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Budget section hears statewide fiscal trends: oil forecast, federal funds decline and sector spending
Summary
Fiscal analysts told the Legislative Budget Section that oil and gas forecasts, federal COVID funding declines and changes in special funds have reshaped the state budget, with major appropriations remaining concentrated in Health and Human Services, K‑12 and higher education.
Legislative staff presented an overview of state budget and fiscal trends to the Legislative Budget Section, including general fund composition, oil and gas forecasts, federal fund variability and major appropriation categories.
Brady, fiscal analyst with the Legislative Council, walked members through charts showing the structure of general fund revenues (beginning balance, tax and fee revenues, and transfers). He said transfers such as Bank of North Dakota profits have been used in past biennia but were reduced for the 2527 biennium, which was balanced without the large SIF transfers used previously. Brady told the panel the largest revenue type at the top of the revenue stack is sales and motor vehicle excise taxes, followed by individual and corporate income taxes; he cautioned that corporate income tax collections can fluctuate with global events.
On oil and gas, Brady said the forecast for the 2527 biennium is approximately $4.27 billion of collections with a state share of roughly $1.3 billion. He said the forecasted oil price assumption is $59 per barrel in the first year of the biennium and $57 in the second, with production at about 1,100,000 barrels per day. Brady summarized the state share allocation “buckets” and noted $500,000,000 is the portion currently estimated to go into the general fund for the 2527 biennium, up from roughly $300,000,000 in the 1517 biennium.
Brady highlighted that federal funds appropriations were comparatively larger during the 2021–23 biennium (approximately $6.8 billion) and declined to about $5.7 billion in 2325 as federal COVID assistance wound down. He emphasized special funds now account for a larger share of total appropriations, citing uses such as foundation aid stabilization for K‑12 and county social human services projects.
On appropriations, Brady said the Department of Health and Human Services is the largest general fund recipient (about $2.2 billion) followed by K‑12 education; the four largest agencies together account for over 80% of general fund appropriations. He discussed Medicaid composition and matching, noting roughly $2 billion in federal and special funds for Medicaid grants and about $1.28 billion of general fund match. He noted an estimated FMAP of about 52.52% for federal fiscal year 2027 and described the increase in home and community‑based care related to a federal Department of Justice lawsuit that changed service emphasis and spending.
Brady also reviewed corrections funding, reporting a roughly 26.5% general fund increase for the Department of Corrections and Rehabilitation in 2527 and an estimated daily inmate count increase of about 14.4% for the same biennium. He noted department FTE increases tied to increased services at correctional centers.
Other highlights: foundation aid stabilization fund contributions to K‑12 (about $233,000,000), higher education appropriations versus tuition and fee revenue (two‑year campuses receive a larger state appropriation share), and the Department of Water Resources’ dependence on the Resources Trust Fund (oil and gas tax dependent). Brady closed by summarizing aid to political subdivisions (about $6,000,000,000 for 2527) and said the state budget actions book, which summarizes after‑session changes for each agency, will be published online once finalized.
