33% Shortfall For Sales Tax Revenue In January

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February 17th, 2017

If there was any more proof needed that Moodys simply has no ability to predict North Dakota's economy and state revenue picture, the latest OMB revenue report should once and for all show there is a problem with their economic modeling.

In January, revenues were short by $40 million or 33% compared to what was expected in the lasted projections done in November 2016.

This is a massive shortfall for one month.

In March, legislators will get a new revenue forecast to do their final budgeting.

It now makes sense why there is such a hard push to raise so many taxes by Republicans.

They know things are not getting any better, and they may be getting worse.

In the last couple weeks there have been a few stories about the state's economy that simply were not good.

First it was the announcement that Titan Machinery was closing locations due to the agricultural recession expected to last much longer.

Then it was the announcement that one of the biggest farmers in North Dakota was declaring bankruptcy.

One of North Dakota's largest high-value crop farms has filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court in Fargo.

McM, Inc., based in St. Thomas, N.D., north of Grand Forks, on Feb. 10 filed a voluntary petition for bankruptcy. The farm is one of the largest farms of high-value specialty crops in the region, including about 39,000 acres, with about 2,000 acres of sugar beets and about 4,200 acres of non-irrigated potatoes in 2016.

The spin by some is that this is normal:

But the truth is, and legislators are realizing it, that the boom really is over.

And not just the oil boom.

It's time to stop acting like this is a short-term issue.

Dustin Gawrylow, Managing Director

North Dakota Watchdog Network

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January 24th, 2017

It's a broken record, but it's worth reporting each month to remind the public, the governor, and legislators. December was another disappointing month for state tax revenues. Based on the latest Moodys' Projections in November 2016, revenues in December were a total of $14.7 million short of that projection.

Unlike previous months where tax revenue outside of sales tax made up a little of the gap, areas such as Corporate Income Tax collections were worse than expected - adding to the revenue shortfall.

Earlier this month, the legislature reduced its expected revenues for the next budget by a close-to-appropriate extra $1.1 billion to $3.68 billion expected revenue in 2017-2019.

As the legislative session progresses, one more revenue projection is expected later in the session. At the rate the current cycle shortfalls continue, lawmakers must always take Moodys projections with a grain of salt and assume they are always high.

June 28th, 2016 - The Bakken Bubble Has Burst

June 16th, 2016 - OMB Director: "We're on the brink."

June 13th, 2016 - The Shrinking North Dakota Economy

June 3rd, 2016 - Have North Dakota's Leaders Accepted Reality Yet?

May 4th, 2016 - Governor Dalrymple Orders 95% Budgets For Next Session

February 25th, 2016 - ND Budget Cuts Illustrate The Absurdity of Government Accounting

February 9th, 2016 - Mediocre Won't Cut It Anymore

February 1st, 2016 - The One Billion Dollar Shortfall

January 7th, 2016 - The Budget Spin Machine

December 15th, 2015 - Moodys Turns Gloomy On North Dakota

March 18th, 2015 - Follow-up: Yes, It Is North Dakota's Turn For Austerity

March 5th, 2015 - Let's Prevent A 2017 Budget Crisis