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ND lawmakers hear updated revenue prediction in early days of session

North Dakota Republican Sen. Ray Holmberg, R-Grand Forks, addresses members of the House and Senate appropriations committees Monday, Jan. 7, 2019. John Hageman / Forum News Service

BISMARCK — The top budget writer in the North Dakota House predicted Monday, Jan. 7, that lawmakers will adopt “fairly conservative” tax revenue projections as they begin crafting budgets for the upcoming two-year budget cycle.

An economist hired by the Legislature presented the House and Senate appropriations committees with an updated revenue forecast Monday morning that predicted a slightly steeper rise in oil prices than Gov. Doug Burgum’s proposed spending plan for the 2019-21 budget cycle. But Republican Rep. Jeff Delzer, chairman of the House Appropriations Committee, suggested lawmakers may scale back those expectations.

“We’ll look at this again in March,” he said. “And it’s a lot easier to increase revenues towards then than to decrease it … and finish the budgets.”

The North Dakota oil price sat at $41 per barrel Monday, North Dakota Pipeline Authority Director Justin Kringstad said. The governor’s budget, released last month, assumes prices of $46 to $50 per barrel in the 2019-21 biennium, and IHS Markit predicted a few dollars higher in its presentation to lawmakers Monday.

Republican Sen. Ray Holmberg, chairman of the Senate Appropriations Committee, likened predicting oil prices to taking a shot in the dark “with a small flashlight.” But he noted that oil production has climbed to record levels, helping compensate for price fluctuations.

Lawmakers hired IHS in late 2017 to provide a second opinion on revenue projections after previous estimates missed the mark. On Monday, the firm offered a more pessimistic outlook than Burgum’s budget for the largest single component of the state’s general fund with 13.3 percent less in expected sales and use tax revenue for 2019-21.

The IHS baseline forecast predicted North Dakota would see about $2.95 billion from its four major tax types in 2019-21, 4.6 percent less than the governor’s budget.

Burgum's spokesman Mike Nowatzki questioned the firm's sales tax projections, arguing they "run counter to current trends" and appear to overlook the relationship to oil prices and corporate income tax collections.

Jim Diffley, an IHS economist, highlighted state, national and global trends in his presentation to legislative budget writers, including global oil production, trade tensions with China and employment growth.

“It never hurts to have two sets of eyes looking at the data,” Holmberg said.

State lawmakers began the 2019 legislative session on Thursday, a month after Burgum, a Republican, proposed a two-year spending plan totaling $14.3 billion with $4.6 billion in ongoing general fund spending. The 2019-21 biennium starts in July, a couple of months after lawmakers are expected to leave Bismarck.

The two appropriations committees will meet this week to adopt a revenue forecast before updating it in March.

“We have to draw lines in the sand as to how much money we feel we want to build the budget upon,” Holmberg said.

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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