#1MOODY'S ANALYTICS North Dakota Revenue Outlook Emily Mandel, Economist Better Faster Decisions March 2023#2Labor Market Is a Strength (and a Liability) United States, # mil 20 18 -Job Openings Unemployed (U3) 16 14 12 10 8 6 4 2 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Sources: BLS, Moody's Analytics Moody's Analytics March 2023#3Excess Saving Is Drawn Down, but There Is Plenty Left Excess household saving, $ tril 2.8 2.4 2.0 Excess saving is the extra saving households did during the pandemic due largely to sheltering in place and significant government support. 1.6 1.2 0.8 0.4 0.0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-22 Sources: BEA, Moody's Analytics Moody's Analytics March 2023 3#410 Inflation's Rocky Path Back to Target Consumer price inflation, % change yr ago Russia Invades Ukraine Oil Prices Fall 987654 3 2 1 0 19 Sources: BLS, Moody's Analytics Moody's Analytics 20 Pandemic Recession Vaccine Rollout American Omicron Wave Rescue Plan Supply Chains Ease Federal Reserve Inflation Target 21 21 22 March 2023 23#5120 100 80 60 40 20 Energy Industry to Remain an Advantage WTI Price, $/barrel 0 13 14 15 16 17 18 19 20 21 22 23F 24F 25F Sources: EIA, Moody's Analytics Moody's Analytics#6-1 98765432- 1 0 M Stable Outlook for Agriculture Farm proprietor's income as a % of total personal income, 4-qtr MA милли 90 94 98 02 06 10 14 18 22 Sources: BEA, Moody's Analytics Moody's Analytics#79 8 7 654321 0 18 Tight Labor Market to Restrain Job Growth 19 North Dakota 20 21 -Unemployment rate, % (L) -Average hourly earnings, $ (R) Sources: BLS, Moody's Analytics Moody's Analytics 22 22 29 26 25 3222 22 2 33 31 30 28 27#81,300 1,200 1,100 1,000 900 800 Sales and Use Taxes North Dakota fiscal year, $ mil November 2022 forecast -March 2023 forecast 700 14 15 16 17 18 19 20 Sources: State of North Dakota, Moody's Analytics Moody's Analytics 21 21 22 23F 24F 25F March 2023#9170 160 150 140 Motor Vehicle Excise Tax North Dakota fiscal year, $ mil -November 2022 forecast ―March 2023 forecast 130 120 110 100 14 15 16 17 18 19 20 21 21 Sources: State of North Dakota, Moody's Analytics Moody's Analytics 22 23F 24F 25F March 2023#10650 600 550 500 450 Individual Income Tax North Dakota fiscal year, $ mil -November 2022 forecast ―March 2023 forecast 400 350 300 14 15 16 17 18 19 20 Sources: State of North Dakota, Moody's Analytics Moody's Analytics 21 21 22 23F 24F 25F March 2023#11300 250 200 150 100 Corporate Income Tax North Dakota fiscal year, $ mil -November 2022 forecast ―March 2023 forecast 50 14 15 16 17 18 19 20 21 22 23F 24F 25F Sources: State of North Dakota, Moody's Analytics Moody's Analytics March 2023#12MOODY'S ANALYTICS Better Faster Decisions Contact Us: Predictive Analytics - Economics Offices West Chester, Economics-HQ +1.610.235.5299 121 North Walnut Street Suite 500 West Chester PA 19380 USA New York, Corporate-HQ +1.212.553.1653 7 World Trade Center, 14th Floor 250 Greenwich Street New York, NY 10007 USA London +44.20.7772.5454 One Canada Square Canary Wharf