News Releases for December 2000
December 28, 2000
For further information, please Contact the Governor's Office
Hoeven Says Priorities Possible Within Responsible Budget
BISMARCK - Governor John Hoeven said today that his 2001-2003 budget will take a responsible approach toward spending decisions, recognizing a drop-off in state sales tax revenues and the possibility of a slowing national economy.
The governor released a new revenue forecast that reflected the $13.7 million decline in projected sales tax dollars in the current biennium, as well as 3 percent annual growth in tax revenues for the 2001-2003 biennium.
Hoeven said that a cautious approach toward budgeting will make sure enough resources are available to address his administration’s priorities of education and economic development.
“We are being very careful about revenue projections because the national economy may slow and affect North Dakota’s tax collections,” Hoeven said at a Bismarck news conference. “But by building a responsible, prudent budget, we can fund new initiatives to increase teacher salaries and strengthen the economy.”
The new forecast updates figures from an October projection prepared for the Schafer adminstration by Economy.com, the state’s forecasting firm. The forecast anticipates revenues and transfers of $1,688,526,921 for the 2001-2003 biennium.
Included in the 2001-2003 assumptions are revenue reductions that represent two Hoeven initiatives to strengthen North Dakota’s economy.
- A 20 percent investment credit from state personal income tax for investments of up to $50,000 in a new business - $2.5 million.
- Phasing out the sales tax on used farm machinery and repair parts - $5.5 million.
“A tax credit will encourage creation of new wealth, and will be an attractive incentive for the high-tech companies we want to attract,” Hoeven said. “Eliminating the sales tax on used farm machinery will give a boost to the ag economy, and help rural Main Street, too.” Other changes from the previous forecast include the following additional revenues and transfers:
- $4.6 million in the motor vehicle excise tax.
- $2.5 million from departmental collections.
- $10 million transfer from Bank of North Dakota, bringing the total transfer to $60 million.
- $9 million transfer of earnings from the Student Loan Trust Fund.
- Hoeven expressed confidence that Bank of North Dakota profits would allow the transfer of $60 million, noting he had endorsed transferring the same amount two years ago.
The governor also said drawing on the Student Loan Trust Fund was a way to put its earnings to good use for North Dakotans, paying for priorities such as education.
Hoeven emphasized that the forecast was based on conservative estimates that do not exaggerate potential revenues. For example, the $660 million in sales tax revenues forecast for 2001-2003 is $5 million less than projected by Economy.com. In addition, the forecast assumes a 3 percent annual growth in state tax revenues.
The administration is also planning for any possible economic slow-down that would drastically reduce revenues, identifying $55 million in available contingency funds.
Following current law, the Office of Management and Budget will introduce language to allow the transfer of up to $25 million in Bank of North Dakota capital if an unanticipated revenue shortfall occurs.
Another estimated $16 million in contingency funds would be available from the Oil Tax Trust Fund. The fund was created in 1997 to set aside oil revenues that top $62 million in any biennium. New legislation will make those revenues available in case of a financial emergency.
Finally, an estimated $14 million is available for K-12 schools from the Foundation Aid Stabilization Fund. The money becomes available if the governor makes an allotment, i.e., an across-the-board cut of state spending.
E-mail comments to the Governor
