Statewide Economic Growth Continues to Build General Fund Revenues

Press Release

The Office of Management and Budget (OMB) today released updated revenue projections for the 2009-2011 biennium and preliminary revenue projections for the 2011-2013 biennium. The revenue projections are prepared by Economy.com, the state's economic forecasting firm, and OMB.

North Dakota does a preliminary revenue projection at this stage of the budget process. Another updated revenue projection will be done in November, prior to the legislative session for the budgeting process.

"It is important to recognize, as we plan for the next budget cycle, that this forecast covers a three year period, through June of 2013, and projects revenues we anticipate receiving in the future," said Pam Sharp, director of the Office of Management and Budget. "The projection is based on major assumptions that North Dakota will continue to weather the ongoing national recession, and that oil prices will continue to average more than $70 a barrel throughout the 2011-2013 biennium."

The revised revenue projection, excluding transfers, for the 2009-2011 biennium indicates revenues of $2.5 billion, which is just above the legislative forecast.

Looking at the general fund revenue picture in the current biennium, sales and use taxes (including motor vehicle) account for about 45 percent of total general fund revenues. Income taxes, both personal and corporate, account for nearly 30 percent.

Tax receipts from oil provide 25 percent of total state tax revenues. By law, however, only $71 million of oil tax revenue is deposited into the General Fund; about 90 percent of the oil tax revenue is deposited into the separate Permanent Oil Tax Trust Fund.

The projected general fund ending balance for the 2009-2011 biennium is $66 million, and the projected Permanent Oil Tax Trust Fund ending balance is $630 million, resulting in a total projected surplus of $696 million. In addition, the state has a $325 million reserve held over from previous bienniums in the Budget Stabilization Fund.

Revenues for the 2011-2013 biennium, excluding transfers, are projected to be $2.72 billion, which is $236 million over the revised 2009-2011 forecast. Revenues flowing into the Permanent Oil Tax Trust Fund in 2011-2013 are projected to be $698 million, which assumes passage of the Legacy Fund measure, which would reserve an additional $613 million under the terms of the measure. Overall, the preliminary revenue projection for 2011-2013 reflects continued broad growth in the state's economy.

"Our aggressive economic development efforts in the energy sector and across our state in fields like value-added agriculture, technology and tourism are today providing tangible benefits for the people of North Dakota in terms of jobs, income and new opportunities," said Hoeven. "The state's broad-based economic growth will enable North Dakota to fund priorities, provide sustained tax relief and continue to build a strong reserve for the future."

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