Ralph Kingsbury: No Way To Run A Budget


Readers of this column are probably aware that I have a blog in which I provide various statistics as they relate to the northern plains. Some are business statistics or other matters of a private nature. Other statistics are various public data. That includes North Dakota revenues and that is what this column is about.

Every month the Office of Management and Budget releases what they call North Dakota Revenues and Transfers. They report a listing of all the various taxes and revenues received by the state through the immediate past month and for the biennium to date. The biennium begins on July 1 every two years. That is, the current biennium is from July 1, 2013 through June 30, 2015.

For the current biennium that began July 1, 2013 and now running through March 31, 2014 the current revenues and transfers total nearly $2.6 billion

However, we must use these averages with caution since different state laws make a difference in the way money is received in some accounts. For instance, there is a general cap for the oil and gas taxes of two different tiers. The first $200 million tier occurred by October 2013. Then the next $341.8 million was deposited into the property tax relief fund. Now in March 2014 a second tier of $100 million began flowing into the general fund, two months earlier than anticipated.

What is important to realize is that after some very large tax reductions and changes such as the timing described above, the tax revenues are up over seven percent during the same time. What is more important, what we need to realize is that of the three most important taxes, the sales taxes, and the individual and corporate income taxes the increases, especially the increases in corporate and individual income taxes are much larger than anticipated. Even an account like the motor vehicle excise tax is off too much.  This state, with all its wealth, could be facing a serious and critical financial situation only nine months into a 24 month budget.

As of the end of March sales tax collections were only 3.2 percent more than predicted. The motor vehicle excise taxes were nearly 11 percent less than anticipated. Individual income tax collections were nearly 37 percent more than expected and corporate income collections were about 42 percent greater than anticipated. Taken together, sales and the two income taxes were over $152 million more than Economy dot com expected. Total collections were only $144.6 million more than projected. That means all the other accounts were in deficit nearly $8 million. Imagine if those three had been as poor as the other accounts. As I said above, we would be in a very serious deficit.

Officials are quoted as saying that this always happens to the taxpayers at this time of the year and then when they complete their taxes by April 15th the adjustment to the required amounts would be made. Really? If my accountant were off that much, nearly 30 percent, I would have a new accountant next year.

Now elected and appointed government officials are making no apologies for buying these reports year after year. The only difference they get that I can see is that some years the reports are off by even greater amounts. One North Dakota official is quoted this month as saying that the economy, especially the oil economy, is so much stronger than anticipated that Economy dot com had to rework their model. Well, that is what they are hired to do. No, actually they are hired to get it right in the first place. Anyone can take the previous year’s outcome and add a couple percent here and take away three or four percent here and call it a projection. In fact I am making that offer to the state right here and now. I will provide them my “projections” for the next biennium for only 17.86 percent of what they are paying Economy dot com this biennium. Of course I want a complete detailed copy of Economy’s report for this biennium.  Why that amount? Why not? Seems that is all Economy is doing.

Some of even told me that they like that the like that Economy is underestimating the revenue that poorly. If not they say that the pressure to spend even more money would be that much greater. Now there is a real story of Profiles in Courage.

I have written this complaint many times. I don’t mean to be repetitive, but readers know that I defend the legislature and the Governor as much as anyone on their work. However, it is beyond me how this state works with this firm year after year for these same results.

It seems to me that this should be a real embarrassment. To accept this report for biennium after biennium. To spend the taxpayer’s money for something that they know is wrong, and it seems to make no difference who the Governor is, or who the legislative leaders are, or which party is in the majority. What a silly game they are playing.