I think it hardly needs mentioning again, but I guess I will: the legislative process in North Dakota probably makes it even more important that we have some confidence in our revenue forecasts. Our legislators are meeting for three months to determine budgets for the next two years. There is always the possibility of a special session if need arises, but you want that to be the truly exceptional case. Now I am not suggesting that anyone will ever get the numbers spot on, 100% accurate, but we can get closer.
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.
Sales tax is by far the largest consistent component in revenue generation for the state of North Dakota, but it is by no means the only one. With that in mind I am generating similar information for other revenue streams. Today it will be corporate income taxes. This one is a bit tricky to look at because there are instances of missing values. These are not missing in the sense that somebody is hiding something; these are missing values in the sense that the report provides nothing for the forecast value for corporate income tax in July, August, and September in that particular publication by the state OMB.
A recent report out by the Center on Budget and Policy Priorities (available as a pdf here) looks at the connection between state tax rates and migration between states. Or maybe it does not. They find little connection between changes in state tax rates and the migration between states.
Economic development and economic growth are key ideas in any state or area, but clearly are a hot topic in North Dakota. The economic success in North Dakota represents an incredible opportunity to catch up in areas perceived to behind and to move into areas that will define the future. It is essentially North Dakota’s opportunity to write its own ticket. What I see missing from the discussion right now is a meaningful discussion on the fiscal side.