North Dakota’s oil and gas tax revenues have exceeded expectations so far this budget cycle, prompting tempered optimism from state lawmakers.
Oil and gas tax collections surpassed $1.4 billion through April, 22.8 percent above forecasted totals. That’s due to better-than-anticipated oil production and prices, according to a report sent to state lawmakers Friday.
The report covered the first nine months of the biennium that started in July 2017. Revenue collections reflect oil production and prices from two months prior.
Republican state Sen. Ray Holmberg, chairman of the Senate Appropriations Committee, said legislators were “more conservative” with their forecast. But he also credited a healthy oil industry that propelled unprecedented growth in state revenues just a few years ago.
“It’s good news, but one doesn’t need to start ringing church bells,” Holmberg said.
A downturn in oil and farm commodity prices prompted budget cuts in 2016 under then-Gov. Jack Dalrymple. During Gov. Doug Burgum’s first legislative session last year, lawmakers trimmed budgets again.
While noting the robust oil tax figures this month, Burgum pointed to depleted reserve funds in recommending cuts for the two-year budget cycle that will start in July 2019.
Much of the state’s oil and gas tax revenues are tied to constitutional pots like the Legacy Fund, which was valued at more than $5.2 billion at the end of last year. Some lawmakers have proposed tapping that fund for infrastructure projects.
General fund revenues, meanwhile, were 2 percent ahead of forecast in March, according to a Legislative Council report.
Republican state Rep. Roscoe Streyle, a member of the House Appropriations Committee, said the additional oil revenue will help balance the budget next biennium. But he agreed with Burgum that “further cuts are needed” to “create a sustainable budget well into the future.”
House Minority Leader Corey Mock, D-Grand Forks, said “the oil activity is going to, I would presume … soften the blow” to some extent. “I still think we’ll have some difficult decisions to make,” he said.
Ron Ness, president of the North Dakota Petroleum Council, said oilfield technology has “advanced rapidly,” and he predicted the industry would “likely” exceed the production record of 1.2 million barrels per day in the coming months.
“We have really, through the downturn, been able to grow production back to its peak,” he said.