This report describes and evaluates the North Dakota state/local fiscal system, especially as it relates to financing public education. It identifies and evaluates various fiscal policy options for raising additional tax revenue for support of schools and other public services in ways consistent with the basic characteristics of the North Dakota economy and with generally accepted principles of good tax policy. The first section of the report identifies and discusses the roots of the present fiscal crisis, including the development of an oil-based economy, the results of past steps to cut spending, the antitax petition campaigns, and emergency spending cuts in recent history. The second section compares North Dakota's tax base with the United States average. The following two sections describe the condition of North Dakota's state general fund and its system for financing public schools with a combination of state and local funds. A set of guidelines are then presented for evaluating proposed tax changes, and the remainder of the report analyzes the major state taxes and their revenue potential. The report concludes with a list of recommendations for strengthening the fiscal system of North Dakota in general and in the specific areas of school finance, property tax, retail sales tax, personal income tax, corporate income tax, excise taxes, and severance taxes. Fourteen statistical tables are included. (TE)