South Dakota Could See Extra Revenue In This Budget Year
MITCHELL, S.D. (AP) — The state of South Dakota’s coffers may end up with slightly more revenue for the current budget year than lawmakers anticipated during the legislative session if recent tax collection levels continue.
The Governor’s Council of Economic Advisors met Wednesday to discuss the state and national economy. Jim Terwilliger, the state economist, said sales tax collections jumped in April and year-to-date sales tax growth is slightly above the “pretty lousy” 1.6 percent increase lawmakers anticipated during the session when they revised the state budget for the full fiscal year ending in June.
Lawmakers adopted a conservative revenue estimate for sales tax growth during the budget year, and sales taxes account for roughly 60 percent of general state revenue. The cautious overall estimate from lawmakers, who anticipated about $7 million less revenue for the current budget year than projected in December, largely came from a slowdown in the state’s agricultural economy.
Sales tax collected on farm equipment alone is estimated to have dropped roughly $10 million between 2013 and 2014, and farm income has sunk from record levels.
“Much of the prosperity we saw in the last two or three years, a lot of it was anchored to (agriculture) and the spinoff of all the other industries,” Bureau of Finance and Management Commissioner Jason Dilges said. “Right now I think some of the softening that we’re seeing from the state side is probably linked to that.”
Sales tax collections surged in April, and the 2.1 percent year-to-date sales tax growth is slightly above the 1.6 percent growth lawmakers anticipated for the full budget year, according to a report to the Council of Economic Advisors. Terwilliger said it would likely mean more money for the state if most state taxes continue performing like they have over the last two months.
But lackluster growth before the end of the fiscal year could drag those gains back down.
