Susan Sisk, director of the North Dakota Office of Management and Budget, presents an update to members of the interim Government Finance Committee on Sept. 17, 2024. (Michael Achterling/North Dakota Monitor)
(North Dakota Monitor) -North Dakota’s general fund is expected to end the 2023-25 biennium with a nearly $713 million surplus, according to data from the Office of Management and Budget.
Susan Sisk, the agency’s director, told lawmakers this week that revenues collected by the state since the beginning of the 2023-2025 biennium were up about 12% as of August. That’s about $350 million above projections.
She said higher-than-expected sales tax and corporate tax revenues accounted for a majority of the surplus.
Sales tax collections have been strong since the start of the biennium, Sisk said.
Meanwhile, corporate taxes were high during the pandemic as businesses received a helping hand from government stimulus. The state had expected revenues to fall as pandemic-era assistance programs expired.
“We expected it to start leveling off, and it has a little bit, but not as much as we thought,” Sisk told lawmakers during Wednesday morning’s Budget Section meeting.
State revenue from interest income also remains high. There are three reasons for this, Sisk said: a larger-than-expected balance at the start of the biennium, high interest rates and a $58 million transfer from the rainy day fund known as the Budget Stabilization Fund.
Individual income tax revenue at the end of July was 14% below department forecasts.
Oil revenues for the state are also running above forecasted estimates, Sisk said.
“Production has pretty consistently been around that 1.2 million (barrels per day) mark, so the revenues have been running ahead of forecast,” she said. “Right now, we are up $387 million in our oil revenues.”
The state’s Legacy Fund was $10.9 billion as of the end of August, Sisk said.
Another fund, the Strategic Investment and Improvements Fund, is projected to have an ending balance of $1.4 billion, said Allen Knudson, legislative budget analyst and auditor.
Knudson told lawmakers the overall state budget outlook remains positive, though he added some areas of caution. Knudson said oil prices are dropping and production levels may be difficult to maintain; interest rates are likely to decline; and agriculture prices are decreasing while input costs remain high.
He also identified a budget gap between revenues and spending, which he said would be a “major issue” if revenues weren’t exceeding the budget forecast.
On Wednesday, Sisk also gave lawmakers an update on state budgets. Of the 75 state agencies, 64 have submitted proposed budgets for the 2025-27 budget cycle.
Agencies that had yet to submit budgets included the Governor’s Office, the Attorney General’s Office, the Department of Public Instruction and Legislative Council, according to Sisk’s presentation.
By state law, state agencies are required to turn in their budget proposals by July 15. Just eight met that deadline, Sisk said — the others were granted extensions. This isn’t unusual, she said.
Gov. Doug Burgum will outline his state budget recommendation to lawmakers in early December for consideration during the legislative session that begins in January. A newly elected governor will likely submit a revised budget recommendation to lawmakers.
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Amy Dalrymple contributed to this report.
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