SD lawmakers cautious in estimating state revenuePIERRE (AP) — Lawmakers putting together South Dakota's next state budget decided Tuesday to take a conservative approach in estimating state revenues for next year, citing uncertainty over federal budget cuts and the possibility of a continuing drought.
By: Chet Brokaw , The Associated Press
PIERRE (AP) — Lawmakers putting together South Dakota's next state budget decided Tuesday to take a conservative approach in estimating state revenues for next year, citing uncertainty over federal budget cuts and the possibility of a continuing drought.
Senate Appropriations Chair Deb Peters, R-Hartford, said South Dakotans may limit their spending because of uncertainty caused by the failure of President Barack Obama and Congress to reach agreement on federal budget cuts. That in turn could limit growth in the sales tax, the state's largest general tax source, she said.
"People don't spend. That's part of the reason we went conservative with some of the revenue numbers," Peters said.
The Joint Appropriations Committee decided tax collections and other ongoing revenue will be about $1.32 billion for the budget year that starts July 1, nearly the same as Gov. Dennis Daugaard predicted when he issued his budget proposal in December. Ongoing revenue for next year would be up about $58 million from the revenue expected for the current year, according to the committee's estimates.
The committee will use the revenue projections as a guide to how much money can be spent in next year's budget. The panel plans to begin putting the finishing touches on the spending plan Wednesday so the House and Senate can pass the next budget by Friday, the end of the main run of this year's legislative session.
Daugaard has proposed a $4.1 billion budget, with more than $1.3 billion coming from state general tax revenues.
The Republican governor's budget proposal also left about $26 million unallocated, giving the Legislature a chance to decide how to spend that money. Peters said Tuesday that unallocated money now has grown to about $32 million.
Lawmakers are considering spending that unallocated money on scholarship programs and plans to boost state aid to school districts.
The committee's revenue estimates are based on reports submitted last week by the governor's budget office and the Legislature's staff. The economists' projections varied by only a few million dollars, a small amount compared with the $1.3 billion general fund budget.
South Dakota's budget is particularly dependent on the state sales tax, which provides about 60 percent of general state revenue. Sales tax collections are expected to grow to $805.5 million next year, up about 4 percent from this year.
Sen. Larry Tidemann, R-Brookings, said he is worried about revenue coming from the agricultural sector because a second year of drought could hurt farm and ranch income.
Bur Rep. Susan Wismer, D-Britton, said she believes next year's tax revenue will be higher than the committee has estimated. She said the committee made conservative estimates last year, but revenue exceeded expectations by $47 million for the budget year that ended last June.
Wismer said crop insurance has locked in a substantial income for grain farmers, even if the drought continues.