A group that advises Moody’s Analytics on its budget forecasts for North Dakota is making some suggestions about the numbers used for the special February budget forecast.
The state’s Office of Management and Budget ordered the forecast because revenue collections are down.
“We are $215 million behind our forecast for the first 6 months of the biennium,” said state budget director Pam Sharp. "Mostly, one word -- oil."
Sharp says for the new February forecast, Moody’s has suggested using $35 a barrel oil for the start of 2016 – rising to $48 a barrel by June 30th, 2017. But oil industry executives say that might be too high.
“This market this week is nothing short of ugly,”said North Dakota Petroleum Council president Ron Ness. Ness suggested a range of $30 to $43 a barrel. And he and state mineral resources director Lynn Helms predict that oil production will drop under the million barrel a day mark – to around 900,000 barrels. But Ness acknowledged this isn’t an exact science.
“We can sit here and pretend we think we know," said Ness. "We don't know.”
But Ness said this is what everyone has to rely on.
Rep. Jeff Delzer (R-Underwood) chairs the House Appropriations Committee. He said with oil and agriculture down, this forecast needs to reflect caution.
“Hopefully, we're pretty close to the bottom," said Delzer. "Even so, I think we should be conservative with our forecast, because it's always easier to deal with more money coming in than the forecast predicted, rather than the other way around.”
Besides oil, the agriculture sector is also slumping. However, North Dakota Bankers Association executive director Rick Clayburgh said there's still some optimism in farm country.
"We're seeing farm customers come back to banks now," Clayburgh said. "They want rate shopping, but now they're coming back, because bankers have walked them through difficult times before, and we have the experts to help producers through it."
Moody’s will crunch the numbers, and have the new forecast ready by early February. This could lead to an across-the-board allotment of at least 2 ½ percent of general fund agency budgets. After that, Gov. Jack Dalrymple can dip into the budget stabilization fund. That fund has nearly $600 million. And K-12 education is exempt from any allotments, because it has its own "rainy day fund."
