Governor Dennis Daugaard says South Dakota has to revise this year’s budget. That’s because he says the state is not bringing in as much money as projected.
Daugaard says the trend since the start of the fiscal year is not good.
"And the July receipt, for example, was about almost $2 million short of expectations," Daugaard says. "Then August was almost $4 million more short. September was another nearly $6 million on top of the others, and then the most recent month that we have available, October, which comes in early November, that was nearly $9 million short. So collectively we’re about $20 million below where we should be at this point."
Daugaard says his budget address next week includes changes to scale back this year’s budget. He also says the state’s next budget must start from a more modest baseline.
The governor says the state is not losing money, but dollars are coming in lower than the estimates. Daugaard says part of the problem stems from agriculture.
He says farmers and ranchers saw record income for several years. Now he says the ag sector is weak. The governor says South Dakota receives tax when farmers purchase machinery.
"So a lot of farmers who had free cash, rather than pay tax on that, good tax planners said to them, 'Hey, take some of this cash and just go buy a new combine or go buy a new tractor, and you can expense all of that,'" Daugaard says.
Daugaard says farmers have less cash because of lower commodity prices. He says those farmers buy fewer pieces of equipment, and that means the state misses out on taxing big ticket items.
Daugaard says consumers send fewer tax dollars to the state when they make purchases online. He says businesses with physical presence in South Dakota collect sales tax for the state, but companies without a shop on South Dakota land don't deliver sales tax to the state. He says consumers still owe that money to South Dakota's coffers, but few fill out the forms and submit their sales tax.
Governor Dennis Daugaard talked about budget challenges, education, and health care on SDPB's Dakota Midday. Listen to his conversation with host Lori Walsh at this link.