Federal COVID-19 funding dollars spent as of August 31.
Preliminary Revenue Forecast
Joe Morrissette, Director of the Office of Management and Budget (OMB), presented preliminary revenue forecast information to the Budget Section on Thursday, September 17. The highlights of this forecast are as follows:
Oil Price and Production Outlook
OMB assumes the price of oil for the rest of the current biennium ending June 30 to be $32 per barrel. This assumes a $8 discount from the West Texas Intermediate price of $40 per barrel. For the 2021-23 biennium, the assumed price increases to $34.50 per barrel for the first year of the biennium and then to $36 per barrel for the second year of the biennium. This also assumes a $8 discount for North Dakota off the West Texas Intermediate price of $42.50 and $44 per barrel.
Oil production in North Dakota is projected to be 1,250,000 barrels per day for the remainder of the current biennium and moves downward to 1,215,000 barrels per day for the entire biennium of 2021-23.
The original legislative forecast for the current biennium projected that $4.85 billion would be collected from oil tax revenues. The new assumptions project that only $3.4 billion will be collected this biennium, a loss of $1.4 billion. The projection for oil tax collections in 2021-23 is $3.0 billion.
The downward projection in the price of oil as well as production amounts to some significant issues in the current biennium. Most notable is Operation Prairie Dog. The original projections assumed that $250 million would be distributed to cities and counties through Operation Prairie Dog. Current projections show that only $30 million will actually be distributed through Operation Prairie Dog and that would be from the first bucket which is the municipal infrastructure fund.
Also notable is the Resources Trust Fund projection. Original projections showed the Resources Trust Fund collecting $433 in the current biennium. New projections show that only $293 bill be collected, which leaves the fund short in the current biennium by about $140 million. Projections for 2021-23 show collections of $269 million. These new projections will have a significant impact on water projects.
Another notable decrease is in the Strategic Investment and Improvement Fund (SIIF). Originally this fund was expected to receive $517.5 million in the current biennium but that projection has decreased to $311.5 million, a loss of $206 million. Additionally, for the 2021-23 biennium, the SIIF fund is expected to receive only $238 million.
2019-21 General Fund Outlook
The updated revenue forecast for the current biennium shows a net increase of $88 million, which is a combination of several decreases in estimates and several increases in estimates.
Most notable decreases are sales taxes – decrease of $96 million; motor vehicle excise taxes – a decrease of $24 million; and individual income taxes – a decrease of $10 million.
The most notable increase is the transfer from the Legacy Fund. Original estimate was $100 million and the revised estimate is now $235.6 million, an increase of $135.6 million. Other notable increases include the insurance premium tax – an increase of $21.5 million and gaming taxes – an increase of $20.7 million.
These estimates show that the general fund will have an ending balance at the end of the 2019-21 biennium of $160 million. In addition, it shows the Budget Stabilization Fund filled to the maximum level allowable of about $727 million.
2021-23 General Fund Outlook
The outlook for general fund collections in the 2021-23 biennium show a further decrease in sales tax collections of $71 million, an increase in motor vehicle tax collections of $11.8 million, a further decrease in individual income tax collections of $10.8 million and an increase in corporate income tax collections of $10 million. All of these adjustments result in a net decrease in general fund revenues of $59.9 million in the 2021-23 biennium.