The state’s top budget official told North Dakota lawmakers Monday they can expect $1 billion more in oil tax revenue by mid-2021 than they predicted early in the session.
Office of Management Director Joe Morrissette presented the House and Senate appropriations committees with updated revenue projections that included rosier oil price and production figures than what lawmakers adopted in January. At the time, they used lower oil price figures than those projected by the executive branch and their own forecasters.
A firm hired by lawmakers will give the committees a second opinion Tuesday. Lawmakers are expected to adopt a forecast that will guide budgeting decisions for the remainder of the session on Thursday.
Legislators are in the midst of writing state agency budgets for the 2019-21 biennium, which begins in July.
Monday's forecast predicts oil revenues will exceed $4.9 billion in 2019-21, contributing to a variety of state buckets meant for general government operations, education, infrastructure and others. But top Republican lawmakers appeared wary of OMB's oil figures after Monday's presentation.
"I think they're higher than what we talked about in the revenue forecasting committee," said Rep. Jeff Delzer, R-Underwood, the chairman of the House Appropriations Committee.
Gov. Doug Burgum, R-N.D., hailed the forecast as "reliable, reasonable and conservative" and said it was based on "the latest economic data and tax collection figures and broad ‘boots on the ground’ input from industry representatives."
“The upward movement from our November forecast leaves plenty of room to fund priorities such as increases in K-12 education, human services and team member salaries while making bold, wise investments that will generate returns for current and future generations of North Dakotans," Burgum said in a statement.
Lynn Helms, the state's top oil regulator, said figures used by OMB fall within scenarios that state officials and the oil industry developed. In a news release issued by Burgum's office, North Dakota Petroleum Council President Ron Ness said the "oil production and price assumptions in this revised forecast are conservative based on industry input."
Burgum's spokesman Mike Nowatzki later questioned lawmakers' cautiousness.
"'Wary' based on what?" he wrote on Twitter.
Sen. Ray Holmberg, R-Grand Forks, who chairs his chamber's budget-writing committee, said lawmakers were waiting to hear from their forecasters. Tuesday's presentation will come from IHS Markit, a firm lawmakers hired in late 2017 after previous revenue projections missed the mark.
Holmberg noted the state's budget is largely based on a "volatile" oil economy and an agricultural sector that's currently "weak."
"We have consistently built our budgets on cautious optimism," he said.
The forecast presented to lawmakers Monday assumed oil prices of $49.50 per barrel for fiscal year 2020 and $49 per barrel for fiscal year 2021, higher than the $42.50 per barrel figure adopted by lawmakers in January. The new forecast also predicted production would gradually increase to 1.44 million barrels per day in fiscal year 2021.
The price for a barrel of North Dakota oil was around $51 Monday, said North Dakota Pipeline Authority Director Justin Kringstad. Production hit a record of 1.4 million barrels per day in December.
The forecast released Monday also predicted an extra $160 million in general fund revenues compared to January's legislative estimates for the rest of the current budget cycle and the 2019-21 biennium.
Burgum proposed a two-year $14.3 billion total budget that included $4.6 billion in ongoing general fund spending in December.