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North Dakota’s Revenue Forecasting Process

Revenue Forecasts

The Executive Budget Office (Office of Management and Budget) has primary authority for revenue forecasting in North Dakota. Historically, during each biennium, the Office of Management and Budget issues three revenue forecasts:

June preliminary revenue forecast - Issued in the year prior to the start of the legislative session.

December executive budget revenue forecast - Presented, along with the executive budget recommendations, to the Budget Section and organizational session of the Legislative Assembly.

February/March revised revenue forecast - Revised in either February or March during the legislative session; reviewed by legislative leadership, Appropriations Committee members and Finance and Taxation Committee members of both houses; and then approved by the Appropriations Committees as the "official" legislative revenue forecast.

 

Tax Department

The Tax Department is responsible for the basic methodology for forecasting the following general fund tax types -- sales, motor vehicle excise, individual income, corporation income, financial institution, oil extraction, oil and gas production, cigarette and tobacco, coal conversion, and wholesale liquor taxes.

 

Moody's Analytics

The Office of Management and Budget contracts with Moody's Analytics to provide economic projections for the state of North Dakota. Moody's Analytics provides tax-based forecasts for each of the major taxable sectors. Reports prepared by Moody's Analytics include analyses and forecasts of sweet crude oil prices and production. As needed, Moody's Analytics also provides analyses and forecasts of North Dakota's major crops and livestock, including farm income and cash receipts for livestock and products.

 

Revenue Advisory Committee

The Revenue Advisory Committee, created by the Office of Management and Budget, is a committee generally consisting of private sector members, at least two legislators, and other public officials. The Revenue Advisory Committee meets before the issuance of each forecast to review the economic projections and resulting tax-based forecasts.

 

Forecasting Process

• At the start of each of the three forecasts, the Tax Department updates the historical tax base statistics and provides the results to Moody's Analytics.

• Moody's Analytics processes the historical data through forecasting models, adjusting forecast equations or "drivers" as needed.

• The Tax Department and Office of Management and Budget participate in conference calls with Moody's Analytics to discuss views on the United States and North Dakota economies.

• Moody's Analytics creates North Dakota's tax-based forecasts for each of the next two fiscal years.

• The Office of Management and Budget schedules a meeting of the Revenue Advisory Committee to review the tax-based forecasts and make any modifications as determined by the committee.

• The Tax Department applies the appropriate tax rates and statutory distributions through the use of in-house tax revenue models to produce the tax revenue forecast, which is supplied to the Office of Management and Budget.

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