Governor presents revenue forecast to legislators, says difficult decisions ahead

Thursday, March 9, 2017 - 2:30pm

BISMARCK, N.D. – Gov. Doug Burgum and the Office of Management and Budget today presented updated revenue projections for the remainder of the 2015-2017 biennium and a new revenue forecast for 2017-2019, both of which predict substantially less revenue than the conservative assumptions adopted by legislators in January.

“The challenges before this Legislature, as everyone knows, are historic,” Burgum said to a joint meeting of the House and Senate appropriations committees. “The decisions are going to become even more difficult.”

The revenue projections are prepared by OMB with input from Moody’s Analytics, the state Tax Department and the state’s Advisory Council on Revenue Forecasting.

The revised projection for the current biennium ending June 30 lists general fund revenues of $4.78 billion, including fund transfers, which is about $46 million less than the legislative assumptions adopted in January.

The forecast for 2017-2019 projects general fund revenues will be $103 million below the January assumptions. The general fund supports the general operations of state government.

Given the new projections, the governor asked legislators to reconsider some of his budget proposals. Those include increasing the cap on the amount of oil tax revenue that goes into the general fund from $300 million to $900 million and asking state employees to cover 5 percent of the cost of state-paid health insurance premiums, which are projected to increase roughly 17 percent in 2017-2019. The governor proposed restoring a 1 percent raise for state employees in the second year of the biennium if revenues outperform the forecast by an agreed-upon rate.

Burgum thanked legislators for their hard work on the incredibly difficult task of balancing the budget amid an unprecedented revenue shortfall. Despite the challenges, he noted the state has potential for strong economic growth and the pendulum is swinging positively in oil country in terms of increased economic activity. Oil tax revenues are projected to increase from $2.94 billion this biennium to $3.15 billion next biennium, an increase of $216 million.

“North Dakota’s future has never been brighter,” Burgum said. “We have one of the strongest balance sheets in the nation, a great workforce and ample job opportunities. We’re turning the corner.”