March 10, 2017 / 12:21 AM / 4 months ago

North Dakota lowers budget forecast amid revenue slump

2 Min Read

March 9 (Reuters) - North Dakota on Thursday lowered revenue expectations for the remainder of the current biennium and predicted lower tax receipts than previously thought for 2017-2019 as the energy-producing state continues to struggle amid lackluster oil prices.

Governor Doug Burgum said that for the biennium ending June 30, the state will have general fund revenues of $4.78 billion, about $46 million less than lawmakers predicted in January.

The forecast for the 2017-2019 general fund will be even greater - $103 million below the January assumptions, he said.

"The challenges before this legislature, as everyone knows, are historic," Burgum said to a joint meeting of the House and Senate appropriations committees. "The decisions are going to become even more difficult,"

North Dakota, epicenter of the U.S. oil and natural gas fracking boom earlier this decade, saw tax revenues dry up when prices collapsed in 2014.

Oil future prices for the benchmark West Texas Intermediate (WTI) crude have been higher and steadier since late last year, although they fell off earlier this week.

WTI settled at $49.28 a barrel on the New York Mercantile Exchange on Thursday, though prices remain below the five-year average of approximately $70 per barrel.

Burgum asked lawmakers to reconsider some of his budget proposals in light of the new projections, including increasing the cap on the amount of oil tax revenue that goes into the general fund from $300 million to $900 million.

He also called for state employees to cover 5 percent of the cost of state-paid health insurance premiums, which are projected to increase roughly 17 percent in 2017-2019.

Even so, Burgum said the state is turning a corner, and noted that oil tax revenues are projected to increase from $2.94 billion this biennium to $3.15 billion next biennium, an increase of $216 million. (Reporting by Rory Carroll; Editing by Leslie Adler)

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