ND lawmakers to contract with extra firm on revenue figures
BISMARCK—Seeking more input on state revenue projections after recent estimates missed the mark, North Dakota lawmakers voted Tuesday, Dec. 5, to contract with a consulting firm to provide economic forecasting data.
The Legislative Revenue Advisory Committee voted unanimously in favor of IHS Markit's proposal, which carries a $49,292 price tag. That came just weeks after the Office of Management and Budget signed a new two-year, $140,000 contract with Moody's Analytics that includes the option for two two-year renewals, the agency's outgoing director Pam Sharp said.
"The Legislature is responsible for passing a budget," said House Majority Leader Al Carlson, R-Fargo. "And we need to be also responsible for gathering the revenue numbers that we work with when we go to build that budget."
Sharp, meanwhile, raised some concerns about having two forecasts.
"Best practice would be to have everyone work together on one forecast," she said. "I think there's more and more opportunity for political decisions to get into the mix."
Dan White, director of fiscal policy research at Moody's, echoed that sentiment but said policymakers should try to gather as much information as they can to make budget decisions. Sharp said they added a fourth scheduled forecast and "a few other things" to the Moody's contract.
Gov. Doug Burgum vetoed legislation creating the bipartisan committee in May, arguing that it could "result in conflicting revenue forecasts, creating additional challenges for the state's budgeting process." Attorney General Wayne Stenehjem later said it wasn't a constitutional violation for the Legislature to create a committee to monitor state revenues and economic activity.
Sharp said she's been "really pleased" with Moody's, describing the firm as "extremely responsive." She said it doesn't shoulder all of the blame for missed revenue projections.
Lawmakers used a revenue forecast prepared by Moody's to set a record $14.2 billion two-year budget in 2015-17 that included $6 billion in general funds, which was later slashed due to lagging oil and farm commodity prices. Then-Gov. Jack Dalrymple ordered a round of budget cuts in early 2016 to cover a $1 billion revenue shortfall, and lawmakers later addressed a $310 million shortfall during a special session.
"We would try to figure out, OK, how many rigs are we going to have, how many wells are going to be drilled, and then we'd have to give that to Moody's," Sharp said. "When that information isn't what it actually turns out to be, then everything is skewed."
Republican Sen. Ray Holmberg, the Senate's chief budget-writer and chairman of the revenue advisory committee, acknowledged there was some frustration among lawmakers, but "Moody's wasn't the only one that misjudged the large downturn in ag and energy."
IHS Markit plans to deliver a final report to North Dakota officials by the end of September 2018, and an updated report is due in January 2019, when lawmakers are scheduled to return to the Capitol.