N.D. in 'very precarious' situation of trying to predict oil, ag prices for budgeting
BISMARCK -- North Dakota is in a "very precarious" position of not knowing where slumping oil and agricultural commodity prices will land as the possibility of a special legislative session looms if next month's state revenue forecast looks bleak...
BISMARCK - North Dakota is in a "very precarious" position of not knowing where slumping oil and agricultural commodity prices will land as the possibility of a special legislative session looms if next month's state revenue forecast looks bleak, the state's chief budget official told lawmakers Monday.
If the forecast predicts a significant revenue shortfall, Gov. Jack Dalrymple will consider calling lawmakers into special session to address it through targeted cuts or revenue transfers, as opposed to an across-the-board allotment like the 4.05 percent cuts sustained by most state agencies in February, Office of Management and Budget Director Pam Sharp told the Legislature's Budget Section.
The budget office is working with Moody's Analytics on the revenue forecast, due out in mid-July.
It will be based partly on input received during a July 8 meeting of the state's Advisory Council on Revenue Forecasting, which includes bankers and leaders from the oil and agriculture sectors who provide input on what assumptions should be used.
Rep. Keith Kempenich, R-Bowman, questioned how accurately the industry will be able to forecast oil prices out seven or eight months.
"How solid are we going to be on moving forward with those numbers this early?" he asked.
"I agree it's very precarious," Sharp said, adding the benchmark price of West Texas Intermediate crude had dropped $3 to $4 a barrel just in the last week. "But we have to go with the best information we have right now."
Sharp noted another forecast will be prepared in November for the governor's executive budget proposal that lawmakers will receive in early December for the 2017-19 biennium.
Rep. Mike Brandenburg, R-Edgeley, asked for assurances that the July forecast would have input from bankers on the oil and agriculture situations.
"Because, I mean, there's disasters coming," he said.
With tax revenues already $90 million short of the January forecast, Sharp said she assumes the state will need to use the remaining $75 million in its Budget Stabilization Fund to balance the current biennium's budget. Dalrymple already authorized a $497.5 million transfer from the rainy day fund to offset the projected $1.1 billion shortfall in February that also triggered the budget cuts.
If July's forecast predicts only a minor shortfall through next June, it could be handled through small across-the-board cuts, Sharp said.
In April, Dalrymple rejected requests from Democrats to call a special session so lawmakers could take a more strategic approach to the across-the-board cuts, which Democrats say impacted those least able to afford them, including behavioral health services and child care assistance grants.
Dalrymple has ordered agencies that receive general fund dollars to prepare budget requests equal to 90 percent of their original ongoing expenditures, with a few exceptions.