nearly $137 million, or 4.4 percent, higher than projected in May 2017 during the most recent legislative session.
Revenues for the 2019-2021 biennium are projected at $3.38 billion, which is up $293 million, or 9.5 percent, from the May 2017 legislative forecast and up $156 million, or 4.8 percent, from the September 2018 revised forecast.
Burgum said that while the upward revenue trend will help narrow the gap between ongoing revenues and ongoing expenditures, it likely won’t be enough to close that gap. The state used roughly $800 million in reserve funds and transfers to balance the current general fund budget of $4.3 billion – a budget that had already been reduced by an unprecedented $1.7 billion from the previous biennium.
“While this recent revenue growth is a good sign for our economy and is on track with the estimates we have used for budget planning purposes, it does not diminish the need for a structurally balanced budget and a conservative approach to spending,” Burgum said. “This conservative yet reasonable preliminary forecast shows we still face a significant challenge as we seek to balance ongoing revenues and expenditures, fund our priorities and provide salary increases to team members next biennium.”
Office of Management and Budget Director Joe Morrissette will present the preliminary forecast today to the Legislature’s interim Government Finance Committee.
Among the projections:
- Sales tax revenue is estimated to exceed the May 2017 legislative forecast by 1.2 percent this biennium and grow by another 10 percent next biennium. Sales tax collections totaled $101.2 million in July, exceeding $100 million for the first time since July 2015. However, even if annual sales tax revenue reaches $974 million in 2021 as projected, it will still be well below the peak of $1.27 billion in 2015.
- Oil tax revenues are projected to exceed the May 2017 legislative forecast by $1.46 billion, or 31.9 percent, and grow by another $245 million, or 5.1 percent, next biennium, due to higher-than-expected crude prices and production. By law, the general fund can receive only a limited amount in oil taxes per biennium. Unless adjusted through legislation, the general fund share is $400 million for the current biennium and $300 million for next biennium.
- Individual income tax revenues are projected to exceed the May 2017 legislative forecast by 8.4 percent this biennium and grow by another 6.4 percent next biennium.
State agencies continue to work with OMB on budget requests within the targets set by the governor in April. Burgum asked agencies to identify a 5 percent or 10 percent base budget reduction, depending on agency size, and an additional 3 percent general fund reduction as a contingency against volatile commodity prices. Since then, the governor has led more than 50 strategy review sessions with agencies to identify additional efficiencies, opportunities for collaboration and cross-cutting initiatives between agencies and funding for salary increases.
Burgum will present the executive budget to the 66th Legislative Assembly during its organizational session in early December.