Central ND News

A revised state revenue forecast in North Dakota indicates potential for significant investments in property tax relief, despite a projected decrease in oil tax revenue. Governor Kelly Armstrong highlighted the importance of addressing high property taxes and emphasized that the state can afford meaningful relief due to its conservative budgeting approach.

"North Dakota homeowners being squeezed by high property taxes are demanding property tax relief and reform, and this revenue forecast confirms that we can afford to deliver the meaningful relief they deserve," Armstrong stated. He added that even with an anticipated dip in oil tax revenues, the state could still fund other priorities such as workforce development, housing, education, health care, and infrastructure.

The new forecast anticipates general fund revenues of $5.07 billion for the 2025-27 biennium—a reduction of $105 million from January's executive forecast used for preparing Armstrong’s budget recommendation. Despite this adjustment, a positive ending fund balance of $125 million is projected by the end of the biennium.

Oil tax revenues are expected to be $26.4 million less for the current biennium and $591.6 million less in 2025-27 compared to previous forecasts due to lower projected oil prices and an adjusted effective oil tax rate. The revised projections include a decrease in oil prices from $62 to $59 per barrel in the first year and from $60 to $57 per barrel in the second year of the biennium.

Additionally, a lower effective oil extraction tax rate is assumed due to many existing wells being classified as "stripper wells," which are exempt from this tax if production falls below specific levels for at least one year.

Reduced collections would impact funds like the Strategic Investment and Improvements Fund and "Prairie Dog" buckets providing supplemental infrastructure funding. Nonetheless, Armstrong pointed out North Dakota's top ranking for infrastructure by US News & World Report and assured continued investment in roads, bridges, water projects, flood protection, among others.

The forecast was released by North Dakota's Office of Management and Budget (OMB), incorporating economic data and input from industry representatives on the Advisory Council on Revenue Forecasting.

Armstrong noted that even a modest increase above forecasted oil prices could significantly boost revenues: "This is a conservative forecast... But this is not gloom and doom." He expressed confidence that legislators could fund essential priorities like property tax relief amid strong sales tax and income tax collections alongside robust oil production expectations.