State Budget Practice Report Cards and Budget Resource Guide
North Dakota was one of only three states to get an average of D-minus, the lowest grade possible, in budget forecasting for fiscal 2016 through 2018 (Alabama and Missouri were the others). The state does not provide multiyear revenue or expenditure forecasts, lacks an explanation of its rationale for revenue growth projections, and fails to use consensus revenue estimates. Revenue estimates are left exclusively to the governor, although the legislature can develop and use its own forecasts when considering the budget.
Despite an oil drilling boom that has topped up North Dakota’s coffers, the state received a D average in legacy costs. Its public employee pension had only 63.8 percent of the assets needed to meet promised obligations as of 2017, and the state fell short of making actuarially determined contributions for the program in all three years studied.
North Dakota earned a C average in transparency. Like most other states, it failed to disclose deferred infrastructure replacement costs. It also has limited disclosure of tax expenditures. A broader and more detailed view of tax exemptions and credits might let policymakers see the degree to which budgetary revenues are being forgone to attract or retain businesses.
In contrast, the state averaged an A in reserve funds. North Dakota ties its goals for reserves to revenue volatility, an important factor given its dependence on oil production.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2016 through 2018. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.