Here’s some quick coronavirus budget math:
- Goldman Sachs said Sunday that U.S. GDP could dip 5% in the second quarter due to the economic disruption caused by the current public health crisis.
- Another economist said Monday the Q2 drop may be 10%.
- The GDP drop at the depths of the last recession (Q4 2008) was 8.4%.
- During that last drop, in South Dakota’s Fiscal Year 2009, our sales tax revenues still ticked up 2.35%.
- As with every other trend, the Bush II recession didn’t really grip South Dakota until Fiscal Year 2020, when sales tax revenues dropped 1.15%. That’s less than a seventh of the GDP drop.
Bureau of Finance and Management, sales and use tax historical and projection chart, Revenue Forecasts, March 2011, p. 3. 
Bureau of Finance and Management, sales and use tax estimates, Revenue Forecasts, March 2011, p. 4. - Last month the Legislature assumed GDP would grow 1.89% in 2020.
- Under that assumption, the Legislature projected $1.745 billion in general fund revenues, $1.082 billion of which would come from sales and use tax. (2020 HB 1294 knocked that general fund revenue down to $1.735 billion.)
- Suppose the Trump-virus recession has no time delay in South Dakota (the economic impact of pandemic and poor leadership is more immediate and nationwide). Suppose we still see South Dakota’s sales tax revenues buffered by that same FY2010 factor of one seventh.
- By those assumptions, state sales tax revenue would drop only $10 million under a 5% GDP drop and $18 million under a 10% GDP drop.
- But go worst case: suppose this recession is different and hits our general fund revenues (not just sales tax, but everything: insurance tax, bank tax, booze tax, smokes tax…) in equal proportion to the GDP drop.
- Under that worst case (well, wait, I can imagine even bigger disasters, so let’s just say worse case), total state revenue could drop $117 million with a 5% GDP drop and $202 million with a 10% GDP drop.
- As of December, South Dakota had $145 million in its budget reserve and $44 million in its general fund replacement fund.
Get ready for the rainy day.
The trump recession will be a long and painful one. The tax cuts that were passed out when not needed, will come back to bite us big time. The market has still not corrected because it has not fallen to what it’s worth, about 12,000 to, at the most a goosed 14,500, but we’re getting there.
The sign of rain is most definitely in the forecast, perhaps, a deluge.
Sturgis Rally??? Maybe not. That will really put a dent in the old budget. Better make plans South Dakota.
That’s a good point about Sturgis, Jerry. The previous recession didn’t wipe out big-ticket, big-crowd events and thus didn’t have the same impact on our tax revenues as might the Trump-virus recession, if it persists. All the stimulus checks in the Treasury won’t make 500,000 tourists come to South Dakota to spend money if travel and big gatherings still jeopardize public health. This recession (and how soon until we turn to the next, deeper word for an economic downturn) will run by very different rules from the previous time of troubles.
Our federal stimulus checks will be funded by deficit spending. I wonder how far we’ll need to tap our state reserves before we consider an emergency amendment to allow deficit spending at the state level?
Cory, it’s a BRIBE, it worked so well on the trumpian farmers that there gonna do it for all, just in time for the election. Here’s a couple of bucks boys, buy some beer or some heroin, whatever. Just remember, republicans just killed sick leave.
Here is the fat cat defending other fat cats. “When a reporter asked whether the wealthy should be getting tested for COVID-19 even as thousands of people are being turned away, Trump had just the perfect response. “No, I wouldn’t say so, but perhaps that’s been the story of life. That does happen on occasion.””
The social fear and economic free fall haven’t stopped because we’ve no confidence the president & congress put a floor under the biological threat and the economic turbulence.
Here’s the summary & link to the Imperial College 20 page study showing the likely US deaths under 4 scenarios. High side: 2-4 million; likely 1 million or a few more. https://www.motherjones.com/kevin-drum/2020/03/heres-the-punch-in-the-gut-version-of-the-imperial-college-coronavirus-study/
Here’s investor Ackerman’s nightmare that we are not doing enough, and yet optimism that the US will belatedly, eventually come around to doing the right thing. 12:53 – https://www.cnbc.com/video/2020/03/18/bill-ackmans-plea-to-trump-to-save-us-from-the-coronaviruss-economic-destruction.html
Bill Ackman is a short seller. As with all short sellers, sometimes they get their behinds handed to them. Bill is just trying to cover up another short sell that went to far. Valeant convinced me that he does not have the Midas touch.
