Above Photo: From Publicbankinginstitute.org
North Dakota is facing important budget concerns due to the continued slide in oil prices. Early this month, the North Dakota Legislature lowered the amount of revenue the state can expect to collect from oil taxes by $600 million for the next two year budget cycle. Oil is a major contributor to the state’s wealth and the significant drop in energy tax revenue (despite record levels of oil production) would be expected to have significant effects on state spending. North Dakota, however, has a state bank. Eyeing the trend, they have built into their budget the transfer of a $140 million dividend from the Bank of North Dakota’s record profits (p24 of link). These dividends are funds the state can tap in lieu of a rainy day fund — one of the major benefits of having a state-owned public bank. They will enable the state to buffer budget woes brought about by volatile swings in commodity prices and boom and bust cycles.