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Legislature sets budget below Gov. Burgum’s request

January 9, 2019

BISMARCK, N.D. (AP) — The North Dakota Legislature on Wednesday decided Gov. Doug Burgum’s spending blueprint assumed oil prices that are likely rosier than reality, lowering expected energy tax collections by nearly $600 million for the next two-year budget cycle.

Republican and Democratic legislative leaders said their budget plan better reflects the current price of oil, a major contributor to the state’s wealth.

“It’s still a very volatile world out there,” said Republican Sen. Ray Holmberg, chairman of Senate Appropriations Committee.

Members of the North Dakota House and Senate’s appropriations committees unanimously agreed on their budget guidelines that set the price of North Dakota sweet crude at $42.50 a barrel, which lawmakers said it was fetching on Wednesday.

Lawmakers’ budget plan also assumes North Dakota oil production to remain flat at a record 1.35 million barrels daily, which would inject $4 billion in the state treasury over the two-year period

Burgum proposed a $14.3 billion spending plan last month that predicted more than $4.6 billion in oil and gas tax revenue, based on oil prices $46 to $50 a barrel and production at 1.3 million barrels daily.

Burgum based his budget on input done in November from state budget analysts and the economic consultancy Moody’s Analytics. Oil prices have slid since then.

GOP Rep. Jeff Delzer, the chairman of the House Appropriations Committee, said oil prices are a moving target.

“Realistically, we have to look at where we are right now,” Delzer said in an interview. “The governor’s budget is what was going on at that time.”

A revenue forecast from the Legislature’s economic consultant is counting on oil prices to go up, just as Burgum’s did in budget he proposed last month.

Lawmakers used assumptions from each forecast in crafting their starting point, but set on their own numbers for oil tax collections. The Legislature will update its budget forecast in March, and could change legislators’ expectations for spending increases, tax cuts or both.

The governor doesn’t control the state’s checkbook. It’s the Legislature that decides how much to spend on state government.

Democratic Senate Minority Leader Joan Heckaman said she agreed with lawmakers’ more conservative numbers, due to oil price swings.

“I think it could change how these funds are used this session,” she said.

The state’s current two-year budget including federal aid is $13.6 billion.

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