Back during the heights of the Bakken boom, when oil activity was driving a tidal wave of revenues into state coffers, the revenue forecasts used by lawmakers and other state officials consistently underestimated those revenues by hundreds of millions of dollars.
At that time I heard consistently from lawmakers that this was a good thing. It hid the true revenue picture, they told me, to keep the Legislature from spending all the money. It also allowed state leaders to crow about a “billion dollar” budget surplus once the revenues actually came in. They were not shy about crediting themselves for this appearance of prudent government management.
That it was all based on faulty revenue forecasts, which were allowed to be faulty for the sake of political expediency, eventually came back and bit us all. When oil prices fell (alongside crop prices) are commodity-based economy took a double whammy, and suddenly the flawed forecasting models couldn’t find where rock bottom would be for state revenues.
These days the forecasting models are much improved, and both the executive and legislative branches are commissioning their own forecasts. One a sort of “second opinion” on the other, which isn’t such a bad thing.
But the manipulation of the state’s revenue picture for political purposes continues, and Governor Doug Burgum is calling lawmakers out on it.
At issue is a couple of hundred million dollars in earnings from the Legacy Fund which were included in revenue forecasts earlier this year but now, in the final forecast released this week as lawmakers begin their work to finalize appropriations bills, is suddenly missing.
“The new forecast shows $100 million in Legacy Fund earnings rather than the $300 million adopted in January,” my colleague reporter John Hageman wrote yesterday.
Burgum told Hageman that forecast “hides at least $200 million in Legacy Fund earnings that are required by the state constitution to be transferred to the general fund.”
“This lack of transparency is not only disingenuous, it’s a disservice to the people of North Dakota,” he continued.
The political motivation for this maneuver by lawmakers is obvious. In his executive budget Governor Burgum called for spending Legacy Fund earnings on a number of initiatives – things like $30 million for air traffic control for the UAS industry, $55 million for an infrastructure loan fund, $50 million for the Roosevelt Library in Medora – and making hundreds of millions of dollars of those endings disappearing through bookkeeping sleight of hand manufactures an excuse for voting those initiatives down.
Please note that this is not necessarily a defense of the spending Governor Burgum is proposing. I generally support it, but your mileage may vary. That’s not the point.
The point is that debates over spending should be informed by an honest accounting of the state’s resources. A certain faction of the Legislature likes to get its way by manipulating that accounting, and it’s simply wrong.
If lawmakers want to vote down, say, the funding for the Theodore Roosevelt Library that’s their prerogative. But they shouldn’t get cover in that vote from a dishonest representation of the state’s revenues.
UPDATE: Just to drive this point home, below is a comparison prepared by Legislative Council of the January revenue forecast to those from this week. As you can see, far from bumping up revenues, lawmakers decreased them by roughly 4 percent: