Lower Tax Collections Means Tough Fight Ahead in South Dakota Legislature

There is just no way to soften the blow of lower than projected revenue numbers. The South Dakota Legislative Appropriations Committee will have some hard choices ahead.

Senator Deb Peters (R) of Hartford heads the Committee in the upper chamber and says the shortage is in the millions. “The Legislative Research Committee and the Bureau of Finance and Management had revenues reducing the current budget year anywhere from $6 to 8 million under what the Governor projected in December. In 2016 it’s worse than that. (The range is) $9 to 11 million less than what the Governor proposed.”

The reason for the shortfall stems from slower than expected collections from sales and use taxes. “We’re looking potential reductions of $12 million of money that is not coming in that was originally anticipated.  It’s offset some by contractor’s excise tax that’s seen a little increase.”

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Not all the news is bad. Peters says revenues are growing, but not at the expected rates.

However, the slower revenues mean there will be a significant fight for state dollars through the end of the current session. For example, increases in wages for state employees, aid to education and Medicaid will definitely not grow beyond the proposed 2 percent increase.