BISMARCK, N.D. – The state Office of Management and Budget (OMB) today released a revised revenue forecast that continues to predict growth into the next biennium, keeping the state in a strong position to provide tax relief and invest in priority areas, Gov. Doug Burgum said.
“Today’s revenue outlook continues to predict significant growth from this biennium to the next in all major revenue categories, including sales tax and income taxes, which speaks to our state’s robust economy,” Burgum said. “This supports our ability to provide permanent income tax relief and invest significantly in workforce, child care, infrastructure and other priorities to better serve North Dakotans and make our state more attractive when competing with other states for capital and talent.”
Overall, general fund revenues are running nearly 25%, or $832 million, ahead of the revised November 2021 legislative forecast for the current 2021-23 biennium that ends June 30. In February alone, general fund revenues were nearly 43%, or $47 million, ahead of forecast – a “very strong month,” OMB Director Joe Morrissette said.
The revised forecast released today projects revenues for the current biennium at $27 million below the November 2022 executive forecast that was used to craft Burgum’s executive budget proposal, but $16 million above the January 2023 estimate adopted by lawmakers as they began the current legislative session. Similarly, today’s forecast projects 2023-25 revenues at $59 million below the November executive forecast but $39 million above the January legislative forecast. Inflation and labor constraints were among the factors cited for the slight decrease from the November executive forecast.
“We’re still projecting significant growth for the next biennium, it’s just a bit smaller than what we shared with you in November,” Morrissette told House and Senate appropriators.
The revised forecast is based on the latest economic data and tax collection figures and broad “boots on the ground” input from industry representatives who serve on the state’s Advisory Council on Revenue Forecasting.
Morrissette added that three of the state’s four major tax types – sales tax, motor vehicle tax and corporate income tax – have exceeded forecast for seven or more consecutive months.
Oil production is expected to remain constant at 1.1 million barrels per day throughout the next biennium. Oil prices have decreased slightly since the executive revenue forecast was being developed in November 2022, from around $80 per barrel to the current price of around $75 per barrel. Oil and gas taxes account for approximately half of all state revenue.
For the current 2021-23 biennium, oil revenues are expected to total just over $6 billion, which is $2.3 billion higher than the estimate used in the original 2021 legislative budget and $9 million higher than expected in November. For the 2023-25 biennium, oil tax revenues are expected to remain fairly constant, with a slight decline in the second half of the biennium, and are expected to total $5.14 billion in revenues, about $116 million lower than expected in the November estimate.