ND tax revenues fall $49M short in October; budget office talks about updating forecast
BISMARCK - North Dakota's tax revenues fell short of projections by nearly $49 million in October, marking the third consecutive month of lower-than-expected collections and prompting the state budget office to engage in talks about updating the ...
BISMARCK – North Dakota’s tax revenues fell short of projections by nearly $49 million in October, marking the third consecutive month of lower-than-expected collections and prompting the state budget office to engage in talks about updating the forecast given to lawmakers in March.
Overall tax revenues are $112 million, or 7.5 percent, less than projected for the first four months of the 2015-17 biennium that began July 1, according to figures being released today by the state Office of Management and Budget.
Depressed crude oil prices and farm commodity prices continue to put a major dent in sales tax collections, which came in about $38 million, or 31 percent, below forecast in October, after being down $23 million in September and $44 million in August.
Budget Director Pam Sharp said there’s nothing to suggest that collections will substantially improve in November.
“It is concerning,” she said. “It’s looking like it probably is a trend.”
Sharp said OMB has initiated conversations with Moody’s Analytics about updating the revenue forecast, the first step in dealing with a potential revenue shortfall for the biennium.
“We wouldn’t want things to get too far down the road,” she said.
If an updated forecast predicts that the state won’t have enough revenue to cover its obligations, the first step is an across-the-board cut of up to 2.5 percent for state agencies, Sharp said.
Any additional shortfall would be covered by the state’s Budget Stabilization Fund, which contained about $572 million in August.
Sharp noted that K-12 education would be held harmless from any cuts because of the Foundation Aid Stabilization Fund.
She said her office wants to see November revenues before pulling the trigger on an updated forecast by Moody’s Analytics, which has been repeatedly criticized by North Dakota lawmakers for its off-target forecasts. Moody’s wouldn’t begin the process until December at the earliest because it first needs the third-quarter taxable sales and purchases report from the state Tax Commissioner’s Office, she said.
On a positive note, individual income tax collections were $3.2 million above forecast in October and are 7.3 percent ahead of forecast for the biennium to date, “which says that people are out there working,” Sharp said.
Reach Nowatzki at (701) 255-5607 or by email at firstname.lastname@example.org .