London E14 5FA United Kingdom Prague +420.22.422.2929 AFI Butterfly B1 3rd Floor, Pernerova 691/42 186 00 Prague 8 - Karlin Czech Republic Singapore +65.6511.4400 6 Shenton Way #14-08 OUE Downtown 2 Singapore 068809 Sydney +61.2.9270.8111 Level 10, 1 O'Connell Street Sydney, NSW, 2000 Australia Tokyo +81.3.5408.4100 Atago Green Hills Mori Tower 20th Floor 2-5-1 Atago, Minato-ku, Tokyo 105-6220 Japan#13© 2023 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). 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Moody's Analytics March 2023 13#14NORTH Dakota Management Be Legendary. and Budget 2023-25 REVENUE FORECAST TUESDAY, MARCH 14, 2023 JOE MORRISSETTE, OFFICE OF MANAGEMENT AND BUDGET DIRECTOR#15STATEMENT OF GENERAL FUND REVENUES AND FORECASTS Compared to the Legislative Forecast 2021-23 Biennium February 2023 Fiscal Month Biennium To Date Revised 2021 Revised 2021 Revenues and Transfers Leg. Forecast Actual Variance Percent Leg. Forecast Actual Variance Percent Sales Tax Motor Vehicle Excise Tax Individual Income Tax Corporate Income Tax 63,734,083 86,549,586 22,815,503 35.8% 9,749,354 13,062,154 15,871,568 2,232,000 Insurance Premium Tax 13,390,589 30,259,722 5,845,728 12,106,247 3,312,800 14,388,154 90.7% 3,613,728 161.9% (1,284,342) -9.6% 34.0% 1,482,543,628 215,436,099 1,759,450,565 276,906,937 18.7% 247,888,622 32,452,523 15.1% 454,572,302 720,003,353 265,431,051 58.4% 152,288,999 353,526,364 201,237,365 132.1% 82,106,496 98,339,695 16,233,199 19.8% Oil & Gas Production Tax 0.0% 266,112,633 266,112,633 0.0% Oil Extraction Tax Gaming Tax Lottery 6,493 6,493 0.0% 100.0% 133,887,368 133,887,368 0.0% 0.0% 7,300,000 Cigarette & Tobacco Tax 1,587,992 1,662,271 Wholesale Liquor Tax Mineral Leasing Fees 582,777 981,745 689,582 3,610,766 Departmental Collections Interest Income 1,377,626 666,102 1,759,907 1,257,053 74,279 106,805 2,629,021 267.8% 382,281 27.7% 590,951 4.7% 37,125,954 18.3% 14,182,479 537,369 5,600,000 38,624,233 16,788,547 29,261,274 73,927,651 58,700,464 57,301,469 88.7% 30,283,607 State Mill & Elevator-Transfer 0.0% 7,750,000 10,555,519 6,971,950 537,369 (1,700,000) -23.3% 1,498,279 2,606,068 44,666,377 152.6% (1,398,995) -2.4% (19,728,088) -65.1% 100.0% 4.0% 18.4% (778,050) -10.0% Bank of North Dakota - Transfer SIIF - Transfer Gas Tax Administration 0.0% 0.0% 0.0% 410,000,000 410,000,000 0.0% 0.0% 1,639,526 Miscellaneous Total Revenues and Transfers 110,173,836 185,393 156,994,902 185,393 46,821,066 0.0% 42.5% 3,383,190,829 1,639,526 13,887,125 4,215,041,989 0.0% 13,887,125 0.0% 831,851,160 24.6% 1#162021-23 and 2023-25 BIENNIUM GENERAL FUND REVENUES Compared to November Executive Forecast OFFICE OF MANAGEMENT AND BUDGET 2021-23 November 2022 Executive Forecast March 2023 Revised Forecast Change November 2022 Executive Forecast 2023-25 (Based on Current Law) March 2023 Revised Forecast Change Tax Type Sales and Use Tax Motor Vehicle Excise Tax Individual Income Tax $2,070,186,286 300,759,073 $2,072,433,477 300,605,472 $2,247,191 (153,601) $2,240,739,965 334,389,719 $2,253,038,333 $12,298,368 331,017,708 (3,372,011) 908,456,440 893,971,828 (14,484,612) 1,151,746,477 1,106,797,138 (44,949,339) Corporate Income Tax 483,718,299 462,704,916 (21,013,383) 495,657,518 468,260,913 (27,396,605) Insurance Premium Tax 126,799,744 130,725,520 3,925,776 132,499,378 139,052,009 6,552,631 Oil and Gas Tax 400,000,000 400,000,000 400,000,000 400,000,000 Gaming 36,801,316 36,801,316 37,300,000 37,300,000 Cigarette and Tobacco Tax 46,241,044 45,681,635 (559,409) 44,846,545 42,575,517 Wholesale Liquor Tax 19,812,374 19,891,278 78,904 20,268,633 19,919,584 (2,271,028) (349,049) Mineral Leasing Fees 84,432,749 85,621,149 1,188,400 60,000,000 60,000,000 Departmental Collections. Interest Gas Tax Administration Miscellaneous 76,750,124 76,676,665 (73,459) 75,447,690 75,447,690 13,992,750 15,292,750 1,300,000 1,873,744 1,873,744 30,000,000 1,844,424 30,000,000 1,844,424 13,143,419 13,884,266 740,847 Total Revenues without Major Transfers $4,582,967,362 $4,556,164,016 ($26,803,346) $5,024,740,349 $4,965,253,316 ($59,487,033) Note: For comparison purposes, the November 2022 executive forecast amounts for individual motor vehicle tax, income tax, corporate income tax, and oil and gas tax allocations for the 2023-25 biennium have been adjusted to reflect current law. 2#172021-23 and 2023-25 BIENNIUM GENERAL FUND REVENUES Compared to January 2023 Legislative Estimate OFFICE OF MANAGEMENT AND BUDGET 2021-23 January 2023 Legislative Estimate March 2023 Revised Forecast Change January 2023 Legislative Estimate 2023-25 (Based on Current Law) March 2023 Revised Forecast Change Tax Type Sales and Use Tax Motor Vehicle Excise Tax Individual Income Tax $2,074,400,000 297,300,000 911,900,000 Corporate Income Tax 436,600,000 462,704,916 $2,072,433,477 ($1,966,523) 300,605,472 3,305,472 893,971,828 (17,928,172) 26,104,916 $2,203,500,000 $2,253,038,333 $49,538,333 338,500,000 1,189,500,000 331,017,708 (7,482,292) 1,106,797,138 (82,702,862) 392,900,000 468,260,913 75,360,913 Insurance Premium Tax 126,799,744 130,725,520 3,925,776 132,499,378 139,052,009 6,552,631 Oil and Gas Tax 400,000,000 400,000,000 400,000,000 400,000,000 Gaming 36,801,316 36,801,316 37,300,000 37,300,000 Cigarette and Tobacco Tax 46,241,044 45,681,635 (559,409) 44,846,545 42,575,517 (2,271,028) Wholesale Liquor Tax 19,812,374 19,891,278 78,904 20,268,633 19,919,584 (349,049) Mineral Leasing Fees 84,432,749 85,621,149 1,188,400 60,000,000 60,000,000 Departmental Collections Interest Gas Tax Administration 76,750,124 76,676,665 (73,459) 75,447,690 75,447,690 13,992,750 15,292,750 1,300,000 30,000,000 30,000,000 1,873,744 Miscellaneous Total Revenues without Major Transfers 13,143,419 1,873,744 13,884,266 1,844,424 1,844,424 740,847 $4,540,047,264 $4,556,164,016 $16,116,752 $4,926,606,670 $4,965,253,316 $38,646,646 Note: For comparison purposes, the March 2023 Reviesd Forecast amounts are based on current law and do not include statutory changes proposed in the executive budget. 