A new state budget forecast puts the General Fund surplus at the end of the biennium at nearly $1.6 billion.
Members of the interim Government Services Committee were informed of the latest forecast Wednesday at a hearing at the state Capitol.
Joe Morrissette, assistant executive budget analyst for the Office of Management and Budget, outlined the budget forecast for committee members. He told legislators that the main driver for the increased revenue is sales and use taxes.
“That’s (sales tax) estimated to get to $2.1 billion in the current biennium, which is $713 million more than originally forecast,” Morrissette said.
Sales tax revenues weren’t the only taxes forecast to come in far ahead of the original 2011 legislative forecast. The new individual income tax forecast is at nearly $873 million in collections for the biennium, more than $328 million more than originally forecast. Corporate income taxes are forecast to total more than $376 million, a $250 million increase. Motor vehicle taxes are estimated to reach $256 million, about $73.4 million more than originally projected.
In July the estimated budget surplus was approximately $850 million, not including an additional $1.1 billion in various state reserve funds in which access is restricted.
Morrissette said on July 1, 2011, the beginning of the biennium, the state’s balance was slightly more than $1.1 billion. Total revenues collected through this August totaled nearly $2.9 billion, with an estimated $1.95 billion more to be collected during the rest of the biennium. which ends June 30, 2013. It brings the total to more than $5.95 billion. Total expenditures by the state are more than $4.34 billion for the biennium.
Morrissette said the forecast doesn’t include any transfers into the Budget Stabilization Fund, which typically are made at the end of the biennium.
“That would leave us an ending balance of $1.596 billion,” Morrissette said.
Morrissette also discussed estimated oil and gas tax collections. He said the estimate for total oil and gas tax collections for the biennium are at more than $3.8 billion. Morrissette said the original forecast was for about $2 billion.
Morrissette noted that the General Fund share of oil and gas tax collections is capped at $300 million per biennium. He said the General Fund cap had been reached in August.
“(We) had not anticipated to hit that until March (2013), almost the end of the biennium,” Morrissette said.
Portions of oil and gas tax revenue are placed into several other funds. These include the Strategic Investment Improvements Fund, Common Schools Trust Fund, Property Tax Relief Sustainability Fund and the Legacy Fund.
A total of 30 percent of oil and gas tax dollars go into the Legacy Fund, which was approved by voters through a constitutional amendment in 2010. No money can be spent from the fund until after June 30, 2017. It requires a two-thirds vote of both houses of the Legislature to disburse funds and spending from the fund is capped at 15 percent per biennium.
The Legacy Fund had a balance of $492.1 million as of Aug. 31. The fund is estimated to have approximately $1.19 billion in it by the end of the biennium.
Sheila Peterson, director of OMB’s Fiscal Management Division, discussed the estimated costs of continuing several programs and expenditures into the 2013-15 biennium.
As of Tuesday, it was forecast that it would cost more than $288 million to continue funding to programs and expenditures in several departments of state government. The majority of the forecasted costs come from K-12 education and Human Services.
Human Services would need an estimated $91.5 million to continue providing Federal Medical Assistance Percentages dollars for programs such as Medicaid. Peterson said the federal match to North Dakota is slightly over 52 percent. However, it is expected to hit 50 percent, the lowest level the federal match can drop to, by Oct. 1, 2014.
“We will hit the floor,” Peterson said.
An estimated $35 million also may be needed to address cost and caseload increases for Human Services.
Peterson said the Department of Public Instruction has estimated it would cost $53.8 million to continue the current mill levy reduction grant program as well as to cover valuation increases to property. In addition, DPI estimates an additional $38.5 million in funding may be needed for covering the cost of increased K-12 student enrollment.
Rep. Blair Thoreson, R-Fargo, questioned the enrollment figure.
“What was used to come up with the $38 million?” Thoreson said.
Peterson said DPI likely used the formula it uses to calculate per-student funding. Thoreson asked if more information could be gathered from DPI so legislators could see how DPI calculated the dollar amount. Peterson said that could be done.
Updated budget forecasts will be released in November as well as prior to the beginning of the next legislative session in January.