Oil price lowered for budget forecast
A revenue forecasting working group has decided to lower its expectations on the price of oil.
That will go into a new revenue forecast for the Legislature’s pre-session in December.
An earlier preliminary forecast had set the price at $90 a barrel. But in recent weeks, the price has dropped.
"For the rest of the current biennium, we'll use an oil price for North Dakota of $72 to $74 per barrel through June 30, 2015," said state Office of Management and Budget director Pam Sharp. "For next biennium, the consensus was that we would use a price that would ratchet up to $82 a barrel."
Sharp says the oil price is a moving target.
Oil is a commodity. Farm products are commodities, too – and farm prices have been soft. Sharp says the state’s budget consultants had already taken that into account as the first preliminary revenue forecast was being built.
"Moody's (Analytics) feels the farm prices are going to be subdued for a couple more years, before they start going up again," said Sharp. "That impacts farm income, as well as sales tax on farm machinery. Ag is certainly a big part of North Dakota's economy, so it does have an impact."
Governor Dalrymple will present his budget proposal – and a new revenue forecast – to the Legislature’s December pre-session. OMB will also prepare an updated forecast for February.