3#18Average Production - Barrels per Day 1,150,000 AVERAGE DAILY PRODUCTION NORTH DAKOTA PRICE PER BARREL 1,125,000 1,100,000 1,075,000 1,050,000 1,025,000 1,000,000 975,000 950,000 115 100 ND Price: $75.00 ND Price: $70.00 ND Price: $62.00 40 40 25 25 55 70 70 85 85 Average ND Price per Barrel 10 10 -5 FY 22 QRT 1 FY 22 QRT 2 FY 220 FY 22 FY 23 FY 23 QRT 3 QRT 4 QRT 1 QRT 2 FY 23 QRT 3 FY 23 QRT 4 FY 24 QRT 1 FY 24 FY 24 FY 24 FY 25 FY 25 FY 25 FY 25 QRT 2 QRT 3 QRT 4 QRT 1 QRT 2 QRT 3 QRT 4 Production ND price 4#192021-23 and 2023-25 BIENNIUM OIL REVENUES Compared to November Executive Forecast OFFICE OF MANAGEMENT AND BUDGET 2021-23 November 2022 Tribal Allocations Allocation Counties and Cities Legacy Fund Foundation Aid Stabilization Fund Common Schools Trust Fund Revised Forecast $847,909,596 708,716,390 1,592,957,865 March 2023 Revised Forecast Change November 2022 Executive Forecast 2023-25 (Based on Current Law) March 2023 Revised Forecast Change $840,808,922 703,424,956 ($7,100,674) (5,291,434) $686,537,775 682,952,584 $671,281,380 ($15,256,395) 667,775,860 (15,176,724) 1,597,296,037 4,338,172 1,372,406,975 1,341,909,042 (30,497,933) 254,552,125 255,026,052 473,927 224,390,545 219,404,088 (4,986,457) 254,552,125 255,026,052 473,927 224,390,545 219,404,088 (4,986,457) Resources Trust Fund 517,631,855 518,603,405 971,550 455,800,617 445,578,381 (10,222,236) Renewable Energy Development Fund 3,000,000 3,000,000 3,000,000 3,000,000 Energy Conservation Grant Fund 1,200,000 1,200,000 1,200,000 1,200,000 Oil and Gas Research Fund 14,500,000 14,500,000 14,500,000 14,500,000 State Energy Research Fund 5,000,000 5,000,000 5,000,000 5,000,000 North Dakota Outdoor Heritage Fund 15,000,000 15,000,000 15,000,000 15,000,000 Abandoned Well and Site Reclamation Fund 15,000,000 15,000,000 15,000,000 14,970,573 (29,427) General Fund 400,000,000 400,000,000 400,000,000 400,000,000 Tax Relief Fund 200,000,000 200,000,000 200,000,000 200,000,000 Budget Stabilization Fund 9,646,249 9,646,249 State Disaster Relief Fund 15,511,903 15,511,903 3,500,000 Municipal Infrastructure Fund Airport Infrastructure Fund 115,000,000 115,000,000 115,000,000 3,500,000 115,000,000 County/Township Infrastructure Fund 115,000,000 115,000,000 115,000,000 115,000,000 20,000,000 20,000,000 20,000,000 20,000,000 Lignite Research Fund 10,000,000 10,000,000 10,000,000 Strategic Investment and Improvement Fund 898,554,781 913,858,454 15,303,673 693,963,459 10,000,000 658,282,588 (35,680,871) Total Oil and Gas Taxes November 2022 Forecast $6,013,732,889 Oil Price Range for the Remainder of the 2021-23 Biennium: Oil Price Range for 2023-25: Oil Production Assumption: March 2023 Forecast Oil Price Range for the Remainder of the 2021-23 Biennium: Oil Price Range for 2023-25: Oil Production Assumption: $6,022,902,030 $9,169,141 $5,257,642,500 $5,140,806,000 ($116,836,500) $80.00 decreasing to $75.00 per barrel (ND Price) $70.00 per barrel for FY24; $65.00 per barrel for FY25 1.10 million barrels per day for the 2023-25 biennium $75.00 per barrel (ND Price) $70.00 per barrel