Gov. Doug Burgum today highlighted recent reports that North Dakota is replenishing its rainy-day Budget Stabilization Fund thanks to a strong finish to the 2017-19 biennium, while also starting the new biennium on a high note with July revenues coming in $42 million above forecast.
“As I said during my State of the State Address in January, fiscal responsibility means more than just balancing the checkbook. Given that our revenues remain largely dependent on commodity prices beyond our control, we must replenish reserves to withstand future economic downturns, protect taxpayers and maintain essential services,” Burgum said. “Now, with a conservative state budget, a robust economy, a healthy rainy-day fund and a better-than-expected start to the new biennium, North Dakota is once again in a strong position for growth.”
The Budget Stabilization Fund was nearly drained to balance the 2015-17 budget, as depressed prices for crude oil and farm commodities created a severe shortfall in state tax revenues.
In his budget recommendation last January, Burgum proposed using a $315 million transfer from oil and gas tax revenues and a projected $312 million ending fund balance to help refill the Budget Stabilization Fund in 2019-21.
Lawmakers didn’t adopt the recommendation, but the 2017-19 biennium ended June 30 with a higher-than-projected ending general fund balance of about $611 million – $261 million more than the legislative estimate. This will result in a transfer to the Budget Stabilization Fund of $546 million, or $261 million more than the legislative estimate. The fund’s current balance is $113.6 million.
By law, an additional $75 million of oil and gas tax revenue could be allocated to the Budget Stabilization Fund this biennium. However, only $67 million will be needed to reach the fund’s statutory cap of $726.5 million, which is 15 percent of the current general fund budget.
On another positive note, July tax revenues were $42.4 million, or 7.6 percent, above the revenue forecast adopted by the Legislature in April, and nearly $114 million, or 23.3 percent, higher than revenues in July 2017, according to the state Office of Management and Budget.
“This is a very positive start to the biennium, but not surprising based on the very conservative forecast adopted by the 2019 Legislature,” OMB Director Joe Morrissette said. “Having the Budget Stabilization Fund refilled is important to ensure the state is well-positioned to weather the next economic downturn and remain in a strong financial position in the years to come.”