Exchanging & Engaging Ideas in Economics & Economic History
Last week on the Jarrod Thomas Show there was a caller suggesting some inconsistency between the data on Grand Forks sales tax and local economic events. I do not think this was an allegation of malfeasance, just that the numbers were not making sense. Sales taxes reached a record level in February of 2017, but the caller cited three factors seemingly at odds with this circumstance: » Read more
For the last few days I focused on state level tax data. The release of a new forecast and the general state of the forecast process promises many more posts to come on this topic. I thought for today I would turn toward a more local number. Grand Forks had its largest month for sales tax collections in its recorded history. What does this look like?
I continue to think about the tax situation in North Dakota right now, particularly trying to understand what the data are trying to tell us. Obviously I want to avoid a situation of torturing the data until they confess, but that should not stop us from slicing and dicing the data to find something meaningful.
Just a few further thoughts, as yet completely unrefined, about the radio program today. The major discussion on the radio today was taxes. This is always an interesting topic because callers often provide multiple, and often contradictory, views of taxation. It is good that radio is not a visual medium (for many, many reasons) but the confused look on my face when listening to some of the callers would not be taken well I am sure.
Yesterday’s post (found here) mentioned Grand Forks retail and the fact that sales were behind last year’s level. As a recap, the accumulated total of monthly collections in 2016, when compared to the same month in 2015, were all lower, and in some cases by significant amounts. Collections from a few specific months were ahead of the same month the year before, but the accumulated total never got higher than 2015.
Location matters. A lot. The more I read and study about the North Dakota economy the clearer that becomes. As I go through this I am looking more and more at the various locations for economic activity in the state, as the following map demonstrates.
I did some looking at sales tax revenues. I went back to July of 2009 and stopped the graph at December 2015. I will have a separate post looking at the circumstances after that date with the revision of the forecast and what happened then. These data come from the state OMB Rev-E-News publication released monthly.
This is going to get a bit more technical than many of my other posts. However, I am a big believer that there is no reason to shy away from complexity, particularly when avoiding it sacrifices accuracy. So we are going to discuss forecast performance for sales tax in North Dakota. There are many different ways to evaluate forecasts and the one I will use here is called a tracking signal.
The legislative session is in high gear and on March 18th the OMB released what they are calling their March 2015 Revenue Forecast (found here). This is an updated revenue number for the legislators, and I think it comes as no surprise that some of the numbers were down, especially oil. Looking ahead to the 2015-17 biennium the forecast is for a decline in oil revenues by $869,745,374. That is on top of more than $100 million less in the remainder of the current biennium. Does this number seem plausible? Sure.