for FY24; $62.00 per barrel for FY25 1.10 million barrels per day for the 2023-25 biennium Note: For comparison purposes, the November executive forecast allocations for the 2023-25 biennium has been adjusted to reflect current law. LO 5#202021-23 and 2023-25 BIENNIUM OIL REVENUES Compared to January 2023 Legislative Estimate OFFICE OF MANAGEMENT AND BUDGET January 2023 2021-23 March 2023 2023-25 (Based on Current Law) Legislative Estimate Revised Forecast Change January 2023 Legislative Estimate March 2023 Revised Forecast Change Tribal Allocations Allocation Counties and Cities Legacy Fund Foundation Aid Stabilization Fund Common Schools Trust Fund $801,720,000 795,680,000 $840,808,922 703,424,956 1,591,930,000 1,597,296,037 $39,088,922 (92,255,044) 5,366,037 $695,590,000 685,530,000 $671,281,380 ($24,308,620) $667,775,860 ($17,754,140) 1,373,750,000 $1,341,909,042 ($31,840,958) 254,670,000 255,026,052 356,052 224,430,000 $219,404,088 ($5,025,912) 254,670,000 255,026,052 356.052 224,430,000 $219,404,088 ($5,025,912) Resources Trust Fund 517,880,000 518,603,405 723,405 455,880,000 $445,578,381 ($10,301,619) Renewable Energy Development Fund 3,000,000 3,000,000 Energy Conservation Grant Fund 1,200,000 1,200,000 3,000,000 1,200,000 $3,000,000 $0 $1,200,000 $0 Oil and Gas Research Fund 14,500,000 14,500,000 10,000,000 $14,500,000 $4,500,000 State Energy Research Fund 5,000,000 5,000,000 5,000,000 North Dakota Outdoor Heritage Fund 18,710,000 15,000,000 (3,710,000) 31,730,000 Abandoned Well and Site Reclamation Fund 15,640,000 15,000,000 (640,000)| 14,820,000 General Fund 400,000,000 400,000,000 Tax Relief Fund 200,000,000 200,000,000 400,000,000 200,000,000 $5,000,000 $15,000,000 $14,970,573 $400,000,000 $200,000,000 $0 ($16,730,000) $150,573 $0 $0 Budget Stabilization Fund 9,650,000 State Disaster Relief Fund 15,510,000 9,646,249 15,511,903 (3,751) $0 Municipal Infrastructure Fund Airport Infrastructure Fund Lignite Research Fund 115,000,000 115,000,000 115,000,000 County/Township Infrastructure Fund 115,000,000 115,000,000 115,000,000 3,500,000 $115,000,000 $115,000,000 $3,500,000 $0 $0 20,000,000 20,000,000 20,000,000 10,000,000 Strategic Investment and Improvement Fund 932,180,000 10,000,000 913,858,454 10,000,000 (18,321,546) 672,280,000 20,000,000 $10,000,000 $658,282,588 $0 $0 ($13,997,412) $5,257,640,000 $5,140,806,000 ($116,834,000) Total Oil and Gas Taxes January 2023 Legislative Estimate $6,091,940,000 Oil Price Range for the Remainder of the 2021-23 Biennium: Oil Price Range for 2023-25: Average Oil Production Assumption: March 2023 Forecast Oil Price Range for the Remainder of the 2021-23 Biennium: Oil Price Range for 2023-25: Oil Production Assumption: $6,022,902,030 ($69,039,873) $80.00 decreasing to 75.00 per barrel (ND Price) $70.00 per barrel for FY24; $65.00 per barrel for FY25 1.10 million barrels per day for the 2023-25 biennium $75.00 per barrel (ND Price) $70.00 per barrel for FY24; $62.00 per barrel for FY25 1.10 million barrels per day for the 2023-25 biennium 6