BISMARCK - A robust economy and tax collections on high-priced crude oil boosted state government's revenues two months into its new budget period by 13.4 percent over forecasts.
That's an extra $18.2 million cushion for the biennium that runs through June 30, 2007.
State Budget Director Pam Sharp cautioned that two months in a 24-month budget can't be termed a trend. There is plenty of time for a downturn to erode the surplus.
Still, it's great news, she said, pointing to the 11 percent overage in the state's No. 1 revenue source, sales taxes. More than one-third of the extra $18.2 million is from sales tax collections.
Rising sales taxes are a good barometer of the state's economy, Sharp said.
ADVERTISEMENT
The second-biggest revenue source is the individual income tax. Collections are $4 million ahead of the 2005 Legislature's expectations. Sharp said this is because of increases in tax withholding, which reflects growth in pay and number of jobs.
The oil and gas production tax is 70 percent ahead of the forecast and the oil extraction tax is 20 percent over, for a combined $5 million in extra revenues.
North Dakota crude oil prices are more than $60 per barrel, Sharp said, and the amount of oil being pumped from North Dakota wells is also increasing.
The state is not spending the unforeseen windfall because it hasn't been appropriated. It fattens the bottom line when the 2007 Legislature meets to write a new budget.
The new revenue figures are a continuation of the growth that has been seen over the past two years.
When the 2003-05 biennium ended on June 30, the state set aside an excess of $100 million in reserves.
The downside of high oil prices is an increase in vehicle fuel and winter heating expenses for state agencies. That won't affect the state general fund because the agencies must operate within the appropriation they received earlier this year.
"They're going to need to deal with it within their own budgets," Sharp said.
ADVERTISEMENT
Increased revenues aren't the only good news the state recently received. Standard and Poor's, a national credit analyst, raised North Dakota's credit rating to AA-; it had been A+.
S&P's analysis says, "Recent reports suggest that the state is recording some of its best growth in recent years." Another credit analyst, Moody's, raised the state's rating last November.
Readers can reach Forum reporter Janell Cole at (701) 224-0830
