Legislative fiscal analysts warned Legislative Management that a sustained decline in North Dakota oil production or a combined drop in production and price could reduce oil-and-gas tax allocations by hundreds of millions of dollars over the 2025–27 biennium, with knock-on effects for multiple state funds and political subdivisions.

Adam Matiek, legislative counsel fiscal analyst, presented two alternate scenarios based on S&P Global’s low-case material and internal adjustments. The first scenario models a 13% decline in production—about a fall from roughly 1.15 million barrels per day to about 1.0 million—resulting in approximately a $570 million reduction in oil-and-gas tax allocations over the biennium. The second scenario pairs the 13% production decline with a 15% drop in price (roughly a $9-per-barrel reduction) and produces an estimated $1.1 billion reduction.

Matiek told the committee the primary budgetary consequences differ across the allocation “buckets.” Under the first scenario, the Strategic Investment Fund (SIF) bucket faces nearly $200 million less; the Resources Trust Fund would see roughly a $50 million decline; and oil-and-gas political subdivisions would lose about $75 million in revenue. In the combined production-and-price scenario, Matiek said the Resources Trust Fund could lose nearer to $100 million, political subdivisions about $150 million, airport infrastructure funding could lose $20 million, and a planned $65 million transfer toward the PERS main system unfunded liability could disappear unless the legislature acts.

Matiek said the scenarios draw on S&P Global’s March briefing and the vendor’s low-case scenarios, and that factors that could prompt such declines include exhaustion of high-yield wells in the Bakken, mergers and acquisition integration issues, pipeline constraints (including partial or full shutdown scenarios for the Dakota Access Pipeline), and global market oversupply. He noted that immediate cash on hand would mitigate short-term impacts for some funds (SIF uses cash on hand), but that timing and multiyear commitments could create funding shortfalls for projects that rely on anticipated receipts.

Committee members asked about timing and contingency authority. Matiek and staff described the mechanism that would lead to executive allotments and potential use of the budget stabilization fund: if revised revenue forecasts show an actual shortfall, the governor and OMB can order allotments and access the stabilization fund under statutory allotment rules; legislative action would be required to replace or restore programs if the legislature wishes to do so. Fiscal staff confirmed the scenarios are illustrative but grounded in S&P Global’s published low-case information and the legislative forecasting engagement with that vendor.

Members asked about the forecast cadence; Matiek said leadership and staff are discussing a schedule with S&P Global that could include earlier-in-interim updates and additional briefings during the next session to provide more frequent data in volatile markets.

The presentation was delivered to inform future budget and contingency planning; no formal budget decisions were made at the meeting.