In his budget suggestions Tuesday, Governor Dennis Daugaard declined to include any revenue boost from the new remote-seller sales tax made possible by South Dakota’s victory in the Wayfair decision in his fiscal projections. Governor Daugaard offered guesstimates of $13.1 million to $23 million of new revenue that might come from out-of-state online vendors who weren’t contributing to our general welfare pre-Wayfair, but citing uncertainty about sales and compliance, Governor Daugaard said the “prudent course is to budget for $0.”
However, said uncertainty did not stop Governor Daugaard from including eight new FTEs in his budget proposal for the Department of Revenue.
According to the summary of proposed FY2020 budget adjustments, Governor Daugaard anticipates the Department of Revenue will need five more auditors to focus on sales and use tax audits of out-of-state businesses, two more agents to work primarily on remote sellers, and one more agent to “work with collection efforts of delinquent returns and taxes associated with licenses as a result [of] the SD vs. Wayfair decision” [page 14]. Total cost of these eight new hires: $483,467.
Our Wayfair windfall is fizzling fast, from the $58 million Governor Daugaard suggested last summer to zero new cash and a half-million in expenses for bigger government.
And remember, even if some money does turn up, the Partridge Amendment (if the Legislature wrote it right, or amends it to work) will give that money back, and we still won’t see a revenue increase, even as we hire more agents to enforce it.