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For economist June will be regarded as an interesting month in North Dakota. That is because of the all the larger North Dakota cities only the hot oil patch town of Williston saw an increase in the city sales tax collections. And that increase was more than 12 percent. Even Dickinson, regarded as the next hot expansion town saw a decrease of nearly 6 percent.

The big monthly change was in Devils Lake, a decrease of more than 30 percent. To me most interesting of all was Bismarck. First of all, of the major cities it had the largest monthly decrease, and what really needs to be compared is that comparing the YTD data it is the only major city on the negative side. Considering all the federal, state, NGO, and “professional” headquarters located there that is surprising.

Also, although Dickinson had a negative change in collections for this month, for the YTD its increase is more than twice of Williston, and in fact is second only to Fargo.

Fargo’s decrease this month is substantial, and probably reflects Americas weak retail sales since Christmas. It also probably reflects the weak Canadian dollar as much as any North Dakota town except for Grand Forks, and when comparing those two it may be hurt proportionally even more than Grand Forks by the declining loonie.

As the oil industry continues to mature it will be interesting to see what will happen to the North Dakota economy. As of today it is only the strong oil market that is keeping North Dakota at the level it is. As late as the farm planting was, and as poor as those prices in that sector will have a major decline, and so to its secondary effects such as sales of farm machinery.

Retail, in my opinion will continue to see a major decline.

This will be North Dakota’s most interesting change in its economy since the beginning of the oil and agricultural boom starting nearly a decade ago.

 

Second verse same as the verse. A little…. You remember the song, and I don’t mean to be repetitive in my comments, but I just have to say this. Although it is not a great amount the legislative forecast at the end of April is off by even more than it was last month.

In total the amount received at the end of April is nearly 9% more than forecast. Last month that figure was 7.1%. The error is nearly 30% more than last month.

You might also remember that OMB said that a lot of the problem would be solved when income tax payers, especially the corporate, sent their final tax reports in and corrected for over payments they had made. Last month the corporate income tax collections were about 42% larger than the projections. This month that figure is about 39%. That is not much. The difference for the individual income taxes is less than 2%.

In sum, individual tax collections are nearly 36% larger than projected collections, and corporate nearly 39% larger. That is a lot.

The only account that is even close is sales tax collections. That is a peculiar account to be close given North Dakota’s still booming economy, and then to miss the income taxes by so much.

Remember, both income taxes were changed and state sales taxes remained the same. Seems to me Economy.com didn’t know how to adjust for changes to the income tax, both corporate and individual.

Finally, I will note again, and hope those in charge of preparing and voting on the next bienniums budget, keep in mind these continuing errors. If not, when the economy, even the growth in the economy, slows down we will find the North Dakota budget in deficit. With the total receipts being only about 9% greater than the projections income would be about $5 million dollars short if the two income tax accounts had been correct just to this point in the biennium, or $12 million at the end of the biennium if the North Dakota economy stays like this. We easily could handle that, but if it continues through the time that will amount to a significant amount-something unnecessary.

 

Close but no gold ring yet. Some of the press are putting out stories about reaching the million barrel mark, and realizing it is just a number, that it doesn’t make that much difference really, but the reality is North Dakota still isn’t there.

Why? Hard to say for sure without a valid review, but really, that review isn’t worth the cost. In all likelihood it is simply given the continuing weather problems it hasn’t been worth the cost of making that mark. Now, if this was WW II and we needed that oil for the war we would be there and well beyond. Today, however, it simply as I said, not worth the cost, not worth the effort in terms of the economic costs, and probably the human costs. Oil drilling is dangerous enough, but it is not worth the chance of serious injury, or even death to reach a particular number.

Anyway, we are nearly there and probably will be next month unless this weather is still with us. As the data from the other oil patches shows, the Bakken continues to be America’s largest oil field. It will continue to be the largest unless there is some human interference.

Those who want to celebrate can probably do so soon. Very soon. We will see next month.

By the way, I have added the gas flaring information so we can watch that continuing reduction

 

According to Kyle C. Wanner the director of the N.D. Aeronautics Commission North Dakota airline passenger numbers for April 2014 were 94,720, or an increase of nearly 14 per cent over April 2013. Five of the commercial airports had their best numbers on record this April.

Dickinson continued to be the biggest gainer as the oil patch activity continued moving south. Of course Williston “slowed” to just short of a 30 per cent increase.

Williston and Dickinson are important to follow as their increase demonstrates that the oil increase is still occurring. It and agriculture remain the two important cornerstones of North Dakota’s economy.

To me the interesting comparisons is looking at Fargo with its nearly 23 per cent for April and nearly 14 per cent for the year and comparing that to what is happening in Grand Forks. Minot and Bismarck are more complicated because of the oil expansion and Minot’s rebuilding from flooding.

The real comparison is between Grand Forks and Fargo. For the year the increase is less than 2 per cent for Grand Forks. As I noted above, it is nearly 14 per cent in Fargo. Why such a difference?

We know that Fargo has been growing. We also knew that Grand Forks had started to grow, and while I expected Fargo to continue its larger growth I didn’t expect that kind of difference. I think if Grand Forks does not want be left behind it is important for them to take a serious look at their economy and see what is driving it, or what is not driving it. What can Grand Forks do to increase its economy?

Given what is happening in North Dakota, Grand Forks is not in a position to allow those kinds of differences without looking for the whys. It is time for a serious review of the city’s economy, otherwise it may be the least important “big” town in the state.

The Chamber of Commerce, or the the local and state economic development organizations all look good in a booming economy. On the other hand, when the economy looks like it does in North Dakota on the one hand, and as it does in Grand Forks on the other, well it is time to prove your worth.

 

Another month and another opportunity to see how fortunate North Dakota has been for these past few years, and how far off they are in the projections of revenues they have purchased.

First of all, concerning the revenues, even after some very large tax cuts put in place by the last legislative session and signed by the Governor, revenues are up by nearly 21 % compared to the same time as the last biennium.

Now that is just over 7 % of the projected amounts. Compared to what we thought we purchased some will say that is pretty good, at least compared to previous projections. However, as always, the devil is in the details, and I don’t think that is so good.

Sales taxes are off by less than 4 % and that is not bad. Auto purchases, or the revenues from them are off by less than 11 % and that isn’t bad either.

The other big categories are corporate and individual income taxes and they are off about 37 % and 42 %. That is, the revenues from these taxes are that much more than expected and yet the total revenue is only up about 7 %. That means that without those large amounts of extra revenue we would be in a deficit situation and that would be a critical situation, a very critical deficit situation. If the economy slows down with three fourths of the biennium left North Dakota will need its reserve revenues and the psychological effects of that will be very difficult on its economy.

I do not want to be the boy who cried wolf, but I think this proves again the critical need to get a better economic projection. We are, I think, living off our good fortune. We can not continue doing this, or so I think.