Revenue Down $24M from Daugaard’s December Guess; SD Sales Down

Three months ago, Governor Dennis Daugaard said the state revenue outlook wasn’t great. Today, his Bureau of Finance and Management tells us the revenue outlook is worse than the Governor thought—$24.3 million worse:

Bureau of Finance and Management, Revenue Forecasts, 2017.02.13, p.22.
Bureau of Finance and Management, Revenue Forecasts, 2017.02.13, p.22.

The big nick is sales tax, coming in $22.9 million lower for this fiscal year than the Governor projected in December and $54.9 million lower than the Legislature projected in its adopted budget last year. BFM projects the state will actually collect 10.56% more sales tax this fiscal year than last, but given that we raised sales tax from 4% to 4.5% to raise teacher pay last year, steady total sales should have produced 12.5% growth in sales tax revenue. From BFM’s figures, we can mathematically deduce that BFM is projecting a net decrease in taxable sales of 1.7%, from $21.52 billion in FY2016 to $21.15 billion in FY2017.

Throw in other revenue wiggles up and down, plus $28.1 million in magic one-time receipts, and the net shortfall for the FY2017 budget revenues as adopted last year compared to these new revenue projections is $22.2 million.

Governor Daugaard has already signaled that falling revenue projections will shelve his $2.5-million plan to turn Spearfish Canyon into a state park. If these revenue projections mean the Governor’s park plan is out (and Senator Jason Frerichs told the Watertown crackerbarrel Saturday that Spearfish Canyon State Park is “dead on arrival“), then Senator Al Novstrup’s plan to raise property taxes $39 million to fund nursing facilities is even deader.

At the Aberdeen crackerbarrel Saturday, Novstrup suggested the tax price tag is down to $11.8 million, but if we’re down twice that amount, Appropriators will defend existing programs from cuts before creating any new state spending lines, even if Republicans approve a tax hike to get new revenue.

Of course, none of this would be a problem if Governor Daugaard, Senator Novstrup, and the rest of the Legislature had expanded Medicaid. Participating in that program would have saved our state budget $85 million, enough to cover the sales tax shortfall, acquire Spearfish Canyon, fund Novstrup’s nursing facility pay hikes, and fund 60% more Democracy Credits than IM 22 originally proposed.

12 Responses to Revenue Down $24M from Daugaard’s December Guess; SD Sales Down

  1. Watch out for hoodwink the dell rapids boy likes to slide it around go hood wink

  2. The name of the game in government is going to be naming rights. Custer State Park By Keystone XL. Roosevelt/Billion Automotive High School. Aberdeen Central/Joop Bollen High School (or maybe Siegel/Barnett Central HS). It all depends on who ponies up. That’s the wave of the future in SD and nationally.

  3. Kathy Tyler

    I think we need to talk to Rep. Haagar, Wiik, etc. They had the money, about $40,000,000, extra last year to fund education without adding the extra half-cent. Maybe he can find it again.

  4. Darin Larson

    Kathy, I had the same thought. When so many Republican legislators said the money was there to fund teacher pay without raising the sales tax last year, we should have that same money available now to try to weather the coming Trump recession.

    Speaking of our economy, I don’t think the state will have a rosy forecast for the next fiscal year either. Mexico is readying retaliation against Trump for his policies and SD corn farmers could be taking the brunt of Mexico’s wrath. Golly, who could have predicted trade wars under the Trump administration?

  5. Don Coyote

    @Darin Larson: Rios Piter is a member of Mexico’s minority socialist PRD party. All bluster. Doubtful Argentina or Brazil has enough slack in their production to come close to supplying the amount of corn Mexico buys from the U.S.

  6. John Kennedy Claussen, Sr.

    This reality explains why the Republicans last year tried to initially pass HB 1182 without any mention of the word “education” in that bill….

  7. Has anyone heard when the state of Saudi Dakota will pay the 24 million it owes the fed that Rounds and Daugaard lifted? That was supposed to have been paid last month, what gives with that?

  8. Ha, it’s high time to pare back the overly generous tax subsidies to: 1) farms and ranches – pony-up, buttercup; 2) advertising; and 3) big trucks that do an exponential amount of damage to our roads. It’s long past the time for the free-loading to end.

  9. Surprised the Governor had any budget to work with after he had to get rid of a certain someone in charge of it for banging anything that moved in Pierre. But, hey, there is no scandals going on in Pierre.

  10. It’s because farmers aren’t buying anything it’s all in the sales tax.

  11. JOhn
    Who do you think is paying the bill now? There is no state income tax 98% of ag land pays all bills to county
    New equipment and used pays 4.5% to state.

  12. Boy, just think of all the emergency bills we can pass with a crisis such as this one.