A strained state budget could complicate legislative session

Published: Nov. 19, 2020 at 6:30 PM CST
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BISMARCK, N.D. (KFYR) - The coronavirus pandemic is straining the economy in many ways, and that could soon be reflected in North Dakota’s budget.

North Dakota is one of the few states that hasn’t had to make budget cuts throughout the pandemic and, in fact, the state’s budget is still tracking slightly above its forecast.

But signs of trouble are on the horizon, as October’s sales tax numbers come in 25% below the original forecast and oil tax revenues continue to decline.

Leaving legislators rightfully concerned about funding for the upcoming session.

Lawmakers said tough decisions will need to be made in the coming session.

“It’s going to be a bloodbath. I hate to say it. We have to face reality, the agencies are going to have to cut,” said Rep. Terry Jones, R-New Town.

They said they’ll need to be more diligent in their policymaking. “We need to be really reflective of what these changes that Covid-19 has brought have done to communities small and large, to education, to small businesses, to the economy,” said Sen. Erin Oban, D-Bismarck.

Although the state budget has held up well in the pandemic, there’s been substantial drops in sales tax revenue with no signs of vast improvement in the near future. “We expect that two years from now our sales tax revenue will still be less than it was last year,” said Office of Management and Budget Director Joe Morrissette.

And, ending the biennium with an almost 30% drop in oil tax revenues than what was expected is worsening the blow.

“The money that was used to balance the budget in the 2019 session for the current biennium, a big part of that was oil taxes that accumulated and were in hand. We know that because of the current downturn we won’t have that same level of resources available,” said Morrissette. This will create challenges for lawmakers to balance the state budget.

Morrissette said that although they do expect to see some recovery, the resources that helped stabilize the budget in previous bienniums won’t be as plentiful for a while going forward.

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