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Legislative Report

March 27, 2015
Pierce County Tribune

We just heard the final Budget Forecast Wednesday morning that will be the guideline that we will utilize to balance the 2015-17 North Dakota Budget. Moody's Analytical and the Office of Management and Budget prepare this report for the legislature. When we met in December for the Organizational Session, the Executive Budget was the template for beginning this legislative session. Because of the volatile nature of the energy sector that was beginning to occur at that time, the legislature, with the help of the Executive Branch, as well as industry, adjusted the budget to prepare for the changes that we are now experiencing. The numbers that we heard this morning will indicate a change to the legislative budget that we prepared in January and not the Executive Budget we heard in December.

As I have reported in the past, North Dakota is one of two states that taxes oil production with a formula that includes triggers. We are nearly three months into the time period of our trigger taking effect. When the price of West Texas Crude (WTI) is less than $55.07/barrel for a monthly average for 5 consecutive months, the 6 % Extraction tax is reduced very significantly for North Dakota crude oil. The new projections for oil revenue reflect a decrease of $108 Million in collections for the rest of the current biennium and a reduction of $870 Million for the 2015-17 biennium. $355 Million in the Legacy Fund, and $216 Million to political subdivisions, make up much of that decrease. These do not have an impact on areas that directly impact the lives of the citizens of our state.

One that does have a direct impact though is the Resource Trust Fund that funds water projects across the state. The Executive Budget projected nearly $1 Billion to fund projects in the upcoming biennium. The January Legislative Budget lowered that to $540 Million, and today's report lowered that to $232 Million. This will dramatically affect the funding of water projects across the state.

The good news in the report today is that General Fund revenues will not suffer nearly as much. As compared the January Legislative Budget, this report projects an increase of collections of $130 Million from that budget forecast. Most of the projected change is projected in the area of sales tax collections as well as income tax collections. Although this reflects a significant decrease from the Executive Budget, the overall strong North Dakota economy is still projected to grow for the foreseeable future. Job growth is still a strong indicator in these projections as well as the number of construction projects that will continue to take place in our state.

As we prepare for the final 1/3 of this legislative session, I believe that we still have the opportunity to move forward in North Dakota to provide resources to fund our priorities. Education, infrastructure, and public safety will ultimately be the areas of the budget that will be prioritized to build on the success of recent legislative sessions. It is my hope that we can look back at the situation that is occurring in the oil industry as well as the agriculture sector as a hiccup in what is otherwise a very optimistic future.

I continue to look forward to any concerns or comments that you might have regarding what is taking place this session. Please feel free to contact me at or call the Capitol with your concerns at 1-888-635-3347.

Rep. Jon Nelson, R-Dist. 14

Rugby

 
 

 

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