ND Budget Forecast Looking Strong

Two years ago when North Dakota lawmakers were gearing up for the Legislative Session, they were focused on the bleak revenue forecast and the hit the state economy had taken from a dramatic dip in commodity prices. This week, lawmakers received an update on the forecast, which is looking strong for 2019 but experts expect a flatter forecast in 2020.

Individual income and corporate income tax revenues along with fees from mineral rights are ahead of forecast. In total, the General Fund is about $178 million ahead of forecast. Pursuant to North Dakota Century Code, any biennium balance in excess of $65 million must be transferred to the Budget Stabilization Fund. Therefore, an estimated $312 million will be transferred to the Budget Stabilization Fund June 30, 2019.

Sales tax revenues are also rebounding slowly. The state had record sales tax collections in 2014 and 2015 but fell dramatically in ’16 hitting a low in 2017. Currently, sales tax revenues are about $40 million ahead of forecast.

The Strategic Investment and Improvement Fund, which had been drained last session, has rebounded to nearly $384 million; although $247 million has been committed. It’s also important to note that the Tax Relief fund includes $200 million. Last session, the funding for county social services came from the Tax Relief fund.

Oil and Gas Revenues are 45% above forecast with $1.4 billion in additional revenues. Moving into the next biennium, the revenue forecast will be based on oil prices ranging from $46-$50 per barrel and production increasing from 1.3 million barrels per day to 1.35 million by the end of the 2019-2021 biennium. These are conservative figures as North Dakota produced nearly 1.36 million barrels of oil per day in September. Our current biennium oil and gas revenue forecast was based on $55 per barrel decreasing to $46 per barrel, however the average price has been $49.75.