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South Dakota could see between $16M to $40M in revenue shortfalls

The governor’s Bureau of Finance and Management projected that the shortfall would be roughly $40 million
 A view in Pierre of the State Capital.
A view in Pierre of the State Capital. (KOTA)
Published: Jul. 23, 2020 at 11:36 AM MDT
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SIOUX FALLS, S.D. (AP) — The South Dakota budget could see revenue shortfalls between $16 million and $40 million during the next year due to the coronavirus pandemic, lawmakers were briefed on Wednesday.

While Gov. Kristi Noem announced last week that the state budget that wrapped up June 30 had a $19 million surplus, revenues were bolstered in part from federal relief money for addressing the pandemic. Economic analysts warned that as federal stimulus programs expire, sales tax revenue could decrease in the coming months. The Republican governor has said that a special legislative session may be necessary to adjust the budget.

The governor’s Bureau of Finance and Management, which usually produces more conservative revenue estimates, projected that the shortfall would be roughly $40 million. But the Legislative Research Council’s projection was about $16 million less than what the Legislature adopted in February.

South Dakota so far has spent nearly $75 million of the $1.25 billion it received from the federal government to address the coronavirus pandemic. Most of that money — $45.6 million — went to the unemployment trust fund as the state dealt with historic levels of people filing for unemployment.

The rest of the funding was spread across agencies for transitioning state employees to remote work, mounting a public health response, and funding state law enforcement. That money helped the state end the fiscal year on June 30 with a surplus. While state agencies cut back spending, Noem was aided in part by the federal funding.

The state paid salaries for health officials and highway patrol officers from those funds. The Department of Health and the Department of Public Safety received roughly $5 million each, which helped make up for an $8 million revenue shortfall as sales tax fell off due to the pandemic.

The Board of Regents also received a healthy share of the funds, with nearly $11 million going its way as public universities scrambled to vacate students from campuses in the spring.

Liza Clark, the commissioner of the Bureau of Finance and Management, told lawmakers that state agencies plan to use some of the remaining funds to prepare for a resurgence of the virus. She said that transitioning state agencies to remote work in the spring was a challenge.

“We were able to survive, but how would we be able to succeed at it?” Clark said as she gave examples of office equipment that would help state employees work from home.

Copyright 2020 KOTA. All rights reserved.

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