State lawmakers finished up their special session in Bismarck today, passing legislation which cuts spending and moves money around to fill a hole in the budget.
The reasons for the hole? During North Dakota’s oil boom years lawmakers grew spending about as fast as revenues grew, which was pretty fast. But now the oil boom has faded, the revenues are falling, and the levels of spending they appropriated simply couldn’t be maintained.
But as lawmakers leave Bismarck, I think we could all use a healthy dose of context for the state’s budget situation, and I can provide it courtesy of the most recent general fund revenue report from the Office of Management and Budget released today.
You can read the full report below, but here’s a graph showing the cumulative growth in general fund revenues so far this biennium as compared to the same time window for the four previous biennia (click for a larger view):
As you can see, the current biennium’s revenues are down significantly from the previous biennium. Yet, they’re still higher than the 2011-2013 biennium which was the first biennium impacted significantly by the Bakken oil boom.
It’s very easy to get caught up in the political scuffling over this budget line item or that one. It’s easy to be misled by state officials who work hard to make any reduction to their budgets seem like armageddon, or politicians who want you to believe that even reducing the rate of spending growth is something akin to pushing little children and the elderly off a cliff.
But the simple truth is, even post-oil boom, North Dakota still has significantly more revenues coming in than before the oil boom. Even if oil doesn’t rebound next year, even if crop prices remain in the tank, revenues will likely remain significantly higher than they were just five years ago.
Revenues aren’t the problem here. If our lawmakers hadn’t grown spending so aggressively during the oil boom years this post oil-boom budget process wouldn’t be nearly so arduous.
Here’s the full OMB report: