CHICAGO — North Dakota continues to buck national trends, with officials this week reporting that revenues collected in the current biennium have exceeded projections and that the state is on track to see a $700 million surplus by next June.
Most of the surplus comes from oil profits as the state enjoys the biggest oil boom in its history.
Most of the oil revenue currently goes into a variety of state funds, with only a small part going into the general fund.
Voters in November will consider a measure that would put a chunk of the profits into a savings account that would be off-limits to lawmakers for six years.
Budget officials Tuesday said they expected a $66 million surplus in the general fund by the end of the current two-year biennium next June.
The Permanent Oil Tax Trust is expected to end the biennium with a $630 million surplus, pushing the state’s total surplus to just under $700 million.
The oil trust would have totaled $1.4 billion by the end of next year, but the state tapped $746 million for various purposes, with most of it going towards property tax relief.
Total revenues for the budget period ending next June are projected to reach $2.48 billion, up about $2 million from the 2009 legislative forecast.
Revenues for the 2011-2013 budget periods are expected to rise to $2.72 billion, the state projected.
“The projection is based on major assumptions that North Dakota will continue to weather the ongoing national recession, and that oil prices will continue to average more than $70 a barrel throughout the 2011-2013 biennium,” Pam Sharp, director of the Office of Management and Budget, said in a statement.
Sales and uses taxes are expected to come in $58.3 million over original projections to total $1.16 billion by the end of next June. The tax is the biggest contributor to the general fund.
The state is currently operating under a two-year, $8.8 billion budget.
North Dakota’s oil boom is thanks to the Bakken Formation, the nation’s largest oil field, which covers 25,000 miles across North Dakota, eastern Montana, and Saskatchewan, Canada.
The boom is transforming west North Dakota where the 17 oil-producing counties are located.
Boosted by the rising price of oil and increased production, the state has seen its oil-related revenue quadruple over the last five years, budget officials said.
Current law dictates that only the first $71 million of oil revenue goes into the general fund — about 90% of the revenue is deposited into other funds, including a special projects fund, school funds, and a water fund.
Voters in November will consider a ballot measure that would require the state to set aside a chunk of the revenue into a so-called Legacy Fund, a kind of permanent savings account that would capture 30% of the oil revenue.
Legislators would be unable to dip into the money until 2017, then would need two-thirds approval to tap up to 15% of the principal over a two-year budget period.
North Dakota is rated AA-plus by Standard & Poor’s and Aa2 by Moody’s Investors Service.
Fitch Ratings has no underlying rating on the state, which does not issue general obligation debt.