Before Anything Else, Burgum and Lawmakers Must Find Confidence in Revenue Forecasts


Today is officially the first day of North Dakota’s legislative session. This afternoon Governor Doug Burgum will deliver his State of the State address. Also sometime today we should be getting the details on the tweaks Burgum wants to make to the budget delivered to the Legislature by former Governor Jack Dalrymple last month.

As our state’s leaders come together to address the state’s budgets and legislative needs, they do so with a grim report in hand as to the state’s finances. The most recent report on the state of the General Fund from the Office of Management and Budget shows revenues down nearly 20 percent at this point in the 2015-2017 biennium compared to the same point last biennium.

Revenues are down nearly 30 percent if we exclude special fund transfers.

You can read the full OMB report below. This cart (click for a larger size) compares the current biennium’s revenues to date compared to the previous four. As you can see, while the state is lagging behind the last two bienniums, revenues are still near historic highs.

The state’s revenue forecasting is still leaving much to be desired, which is something both lawmakers and Burgum have expressed concerns about. “The first thing we have to look at is the revenue forecast,” the Governor told me in an interview last month. “If you miss you want to be conservative,” he added.

The state’s forecasters have been overestimating revenues collections by a lot, creating a need for one updated revenue forecast after another over the last couple of years. Per the OMB report below, actual sales tax collections have come in $56 million below the revenue forecast put in place just months ago in July.

When Burgum says the forecast has to be fixed, he’s right. North Dakota lawmakers base their budgets on how much the state is expected to collect. It’s a difficult enough job, over an 80 day session populated by people with divergent fiscal philosophies and priorities, to set the budgets for a two-year biennium even with accurate forecast information.

But with forecasts that prove inaccurate time and time again? It’s an almost impossible task.

Beyond whatever spending policies Burgum plans to announce today, it will be interesting to see what he does to give lawmakers some confidence in the revenue forecasts.

Here’s the full OMB report.

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