N.D. swims in surplus cashNorth Dakota may need to get a bigger piggy bank. The latest state finance report predicts at least $1.5 billion in surplus and reserves by June 30, 2013, the end of the biennium.
By: Teri Finneman, The Jamestown Sun
BISMARCK — North Dakota may need to get a bigger piggy bank.
The latest state finance report predicts at least $1.5 billion in surplus and reserves by June 30, 2013, the end of the biennium.
The state’s booming economy has resulted in stronger than expected revenues from sales taxes, individual and corporate income taxes, and oil and gas taxes.
“We’ve never seen our revenues come in at this rate over forecast before,” said Pam Sharp, director of the Office of Management and Budget. “Revenue growth is at an all-time high.”
Sharp gave a financial update to legislators during the Budget Section’s meeting Tuesday in the Capitol.
North Dakotans continue to spend money, resulting in $80.9 million in sales tax collections in February, according to her report. This was $21 million more than expected.
Individual income tax collections were $10.9 million higher than predicted, with $18.3 million in collections. This is attributed to more people working and more people working at higher wages, Sharp said.
Corporate income tax collections for February were $10.5 million, or $8.7 million higher than forecast. This reflects that corporation profits are considerably stronger than they were two years ago, Sharp said.
Oil and gas production and extraction tax collections in February were $159 million, “probably the strongest we’ve ever seen,” Sharp said. Motor vehicle excise taxes were 53.9 percent stronger than expected, with $9.5 million in February revenue.
Overall, the state has $609 million more in revenue at this point in the 2011-13 biennium than it did at this point in the 2009-11 biennium. Sales tax collections make up $326 million of that difference.
While legislators will have a sizeable piggy bank to break into — assuming revenue continues to come in as expected or higher — they won’t have access to the full $1.5 billion.
A good chunk can’t be spent unless the state has a revenue shortfall and another chunk can’t be spent until 2017. Here’s the breakdown:
The state is now predicting there will be a $592 million ending balance in the general fund by June 30, 2013, a significant jump from the December forecast of $383 million.
Legislators can spend general fund money, so the $592 million would be available for the 2013 session.
Legislators will also have at least $101.5 million to spend from the property tax relief sustainability fund. The fund’s balance is as of Feb. 29, and it will continue to grow as the account receives money from oil and gas tax revenue.
Then there are the funds with more rules.
There is $386 million in the budget stabilization fund – which can’t be accessed unless there is a revenue shortfall — and $182 million in the foundation aid stabilization fund. Interest from this fund is transferred to the general fund, where it can be used for any state appropriation.
The principal can only be spent under the governor’s order to offset foundation aid reductions to schools as a result of a revenue shortfall.
There also is $219.5 million in the voter-approved Legacy Fund, which is supported with oil and gas tax revenue. Money from this fund can’t be spent until 2017.
Overall, the state expects to have general fund carryover and revenue of nearly $5 billion for the 2011-13 biennium and nearly $4.4 billion in expenses.
Teri Finneman is a multimedia correspondent for Forum Communications Co.