Many observers, including this one, felt Governor Jack Dalrymple was being entirely too optimistic when he released his executive budget.
“We expect revenues to continue to exceed on-going expenditures,” he said during his budget address back in December, but then proposed what he described as “ambitious” spending increases. His executive budget increases on-going state spending by 5.4 percent, and one-time spending by 12.7 percent.
Meaning that Dalrymple, despite falling oil prices, was betting on revenues increasing.
Today lawmakers ratified a much different expectation for future revenues. In a just-released revenue analysis they project that the state will lose over $4 billion in revenue in the next biennium.
What they’re assuming is that oil prices are going to hit the “big trigger” on oil taxes. I’ve written about this tax code landmine before, which the previous Legislature didn’t reform after Demcorats threw a fit over it, and I think we can all regret the fact that it’s now complicating the state’s revenue outlook.
The state having billions less revenue is going to be a major obstacle. I know the knee-jerk reaction from some will probably be “good, less money for them to waste,” but keep in mind that this is likely to have an impact on things like funding for western infrastructure.
And at this point, I think we can pretty much forget about those plans to eliminate income taxes.
On a related note oil magnate Harold Hamm is optimistic about an oil price rebound, but lawmakers are tasked with making tax and spending decisions for the next two years over the next couple of months. They’re probably safer being a bit more pessimistic than Hamm.