State Tax Revenue Picture Turning Around Down in April and May, But Signs of a Rebound
Monday, June 29, 2020State legislators received a mixture of good news and bad news this week during a discussion of the state's incoming tax revenue. The bad news is revenue was way down in April and May, but the good news is most business activity appears to be returning to near normal.
Members of the legislature's interim Government Finance Committee heard a report from OMB Director Joe Morrissette on the status of the state's general fund. Morrissette said recent sales tax collections have been far below the state's forecast, but he told lawmakers he believes the worst economic impacts of the pandemic may be behind us.
Click here to listen to Morrissette's comments.
Morrissette said oil tax revenue numbers have fallen significantly since the start of the oil price war and the ensuing drop in demand related to the pandemic. He said oil tax collections had been averaging about $200 million per month prior to the downturn, but fell to about $95 million in the month of April, and to only about $30 million for the month of May. But Morrissette noted that crude oil prices have rebounded to near $40/barrel on the WTI index, and North Dakota producers have responded by re-starting wells that had been shut in.
Legislators also heard a report oil and gas tax revenue collections from Chris Kadrmas with Legislative Council. Kadrmas said although April production averaged 1.2 million barrels per day, the average price realized by North Dakota producers was just $12.93 per barrel. The price reflects the average of Flint Hills Resources posted prices, and the WTI price.
The bottom line in the state general fund is surprisingly still positive. Morrissette said because the state had been well ahead of forecast prior to the economic downturn, state tax collections through the end of April are still about $45 million, or 2% above the budget forecast.