Yesterday evening I wrote about a report from the Rockefeller Institute of Government, picked up by Reuters, which described North Dakota’s tax revenues as declining 46.7 percent in the third quarter of 2014 compared to the previous year.
I was skeptical because the state’s monthly reports concerning general fund revenues have shown steady growth. The most recent report from the Office of Management and Budget had the state’s revenues up 14.7 biennium to date. I speculated that the revenue decline must be taking place in the special funds which receive direct oil and gas tax revenues that don’t go through the general fund, but even that didn’t quite pass the smell test.
If oil activity had declined so precipitously to cause a 46.7 percent decline in revenues, wouldn’t that impact the general fund too?
I wrote last night that I would contact the Office of Management and Budget this morning to find out what the deal is. Turns out, the decline the Rockefeller Institute is showing has more to do with a transfer of funds than any real decline in revenues. OMB Director Pam Sharp responded to my email this morning:
Reuters based their comment on a report from the Rockefeller Institute of Government. The Rockefeller Institute of Government added all the general fund revenues for July, August, and September of 2013 and compared that number to the general fund revenues for the same months in 2014. The problem is that in those months in 2013, the general fund received a transfer from the Property Tax Trust Fund in the amount of $341 million and also collected part of the $300 million of oil tax revenues that flow into the general fund each biennium. That transfer and the oil tax revenues are not repeated in 2014 so that is not a good comparison. The Rockefeller Institute did not take into account these one-time transactions. Taking those transactions into account, the rest of the general fund collections for the third quarter 2014 were about 1 percent higher than the general fund collections in third quarter 2013.
Rob, thank you for bringing this to my attention. I had not seen that story and it is definitely misleading.
So, not quite the dire scenario the Reuters report made things out to be.
Still, there are storm clouds on the horizon, as the oil price rout continues and oil companies here in North Dakota are cutting back on their activities and expenditures.