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Fiscal staff: state entering session with large beginning balance, oil revenues driving extra dollars
Summary
Legislative fiscal staff told the Appropriations Committee the state has a healthy beginning balance driven by turnbacks and high oil prices, outlined oil tax allocation choices, and explained how those figures affect budget options for infrastructure and one-time projects.
Alan Knudson, fiscal staff with the Legislative Council, told the House Appropriations Committee that the state is entering the 2025–27 budget cycle with an unusually large beginning balance and several one-time revenue sources that will affect lawmakers' choices.
Knudson said the gray portion of the general fund chart — the beginning balance — has exceeded $1 billion for the last three sessions and that the governor's budget assumes using approximately $200 million of budget-stabilization-fund money to shore up the general fund. He said "turnback" — agency unspent appropriations carried into the next biennium — is estimated by OMB at roughly $225 million for the upcoming budget.
The committee's revenue outlook is heavily influenced by oil. Knudson described the oil tax allocation formula, noting a series of statutory and programmatic allocations that fill designated buckets first (Legacy Fund, Resources Trust Fund, Foundation Aid Stabilization Fund, social services fund and Strategic Investment and Improvements Fund). He said Governor Burgum's recommendation includes increasing the state share of oil tax receipts that flow to the general fund from about $460 million to $600 million in the next biennium.
Knudson also described recent patterns of transfers and legacy-fund earnings that have been used in past budgets, and he noted that the executive recommendation declined to count Bank of North Dakota and mill-and-elevator profits as transfers for the upcoming biennium. Adam Matiuk, who handles revenue tracking, reminded members that staff will post weekly budget status reports and that S&P Global will present a legislative revenue forecast in a joint hearing with the Senate next week.
Why it matters: A large beginning balance and higher-than-expected oil revenues create options for one-time, legacy infrastructure projects but also raise choices about how much to commit to ongoing spending. Knudson emphasized the committee should consider using SIF for capital and legacy projects rather than general operating expenses.
Key numbers and context: Knudson said recent beginning balances have been over $1 billion, OMB estimated agency turnback at about $225 million, and the Burgum recommendation raised the state's targeted general fund oil receipt from $460 million to $600 million. He also noted that interest income and certain other revenue sources are expected to moderate next biennium.
Members asked for more detail about carryover and whether large appropriations are causing project backlogs; Knudson suggested the Water Resources presentation would be the place to follow up on carryover project readiness.
Sources: Remarks by Alan Knudson and follow-up comments by Adam Matiuk to the committee.
