SIOUX FALLS, S.D. — Gov. Dennis Daugaard is calling for South Dakota agencies to cut as much as $15 million in expenses to balance the state’s budget by the end of June, despite a welcome uptick in tax collections last month.
The Republican governor said he anticipates revenues will be between $10 million and $15 million short for the current state budget period that ends June 30. Daugaard said he doesn’t want to tap reserves, so he’s asking agencies to curb spending instead.
“We won’t have collected that much money, but nor will we have spent that much money either, so we’ll end the year balanced,” Daugaard said.
According to figures released Wednesday, April tax collections came in about $2.2 million higher than anticipated, which is welcome news for state officials. But year-to-date revenues are still roughly $11.5 million — or nearly 1 percent — lower than lawmakers’ anticipated in February when they set revenue estimates for the current budget period. The February targets had to be revised down by millions of dollars from previous projections.
A bright spot among the April collections was the sales tax, which exceeded expectations by more than $1.3 million. Sales tax is the state’s main revenue source, and Bureau of Finance and Management Commissioner Liza Clark said officials hope that increase continues.
“All of our economic indicators show that everything is moving in a positive direction, so we’re cautiously optimistic, I would say, for continued revenue growth, and sales tax growth,” Clark said.
South Dakota lawmakers during the 2017 legislative session dealt with sluggish state tax collections caused by low inflation, less spending in the farm economy and e-commerce transactions that avoid sales taxes.
Before heading home in March, lawmakers passed a state budget for the upcoming fiscal year that includes roughly $1.59 billion in general state spending, nearly $30 million — or about 1.7 percent — below the budget plan Daugaard proposed in December.