BISMARCK, N.D. – A revised revenue forecast released today by the North Dakota Office of Management and Budget (OMB) bodes well for the state’s ability to achieve a structurally balanced budget, fund priorities and invest in legacy projects for the future, Gov. Doug Burgum said.
The revised forecast projects higher levels of general fund revenue and oil tax revenue than the November forecast that was used to prepare Burgum’s executive budget recommendation presented to the Legislature on Dec. 5.
“This is a reliable, reasonable and conservative revenue forecast 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,” Burgum said. “The upward movement from our November forecast leaves plenty of room to fund priorities such as increases in K-12 education, human services and team member salaries while making bold, wise investments that will generate returns for current and future generations of North Dakotans.”
The revised forecast estimates general fund revenues of $4.3 billion for the 2019-2021 biennium, an increase of $51 million from the November forecast when adjusted to reflect current law without the impact of any changes recommended by the governor or currently under consideration by the Legislature. OMB Director Joe Morrissette said the increase is attributed mainly to higher projected sales tax and corporate income tax collections and an improved economic outlook from Moody’s Analytics, which provides input into the revenue forecast along with the advisory council and the state Tax Department.
Oil tax revenues are projected at $4.95 billion, which is $327 million higher than the November forecast. Oil revenues are based on assumptions of $49.50 per barrel in the first year of the biennium and $49 per barrel in the second half, with oil production increasing from 1.4 million to 1.44 million barrels per day. Production surpassed 1.4 million barrels per day for the first time in December as operators have demonstrated their ability to produce more oil per well.
Oil well completions, which are an important part of the revenue forecast because of their significant impact on sales tax collections, are conservatively estimated at 90 wells per month, which would be lower than the state’s average of 94 wells per month seen since July 2017.
“Bakken producers are bullish on the outlook for the next few years,” said Ron Ness, president of the North Dakota Petroleum Council and a member of the Advisory Council on Revenue Forecasting. “Most companies are planning for slow, steady growth, and the oil production and price assumptions in this revised forecast are conservative based on industry input.”
For the remainder of current 2017-19 biennium, the revised forecast projects an additional $40.5 million in general fund revenues compared with the November forecast, which Morrissette attributed to better data for corporate income tax filings, an additional quarter of tax collections and slight changes in assumptions.
When comparing today’s revised revenue forecast to the legislative revenue estimates adopted in January, the projected revenue increases for 2019-21 are significantly higher – an additional $160 million in general fund revenues and $1.031 billion in oil tax revenues – reaffirming the ability to fund priorities and invest in legacy projects.