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Terwilliger Continues to Beat Drum of Budget Pessimism

Never mind my suggestion of budget optimism at the bottom of my STAR Academy post yesterday; according to information presented at yesterday’s meeting of Governor Kristi Noem’s Council of Economic Advisors, we’re fiscally hosed.

Bob Mercer reports that Revenue Secretary Jim Terwilliger repeated his warning that the FY2021 budget faces a hole of $20 million to $25 million due to the federally mandated end of our taxation of Internet services. We’re also seeing continued flaccidity in sales tax, with no Wayfair boom in sight:

He said sales tax collections finished up 3.7 percent for the 2019 fiscal year that ended June 30. That was roughly $10 million below what the Legislature expected.

Three months into the new year, sales tax collections are up 3.6 percent. To cover the difference, he said collections would need to finish up 4.9 percent.

…He said the Wayfair decision hadn’t produced “robust” growth for the treasury [Bob Mercer, “Official Suggests Money Could Be Tighter Than Usual for 2021 State Budget in South Dakota,” KELO-TV, 2019.10.23].

Secretary Terwilliger presented slides that include a summary of sales tax collected from remote sellers pre- and post-Wayfair. Apparently, we’re only up $15.6 million, which could be from the Supreme Court’s permission to dragoon more out-of-state vendors as extra-territorial tax collectors or could just be from South Dakotans following the general trend of buying more stuff online:

Bureau of Finance and Management, slides for Governor's Council of Economic Advisors, 2019.10.23, p. 7.
Bureau of Finance and Management, slides for Governor’s Council of Economic Advisors, 2019.10.23, p. 7.

Another slide forecasts state GDP growth under 2% and job growth under 1%:

Bureau of Finance and Management, slides for Governor's Council of Economic Advisors, 2019.10.23, p. 1.
Bureau of Finance and Management, slides for Governor’s Council of Economic Advisors, 2019.10.23, p. 1.

But luckily for us, economic drag and uncertainty apparently makes people gamble more:

Bureau of Finance and Management, slides for Governor's Council of Economic Advisors, 2019.10.23, p. 8.
Bureau of Finance and Management, slides for Governor’s Council of Economic Advisors, 2019.10.23, p. 8.

It’s a good thing our leaders don’t plan to spend any money solving problems; South Dakota’s stagnant economy (hey, Kristi, I thought your were going to fix that!) isn’t going to produce the revenue we need to meet public needs. If things get gloomier, Kristi may have to cut back on important priorities, like her hubby’s travel and video budget and raises for her kids.

5 Comments

  1. Moses6 2019-10-24

    Another reason why people leave the state.No services, and very low pay.

  2. Buckobear 2019-10-24

    …. but, but, but we have no income tax!

  3. Debbo 2019-10-24

    ….. and we’re business friendly! (Treat labor like crap.)

  4. jake 2019-10-25

    and we’re against anything new that comes along!

  5. leslie 2019-11-15

    And the last two governors used the state as a $600M LAUNDROMAT (EB5) [watch Meryl Steep’s hilarious “Laundromat” for Mike and Denny’s cast of characters!].

    Note: RC star lawyer Republican David Lust is setting up SD financial laws modeling the Caymans, Virgin Islands, TX, WYO, Delaware, with other Republican lawmakers.

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