Depressed crude oil prices are dealing heavy blows to North Dakota's tax revenues, to the extent that it will likely need to update budget forecasts for future years.
State lawmakers were told Wednesday that general fund tax revenues fell $41.7 million short of projections in July and August, the Grand Forks Herald reports, with individual income tax collections $7 million below projections.
"This is a real wake-up call, I think," House Majority Leader Al Carson (R-Fargo) said. He also asked for projections on the effects further tax revenue reductions could have on state budgets, the newspaper notes.
It comes at a time when falling oil prices have caused multiple drilling rigs in the state's Bakken shale formation to be idled. According to state figures, there are 70 active rigs as of Thursday, down from 193 just a year ago.
The current prices for WTI (West Texas Intermediate) and Brent crude oil – the two U.S. benchmarks – are currently hovering around the $44 and $48 per barrel marks respectively, down around 50 percent on a year ago, according to CNBC.
The fall in individual income tax revenues highlights the toll the idled rigs are taking on oil field workers, with CNN Money noting the number of mining and logging jobs in the state have fallen by 3,700 (down 12 percent) since March.
The website notes sales tax collections in the previous two months were 33 percent below forecasts – $44 million short in August alone – while car and truck registration taxes fell 20 percent short.
"If you were to extrapolate this out, I think that we better be really aware of the fact that this could cause some significant problems for our next budget. I mean, how many months in a row of $44 million can we take?" Carlson said, according to the Grand Forks Herald.
While oil production hasn't declined despite falling prices (barrels produced are 5.1 percent higher than a year ago), Bakken Shale News reports that production is likely to go down this fall.
The website claims producers in the shale industry have lost an estimated $32 billion since Jan. 1 because of declining prices.