Can we still blame Bush?
We cannot even perform a test in South Dakota, what a complete republican failure. Blame trump and each and every republican that supports his lying miserable crooked arse.
“Gov. Noem said Wednesday in Rapid City that the state doesn’t have enough enzymes and reagents to process the tests at the state health lab.
“We’re not running any of those tests today. We are working on several different suppliers to get that into the state health lab hopefully within hours,” Noem said at a press conference Wednesday morning at Monument Health, noting that they’ve been requesting supplies for the last several weeks and that many other states have similar issues.
One order of the supplies that was en route to Pierre got cancelled at the last minute, she said.
“That’s why we have seen a shortage on those supplies, and we’re hoping to get them very soon,” she said, adding that the CDC, FDA, White House and Vice President Mike Pence are working to get supplies to the state.”
When you have this band of incompetent crooks and liars, what can you expect? Pence working? Please. The Wrong House, doing what? Providing BRIBES so you forget that your life is worthless to them.
Hint GNOem, call China. That’s what Italy and Spain ended up doing and now Italy is seeing the results from the help. Spain is a little over a week behind, while the US still looks at her belly button and dithers. Gwaad, we need Democrats to fix this crapstorm.
We can still blame dumbass dubya. Get in line.
It’s hard to feel secure when Greedy Grifter and his SIL are still manipulating and trying to figure out how to make lots of $$$$$ from the suffering and desperation of their neighbors. People know this deministration is not worth a damn when it comes to being counted on.
Cruel GOP idiots like Lindsay Graham don’t want to give people $1000 because he can’t imagine what we could spend it on. He’s a rich, old, white guy with no sense of how most Americans live, just like most of his pals in the GOP caucus. 🤬🤬🤬
BTW, that seems like awful slim reserve balances. Anyone else think so?
Mrs. Geelsdottir, Real Conservatives in South Dakota have tried for years to increase the reserves. The Libbies have tried to foil them and mostly succeeded.
NO BAILOUTS AND NO MORE TAX CUTS, let the banks fall on their arses along with the airlines that we have given billions to so they could buy back their stock to raise the value on a worthless product. Nationalize the airlines.
Caravans of snowbirds arrive soon and will likely bring COVID-19 with them.
Jerry, nothing in Ackman’s concern alluded to shorting. Even massive short-seller Jeffery Gundlach closed his last short today.
Jerry, I read something about guaranteed “loans” to airlines, banks, etc. That I could live with. You?
No way Debbo, this is the same Bailout crap we got saddled with in 2008. They have plenty of money, they just want us to bail them out once more, like Lucy with the football and we are all Charlie Brown. Let them go belly up, the sooner the better so they will use their own reserves to cover the loss they perpetuated on themselves. They need to go cold turkey to chase that bailout demon from their bodies.
Remember the huge unneeded tax cut we gave them already? Billions they used to feather their own nests. Let them eat their own cake. NO BAILOUTS AND NOT ANOTHER PENNY FOR TAX CUTS.
grudznick likes Mr. jerry’s idea about nationalizing the airline plane companies. Like the post office, it would be.
Handing out $1000 to be used by most people on cigs, beer and probably the demon weed is just insaner than most. What’s $1000 going to buy you? About 4,000 rolls of toilet paper on the Amazon or a couple dozen breakfasts.
Actually, the Post Office is not nationalized. The post office is very efficient and reaches every voter. So by using the Post Office as a means to send out ballots and then return them for the vote count all over this great land, would solve the problems we have with the vote each year. Booyah, problem solved.
Hookers and porn for that BRIBE, is more like it. But at the end of the day, it’s still a BRIBE that will do nothing but be a stimulus and like Viagra, neither will last too long.
Jerry, your last comment was pure poetry. 😀
The Fed has already been giving Wall Street Trillions of dollars since September 2019. I agree the Big Banks should NOT be bailed out and no tax cuts for the corporations and the wealthy. We are being ROBBED!!!
Can someone tell me how they can print money when there is none,Deficit now 22 trillion and going up.soon it will be 27 trillion .Will this ever be paid off.
Loans, not bailouts!
Debbo, are the reserves too slim or too fat? The answer seems to depend on when we’re evaluating them. I believe that in better times, we have on this blog sometimes suggested the state is budgeting too conservatively and socking away too much in reserves instead of investing in education. But now facing a rainy day that may beat the Depression for economic disruption, reserves sufficient to fun general fund activities for maybe a month and a half may seem pretty thin.
I’m open to a discussion of just how large a reserve a state, city, school board, etc. should build up and maintain when the economy is humming (sub-suggestion: why the heck did Thune, Rounds, Noem, and Trump give billionaires more tax breaks in 2018, when the economy needed no goosing, when we could instead have capitalized on the billionaires’ relative economic ease to build up revenues and invest in public health infrastructure for some future disaster like we have right now?).
But at the moment, my focus with this post is simply the numbers: given the economic numbers being bandied about and a quick glance at empirical data from the last major economic oopsie, here’s the possible impact on revenues and how much room we have to respond solely with reserves.
Should we rely solely on those reserves for emergency response? Or is there still time to engage in some creative redistribution? Might we want to consider a quick Sixer Surtax to glean a little wealth from the most well-off to bolster ability to help all the folks who are going to suffer in this pandemic and economic downturn?
Governing reports that nationwide, “States ended fiscal 2019 with $72 billion in their rainy-day funds, or 7.6 percent of their general fund spending, according to NASBO. That compares with $33 billion in fiscal 2007, at the start of the Great Recession, which represented 4.7 percent of state budgets.”
The reserve and replacement funds I cite above add up to 10.9% of the general fund revenues appropriated for FY 2021.
Bailouts are not loans, they are Bailouts. Nationalize them instead of helping them rob us. Italy already did that with her airline Italia to keep it functional.
“France is ready to use the ultimate weapon to protect its biggest companies from the market turmoil set in motion by the coronavirus: nationalization.
With European Union leaders pulling out all the stops to try to get control of the situation and France tearing up its budget plans to promise billions of euros in support for the economy, Finance Minister Bruno Le Maire said the state will intervene in any way necessary to protect the country’s economic assets.”
As usual, the United States is a month short of a full load so we will muck it up good and proper before we do the right thing. Nationalize healthcare and these companies, don’t bail them out to keep doing the same crap over and over again.
Cory, I think you’re right about past DFP arguments regarding reserves and I was probably one who said at one time that it was too much. I’m used to looking at Minnesota’s budget reserves, which measures in the billions.
Jerry, I believe all the bailout loans of 2009 were repaid with interest. I didn’t like the bailout loans then and I don’t like them now, but loans are better than grants. My point.
Debbo, no, you’re incorrect. Here is an MIT report on how much that Bailout cost US taxpayers that were never paid back, even after all these years. The United States taxpayer cannot afford another bailout and expect nothing in return for workers and their families.
http://gcfp.mit.edu/wp-content/uploads/2019/02/BailoutsV12.pdf
Okay. My mistake. Thanks for the info.
Big Oil wants a Bailout as well, nationalize energy to include the utility rip off artists as well. Every time electric and gas conglomerates go to the PUC, they ask for something and the PUC then gives them what they wanted in the first place, a raise of rates for their investors. Put an end to that. Put all the money into healthcare and infrastructure programs like public transportation…yes, even in South Dakota. Not that many years ago, we had air service to Pierre and to other locations in South Dakota. De regulation of the airlines helped to kill economic development in our state. There is no good reason why we could not have railroads back in the state to help curb the climate change. We cannot have any of those kinds of public help with more Bailouts to banks, airlines, big oil and the lot. Let them eat the cake they want us to swallow.
That tricky little GNOem, has once again kept knowledge of the contacts 4 employees of Security First Bank in Rapid City and the plane the dude took back to New York or the one he came in to Rapid City. GNOem is just like trump, keep the citizens dumbed down so the numbers don’t alarm common folk of what is really happening. republican leadership is all about secrets that can make you sick and kill you. Way to govern republicans, here’s a flash, your muzzling facts will not change the fact that this virus is loose among us.
