Deficit Watch: State Revenue Projections Trailing Expenditures by 0.36%

Governor Dennis Daugaard proudly announced another budget surplus last month, this time $14.1 million. He might need it for next year.

According to projections provided by the Legislative Research Council and the Bureau of Finance and Management to the Joint Appropriations Committee at its July meeting, sales tax collections are slowing down and will stay soft for a few months. The Legislature had adopted a sales tax revenue projection of $1.007 billion, $146 million more than the last budget year’s actual $861 million. About $107 million of that increased revenue comes from the half-penny sales tax intended for K-12 teacher pay, property tax relief, and vo-tech teacher pay. LRC and BFM are scaling that projection back by $10.3 million, 1.03% less than expected.

Factor in interim estimates of other revenues—less contractor’s excise tax, telecom tax, and license, permit and fee money; more insurance company tax (though $2 million is designated for stealth vouchers for private schools), mineral severance tax, charges for goods and services, tobacco tax, investment income, and lottery—and LRC and BFM say the state is on track to run $5.7 million short in Fiscal Year 2017. That’s a measly 0.36% in the red, easily covered by FY2016’s surplus. As LRC notes, SDCL 4-8A-16 says that Pierre doesn’t have to hit any fiscal red-alert button to address a shortfall unless the July revenue estimate runs more than 2.5% behind the appropriated budget.

Still, if the state has added a half-penny to its sales tax to add $107 million in revenue, and if it goes from running $14.1 million in the black to $5.7 million in the red, someone is going to ask the appropriators and the Governor where that $19.8 million went. The state had better be ready to point to unexpected economic drag as the culprit and not corruption and other errors in state government.

15 Responses to Deficit Watch: State Revenue Projections Trailing Expenditures by 0.36%

  1. This might just be the excuse Denny needs to divert that 1/2 cent tax increase to the general fund. Which would help explain why Denny says it will be a decade before schools reach the goals outlined in the law. Assuming, of course, that the $600 million this state gives away to big business every year is off limits.

  2. Business will need even more as the numbers are coming in for the season. Rally numbers are expected to be off by 40% so the rooms you were used to paying a couple of hundred bucks for are empty. That is not good news for an economy that is as dilapidated as the legislature and their leader, that assures the continued trend downward. Look, a squirrel.

  3. Stace Nelson

    Hmmmmmm!? They enacted the largest combined tax and fee increases in SD history, increased state government and state spending, and the solution to the damage done to farmers and hard working South Dakotans? More increases?

    Because it’s working so well for Venezuala…

  4. Sales tax revenue will be down more than it is projected now. Take a look at farm machinery dealers lots and you will see there is no big machines selling due to low commodity prices and a large area of poor crops because of drought.

  5. Troy Jones

    It is hard to fight uphill against the economy of a President who will be the first one in history to never have a year over 3% growth.

  6. Cattle prices are not to keen either

    When there seems to be issues our deficit, then smart folks need to convene to figure what could generate serious money to not only stimulate, but to stop the outflow of state money. Fortunately, I have a proven solution. Call the bozo’s er… legislators in and have them pass the Medicaid Expansion. The sooner the better.

  7. Harder to fight uphill or downhill against the economy of a republican controlled congress that has its head up its collective arse. If not for Obama, it would be even less than 3%. Republicans call this a success story. What a bunch of financial wizards.

  8. Troy must have heard that on the Rush Limbaugh show or Sean Hannity.
    Raising taxes on the rich didn’t hurt MN one bit. The economy hasn’t gone downhill and more businesses want to move here instead of an anti-LGBT one party state like SD.
    Imagine if Congress passed a tax hike on the super wealthy and used that to start paying off the 20 trillion dollar debt. (Oh yes, that’s just too responsible of a thing to do).

  9. President Obama met and exceeded Mitt Romney’s 2012 campaign promises for economic growth. You would think that congratulations would be in order from Republicans – just as they would have been congratulating President Romney.

  10. Darin Larson

    Troy Jones says: “It is hard to fight uphill against the economy of a President who will be the first one in history to never have a year over 3% growth.”

    Troy, Obama inherited a flaming turd from George W. Bush in the form of the Great Recession. This was the worst economy since the 1930’s. We were on the cusp of a financial meltdown if we were not actually in a meltdown. Did you forget all of this? Is this ringing any bells for you?

    You talk about fighting an uphill battle. Obama was in an uphill battle like a climb up Mt. Everist in a blizzard. Obama’s successor is out for a scenic walk up Harney Peak in the middle of summer in comparison to where Obama started.

    Throw in the NoBama Republican Congress which almost decided to let the economy go off the cliff Thelma and Louise style before they averted crises, and Obama deserves a tremendous amount of credit. Then the party of No continued to oppose almost every major policy initiative by Obama, so I’m wondering how you can blame Obama for slow growth?

    If it is just economic growth that is the measure of a presidency, please review the Bill Clinton years compared to the W years.

  11. owen reitzel

    @Stace. So how do you want to fix roads and bridges and also give the teachers the raises they deserve?


    lets look at Sweden:

  12. I wonder if when they try and repeal this tax they will put an emergency clause on the law bill so it takes effect right away when the Governor signs it at a big ceremony in the halls of the Capitol building. Plus that would really jam it down people’s maw.

  13. W R Old Guy

    Kansas is 14 million below revenue projections for July. They missed revenue projections almost every month last fiscal year as the slashing of corporate taxes and individual income taxes did not lead to the economic growth that Gov. Brownback the Teapubs promised. Kansas has had to delay pension payments, road construction, school funding and pull money from the various state agencies to avoid finishing the fiscal year that ended in June in deficit.

    It looks like more of the same this year but Kansas holds their primary election today. There are a number of Teapub republicans worried because of more moderate challangers.

  14. Troy, if I recall Piketty correctly, Obama won’t be the last. We got spoiled with a relative economic boom that defied historical patterns. The global economy is about to settle into lower rates of economic growth. Perhaps we can’t grow faster than 3% every year, no matter how much socialism Dennis Daugaard pours on.

  15. Troy: “It is hard to fight uphill against the economy of a President who will be the first one in history to never have a year over 3% growth.”

    So this is the narrative the Republicans are going with now? Never let it be said that your team doesn’t massage the message to reflect the current metric.

    Let’s get real. Bush had a whopping two years of GDP growth above 3% (2004 and 2005). After that things started dropping resulting in a negative by the time he left office. I’m hoping we can all agree that in economic terms Bush was a massive failure – let’s not blame others for his leadership.

    Obama took over and in that first year GDP was -2.9%. Are you seriously going to blame Obama for the GDP in the year he took office? From that point until present day, there has not been a single year of negative growth and the last three full years have seen year over year increases.

    Our economy is on the right track. Growth is slow, but economists have indicated this may be the new normal not only in the US but throughout the world.

    If we are going to invent some threshold to complain about, why not ask why Bush was never able to obtain the five years at 4% or greater than Clinton was able to or the 6% we saw under Kennedy? Or maybe we should go back even further and ask why nobody as been able to mirror the GDP growth under Roosevelt. Just ignore little details like wars or when spending is tied to a growth in our military.

    Positive GDP, positive job growth… that should be your narrative.