Slumping oil prices aren't only hurting workers in the U.S. energy sector -- they're also taking a bite out of states around the country that depend on "black gold" for economic growth.
North Dakota Gov. Jack Dalrymple on Monday ordered sharp cuts to government spending to plug a more than $1 billion gap in the state's budget stemming from depressed oil prices, which have forced many local energy companies to mothball rigs. North Dakota is second-largest oil-producing state, after Texas.
"After 15 years of receiving almost entirely good news about the growth in revenues for North Dakota, it seems strange to hear that things have gone in the other direction," the Republican told state agency officials in Bismarck, the Associated Press reported.
To balance the budget, Dalrymple is also tapping nearly $500 million from the state's emergency fund, which had swelled in recent years from the oil boom.
It's a familiar theme in oil-patch states. Alaska Gov. Bill Walker in December shocked residents by proposing a personal income tax for the first time in 35 years to help close a $3.5 billion budget deficit stemming from the sharp fall in crude prices. In Oklahoma, political leaders recently declared a "revenue failure," requiring across-the-board spending cuts. The Texas state comptroller said in January that tax revenue from natural gas and oil production and regulation has tumbled 48 percent in the first four months of fiscal 2016 alone.
The other states that have taken a major hit from falling oil prices are Louisiana, New Mexico, West Virginia and Wyoming, according to the Nelson A. Rockefeller Institute of Government.
The sharp decline in oil prices, which have fallen from more than $144 a barrel in 2008 to around $34, has triggered industry layoffs and depleted state coffers. Total employment in six of the nation's top oil-producing states fell last year. Of the nearly 300,000 job cuts announced in the first six months of 2015, nearly a quarter were due to sliding oil prices, according to outplacement firm Challenger, Gray & Christmas.
While total nonfarm payrolls grew 1.9 percent in the 12-month period ended in November of 2015, job growth in eight oil-producing states Standard & Poor's Ratings Services examined rose only 0.9 percent.
For these states, the slowdown in drilling in recent months has resulted in lower "severance tax" receipts -- the levy energy companies pay for extracting oil and other nonrenewable resources -- as well as reduced income and sales taxes. By contrast, 42 U.S. states saw an increase in total tax revenue last year, the Rockefeller Institute noted.
"These steep commodity price declines are leading to cuts in production and employment, weakening mineral-state economies and likely leading to slower growth in state revenue from other tax sources," the think tank concluded.
Falling oil prices aren't the only reason oil-producing states are feeling the pinch. Standard & Poor's also blames local officials for being too bullish in their forecast for crude prices.