BISMARCK -- North Dakota's treasury will see less money in 2009-11 than its budget writers had predicted in November, but the decrease isn't enough to affect the state's ability to fund government and maintain reserves, Gov. John Hoeven announced Monday.
Hoeven and his budget director outlined a new revenue forecast for legislators showing $38.4 million less in general funds for 2009-11 than was assumed in November, and a separate oil tax savings account will see $226.4 million less than was thought in November.
Budget Director Pam Sharp said the changes are due to the national recession's effects on North Dakota and the drop in oil prices.
Hoeven said the priorities he put forth in his budget in December can still be financed "and we can continue to build a strong reserve for our future."
The new forecast shows reserves in the next two years of slightly under $1 billion, down from the earlier forecast of $1.2 billion.
ADVERTISEMENT
The new projection for the oil tax trust fund now shows that it will have a balance of $602.7 million on June 30, 2011, instead of the earlier projection of $829 million.
Legislators said the presentation was not surprising. If anything, they had expected to hear worse news.
"I thought there might be a bigger down-tick in this," said Sen. Ray Holmberg, R-Grand Forks, chairman of the Senate Apprpriations Committee.
Moody's Economy.com, a national firm, makes the forecasts for the state based on both state and national data.
Economy.com Managing Director Steven G. Cochrane said, "The best way to characterize the North Dakota economy is to use the word 'stability.' "
North Dakota continued to outpace other states and even its own expectations between November and February when the general fund took in $15.3 million more than budget writers had expected.
It's the snapshot of 2009-11 that takes a hit. The new projections for North Dakota's general fund show that, compared to the November revenue forecast, there will be $21.2 million less in sales and use tax collections, $7.7 million less in motor vehicle excise tax, $10 million less in individual income tax, $4 million less in corporate income tax and $8.7 million less in interest income.
In the big picture, North Dakota's general fund is now expected to take in $2.638 billion during 2009-11, compared to $2.676 billion that was expected when Hoeven used the November forecast to present his budget to legislators on Dec. 3.
ADVERTISEMENT
Cochrane presented a much grimmer look at the national economy.
"The collected psyche has been shattered," he said, noting businesses' recent responses to Moody's "dismal survey" that show any positive view of the national economy falling off a cliff. It shows "absolutely no confidence," Cochrane said. The recession, already the longest and most severe since World War II, will hit the bottom of its trough in September, his company predicts.
Cochrane also spoke to lawmakers about the probable federal stimulus funds that could soon be approved in Congress, saying the state is in a position to use those funds to get out ahead of other states.
That was good news to Sen. Aaron Krauter, D-Regent, who sits on the Senate Appropriations Committee.
"We need to gain competitive advantage with that stimulus money," he said, quoting Cochrane. "That makes so much sense. With the stimulus money we can move up one more notch."
That could include better roads, upgrading the electrical grid and broadband technology, he said.
