CHICAGO — Fueled by a historic oil boom, North Dakota is on track to enjoy an $850 million budget surplus by the start of fiscal 2013, budget officials said Tuesday.
The state has four reserve funds, which total $1.2 billion. Much of the reserve money is restricted, but some of the accounts are rising by as much as $50 million a month, said Pam Sharp, director of the Office of Budget and Management.
North Dakota has enjoyed a few years of strong growth thanks to the largest oil boom in its history from the Bakken oil field in the western part of the state. “Things really are booming,” Sharp said.
General fund tax collections for the first 11 months of the two-year budget period are up 40% over the most recent revenue projections from April 2011.
Sales taxes, which make up the biggest piece of the general fund, are up 53% over expectations, while individual incomes tax collections are up 40% and corporate income taxes are up a full 240%.
Corporations mostly estimate their income taxes, so the increase indicates companies are expecting a strong year, Sharp said. “I don’t know all of the businesses, but I am presuming a lot of it is coming from oil companies doing business in the state,” she said.
Budget officials are now expecting to end fiscal 2013 next June with a $850 million surplus. Last year, officials projected the surplus would reach only $50 million.
“It’s not all oil, but a lot of the money is generated by that,” Sharp said.
Of the state’s four reserve accounts, one is a so-called legacy account, which currently totals $352 million. Lawmakers are restricted from dipping into the account until 2017, and then they can only use 15% of the total. That account is rising by up to $50 million a month, according to Sharp.
The state’s unemployment rate is just 3.1%, the lowest in the nation. An April report by the Rockefeller Institute on state revenue trends showed that North Dakota was the only state that saw overall growth in tax revenues in 2011.
Moody’s Investors Service said Wednesday that the recent defeat of a ballot referendum that would have eliminated property taxes was a positive for local governments. Moody’s said the 77% rejection margin means that property taxes will not likely face a similar initiative in the future and that local governments will now be able to enjoy more stable revenues and revenue projections.
The vote will allow local governments to continue to issue general obligation bonds; most state agencies and local issuers had put GO sales on hold since early this year to await the election results. The ballot failure is also positive for the state itself, because the measure required the state to compensate local credits for all the lost property tax revenue.