NDSU economists study North Dakota fiscal health

FARGO, N.D., Dec. 7 — The NDSU Center for the Study of Public Choice and Private Enterprise conducted an economic study of North Dakota titled “Prairie Prosperity: An Economic Guide for the State of North Dakota.”

The study provides an overview of North Dakota’s recent economic history (“The State of the State”) and suggests policy reforms to address the fiscal challenges associated with a commodities-driven economy (“Pathway to Prosperity”).  

“This study gives research-based policy recommendations that can help North Dakota prosper now and into the future,” said Dr. Jeremy Jackson, director of the NDSU Center for the Study of Public Choice and Private Enterprise and author of the report. “As the state addresses North Dakota’s unique challenges and opportunities in the next legislative session, it is crucial that we have economic research to evaluate and inform policy proposals.”

“Prairie Prosperity” tells the story of a North Dakota economy that has done well for its citizens, but as the recent budget crisis demonstrated, the state’s fiscal health will remain vulnerable and volatile without reform and economic diversification.


  • The collapse in commodity prices combined with public expenditure growth led to a historic budget crisis.
  • North Dakota needs greater economic diversification to reduce the revenue volatility brought on by boom-and-bust cycles in agricultural and natural resource industries.
  • Policies that increase economic freedom and support entrepreneurship are known to positively influence economic growth and prosperity.


Revenue Reform

  • Income taxes: Maintain a commitment to low income taxes and resist the temptation to raise them to make up for revenue shortfalls.
  • Property taxes: Ensure the property tax burden is visible, easily calculated, and understandable by the average citizen. Avoid state-funded tax relief programs that increase local spending and lead voters to perceive the costs of government services to be lower than they are.

Spending Reform

  • K-12 Education: Evaluate the way dollars are spent by their effect on student outcomes. Implement school choice proposals, such as a school voucher system and a constitutional provision for charter schools. Shift property taxes back to local governments.
  • Infrastructure: Balance the needs of the oil and agriculture industries with the danger of overspending in areas with limited growth through the use of strategic, targeted funding.
  • Pension System: End the historical underfunding of the public pension system. Meet 100 percent of the required annual contributions to raise the funded ratio and ensure long-term viability.

State Funds Reform

  • Budget Stabilization Fund: Pass a constitutional provision to set the fund’s cap at 15 percent of appropriations. Establish a tax and expenditure limit that caps government revenues and spending, using a formula such as population growth rate plus inflation.
  • Legacy Fund: Clearly state the purpose of this fund and use it to target specific goals. This sovereign wealth fund has the potential to expand North Dakota’s budgetary flexibility; it should not be used as a second stabilization fund.

The report was published by the Mercatus Center. Read the full report.   


Kali Christianson, Outreach Specialist
701.231.7790  /  kali.l.christianson@ndsu.edu 



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