North Dakota's finances exceed expectations, oil is significant, but not only factor
BISMARCK -- North Dakota is again on its way to building up a state surplus of hundreds of millions of dollars.
The general fund's projected ending balance for June 30, 2013, is $383.2 million, a jump from the $51 million ending balance projected when the Legislature adjourned this spring.
This revised projection as of Oct. 31 takes into account additional appropriations made during the special session in November, said Pam Sharp, director of the Office of Management and Budget.
Commerce Commissioner Al Anderson also presented positive economic news during a meeting of the legislative Budget Section on Tuesday. Per-capita personal income grew by 34.5 percent from $31,795 in 2005 to $42,764 in 2010, he said.
In the same time period, the U.S. average increase was 12.7 percent, Anderson said.
The oil industry has played a significant part in this growth but isn't the whole story, he said, noting that per-capita personal income increased over the last 10 years and the oil industry's impact has been in the past few years.
"All of our industries are actually helping," Anderson said. "We've been relatively low in unemployment over that decade as well and, consequently, just that demand for experienced workers will force wages to continue to climb."
Barring any new federal regulatory hurdles or a significant drop in oil prices, western North Dakota's economic growth should continue well into the future, Anderson told legislators.
Sharp said as of Nov. 30, the state has $100 million in the voter-approved Legacy Fund, which is supported with oil and gas tax revenue. Money from this fund can't be spent until 2017.
There is also $386 million in the budget stabilization fund -- which can't be accessed unless there is a revenue shortfall -- and $162 million in the foundation aid stabilization fund. Interest from this fund is transferred to the general fund, where it can be used for any state appropriation. The principal can only be spent under the governor's order to offset foundation aid reductions to schools as a result of a revenue shortfall.
The biggest area of revenue strength is sales taxes, Sharp said. The state took in $38 million more in sales taxes than it expected in October and is exceeding expectations at this point in the biennium by $97 million. From July 1 to Oct. 31, the state collected $332.7 million in sales taxes.
Motor vehicle excise tax collections also continue to be strong, as well as individual and corporate income taxes, Sharp said. Meanwhile, the general fund has collected $127 million in oil and gas extraction and gross production taxes.
November revenues are still being compiled, but also look to exceed expectations, Sharp said.
Oil statistics she provided show North Dakota was producing 488,066 barrels per day at the end of October. The current rig count is 200, she said.
The Commerce Department is organizing town halls in Oil Patch cities in January to provide updates on the state's efforts to address impacts and to gather input on what more should be done, Anderson said.
"Although it may not seem like it at times, significant progress is being made," Anderson said. Private developers are responding to the housing demand, with more than 2,300 new housing units in Dickinson in various stages of development, he said. This includes 700 single-family homes, 200 duplexes and 270 apartment units.
In Williston, more than 1,750 new housing units are in development, including 218 single family homes, 102 manufactured homes and 537 apartment units, he said.
The North Dakota Department of Transportation is overseeing improvements to about 670 miles of North Dakota highways in western North Dakota, Anderson said. Overall, the state has committed a total of $1.2 billion to address oil and gas impacts, he said.
Legislators on the committee also heard several requests from state colleges. They agreed to increase the authorization of North Dakota State University's Minard Hall project from $18 million to $22.87 million and to authorize the additional funding from insurance proceeds, legal settlements and other available funds.
However, some legislators expressed concern about the growing cost of the project and what NDSU would do if it doesn't receive insurance proceeds or legal settlement funding. House Majority Leader Al Carlson of Fargo said NDSU can't leave the project unfinished, but he told NDSU officials there isn't a guarantee that legislators will fill any gap in funding during the 2013 legislative session.
Finneman is a multimedia reporter for Forum Communications Co.