That rainy day is here and we simply don’t have enough for an umbrella. This is from an ER nurse on what the republican has done to our country and why they should pay dearly for taking that umbrella from us. https://www.dailykos.com/stories/2020/3/19/1928803/-The-fatalistic-view-from-an-ER-Nurse-on-what-s-ahead
trump says GNOem needs to get the masks and the ventilators, He says he is not a shipping clerk. Man, it’s pouring. Get the checkbook out and get to ordering.
“Pressed by a reporter Thursday on the dire shortage of medical supplies and testing to deal with the coronavirus, President Donald Trump deflected responsibility for the crisis and instead put the burden on governors.
Speaking at what’s become a daily White House press briefing on the pandemic, Trump insisted that states should take the lead in supplying the badly needed medical equipment and protective items, despite the federal government’s vastly greater resources and capabilities.
“Governors are supposed to be doing a lot of this work,” he said. “The federal government’s not supposed to be out there buying vast amounts of items and then shipping. You know, we’re not a shipping clerk. We’ll help out wherever we can.”
The president’s remarks about governors being the ones obliged to deal with mask and ventilators shortages were reminiscent of his Friday comment that “I don’t take responsibility at all” for complaints by state officials about the scarcity of testing for COVID-19, the disease caused by the new coronavirus.” https://www.huffpost.com/entry/trump-says-states-supply-medical-needs_n_5e739dbcc5b63c3b648c366d
Toss out the trash and VOTE BLUE, THAT’S WHO!
Here’s one that will gladden your heart Jerry.
“While I know cash is tight, that is equally true for numerous other industries and for millions of small businesses,” [Nikki] Haley said in her resignation letter. “I cannot support a move to lean on the federal government for a stimulus or bailout that prioritizes [Boeing] over others and relies on taxpayers to guarantee our financial position. I have long held strong convictions that this is not the role of government.”
Haley resigned from Boeing’s board. CNBC is my source.
is.gd/GIQd4r
Very informative link Debbo, that Nikki is just as sneaky as our own GNOem. From your link https://www.postandcourier.com/politics/opponents-question-haley-on-jobs-state-backed-incentive-packages/article_64a372c6-b171-51aa-a12d-4d41b63a07dc.html
She wants to run in 2024 and can ill afford the Boeing baggage claim in addition to the rest.
The motto is cheap labor in a cheap state I pray to god tgat the virus dies not do much damage in our state .As short as we are on equipment .Evidently the Gov can not get er done.
No why NOem copies to the White House all her ramblings? She is gonna get some kind of payout from Big Oil. Pretty slick to bring those workers into rural areas with little or no healthcare. No wonder she won’t comment on what is going on with Keystone XL, she’s in on it.
“I’m going to tell you the single worst story I’ve heard in these past few horrid months, a story that combines naked greed, political influence peddling, a willingness to endanger innocent human beings, utter blindness to one of the greatest calamities in human history and a complete disregard for the next crisis aiming for our planet. I’m going to try to stay calm enough to tell it properly, but I confess it’s hard.
The background: a decade ago, beginning with indigenous activists in Canada and farmers and ranchers in the American west and midwest, opposition began to something called the Keystone XL pipeline, designed to carry filthy tar sands oil from the Canadian province of Alberta to the Gulf of Mexico. It quickly became a flashpoint for the fast-growing climate movement, especially after Nasa scientist James Hansen explained that draining those tar sands deposits would be “game over” for the climate system. And so thousands went to jail and millions rallied and eventually Barack Obama bent to that pressure and blocked the pipeline. Donald Trump, days after taking office, reversed that decision, but the pipeline has never been built, both because its builder, TC Energy, has had trouble arranging the financing and permits, and because 30,000 people have trained to do nonviolent civil disobedience to block construction. It’s been widely assumed that, should a Democrat win the White House in November, the project would finally be gone for good.” https://www.theguardian.com/commentisfree/2020/apr/05/climate-crisis-villains-oil-industry-big-banks-pipelines