Proposed North Dakota budget forecast shows nearly $2 billion drop in general fund revenues

BISMARCK--North Dakota lawmakers are preparing to tighten their belts in the early days of the 2017 legislative session. The House and Senate appropriations committees heard proposals Wednesday, Jan. 4, for a new legislative forecast for the comi...

BISMARCK-North Dakota lawmakers are preparing to tighten their belts in the early days of the 2017 legislative session.

The House and Senate appropriations committees heard proposals Wednesday, Jan. 4, for a new legislative forecast for the coming two-year budget cycle that includes nearly $1.9 billion less in general fund revenues than what's projected for the 2015-17 biennium, which ends June 30. The proposed forecast, presented by Legislative Council staff, includes almost $3.7 billion in general fund revenues for the 2017-19 biennium, down about 34 percent from the more than $5.5 billion projected for the current biennium.

Adam Mathiak, fiscal analyst with the Legislative Council, noted the final legislative forecast at the end of the session could be "significantly different" than the January document, which he called the "base level forecast."

The two committees will vote on the forecast Thursday, the third day of the session. The 80-day gathering began Tuesday with the first State of the State address from Gov. Doug Burgum, who discussed making government more efficient in leaner budget times.

Wednesday's presentations put some figures to the fiscal realities lawmakers will have to deal with during the months ahead. It also comes less than a month after former Gov. Jack Dalrymple presented his final executive budget that included a 21 percent reduction in general fund spending from what lawmakers approved at the end of the 2015 session.


Going back to 1967, a general fund budget hasn't been reduced by more than 7 percent from one biennium to the next, said Brady Larson, assistant legislative budget analyst and auditor at the Legislative Council. Falling oil and farm commodity prices have hampered state revenues and helped prompt a special session in August.

The proposed legislative forecast for the 2017-19 biennium includes $146 million less in sales and use tax revenue than the $1.9 billion that was included in Dalrymple's executive budget released in December.

For the current biennium, Wednesday's forecast shows a $67 million reduction in sales and use tax revenues from the December executive forecast.

"Sales tax is the one that hurts us," said Rep. Jeff Delzer, the Republican chairman of the House Appropriations Committee. "The biggest thing we need to take care of in this legislative session, from my standpoint, is making sure that the revenue that we expect we actually get."

The forecast also includes about $1.1 billion less in general fund revenues than Dalrymple's proposal. Under current law, only $300 million in oil and gas taxes can go to the general fund every budget cycle, but Dalrymple's budget proposes to allocate $1 billion from those revenue sources.

Republican Ray Holmberg, chairman of the Senate Appropriations Committee, pointed to the experiences of other oil-rich states in arguing there's some reluctance over relying too heavily on one revenue source for general government operations.

"We won't go to $1 billion, but we'll be more than $300 (million) because we also have to balance the budget," he said.

The proposed forecast also doesn't include a $200 million transfer from the Bank of North Dakota that was included in Dalrymple's budget.


"There's nothing in law that automatically transfers those, so that's why it went back to zero for the proposed legislative forecast," Mathiak said.

The forecast presented Wednesday assumes an average oil price of $48 per barrel for the entire 2017-19 biennium, which is more conservative than the former governor's proposal. Dalrymple's forecast assumed $51.88 for the first month and $53.18 for the remaining 23 months of the biennium, according to a handout from Wednesday's meeting.

Wednesday's forecast mirrors Dalrymple's proposal in assuming oil production will be 900,000 barrels per day for the coming biennium.

“The Pioneer Family” stands in front of the North Dakota State Capitol on July 14, 2016, in Bismarck.Michael Vosburg / Forum Photo Editor

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