Pierre, SD Governor Dennis Daugaard says, "Fiscal year 2017 was challenging because of weak revenue as well. We had to revise our revenue estimates down as we moved through the fiscal year."
Dollar signs were on the minds of member here in the house Tuesday but the two main questions posed we where are the revenue shortfalls coming from and what's next on the chopping block?
Daugaard says, "Low farm income as we mentioned before, farm income has been leading to lower spending both directly ad indirectly in rural areas of the state. 2nd low inflation is another factor. Low inflation as we have experienced in the past several years, has limited the growth in our sales tax base. Continued growth in E commerce spending continues to be a concern because sales tax is not being collected on a portion of these sales by out of state businesses and the ever increasing cost of healthcare in our country is crowding out income and spending especially discretionary spending."
With a 1.6 percent decrease in sales tax, the 2018 fiscal year budget is coming in at over 30 million dollars below last years' forecast causing concern and the need for tight pockets.
Representative David Lust says, "I think ultimately we as a state are going to have to look structurally to determine if our revenue sources are going to work going forward."
But the governor says this decrease could soon pick back up.
Daugaard says, "I think the shortfall again is relatively modest and I think it is short lived. I think we will see a turn of higher inflation we will see a return of higher crop prices perhaps as early as next year. "
But legislators say that there are still some cuts that can be made in the mean time.
Lust says, "I think the easiest fix and the lowest hanging fruit is to look at some of the sale tax exemptions. I think they are over a billion dollars each year in sales tax exemptions we have granted over time and I think we need to take a real strong look at some of those and whether they are prudent or not."
Representative Lynne DiSanto says, "There is a group of us that are convening to do a very in depth check of these departments see where the money is being spent see if it is being spent well and to call it out and to not be afraid to expose if there is government waste."
This years increased expenditures include education, healthcare, and public safety totaling over 30 million with funds coming largely from decreased expenses with the 20 million education funding coming from excess reserves with the increased need due to enrollment.
The Governor says, "This increased money will be more than the marginal cost that they'll have and they will have no greater fixed cost due to the increased enrollment."
The next legislative session in January will provide the opportunity for the changes the house finds necessary.
Daugaard says, "My job is to present a proposal and a good debate starts with a specific proposal."