The Joint Committee on Appropriations (JCA) has wrapped up their budget hearings during week six. The committee listened to Department of Social Services on Monday February 11th and finished their budget hearings Tuesday, with the State Employee Compensation budget.
Legislative Research Council (LRC) and the Bureau of Finance and Management (BFM) presented revenue estimates to JCA for FY2019 and FY2020 on February 13th.
LRC provided model explanation on their revenue estimates using the Holt-Winters Model and Auto-Regressive Integrated Model. LRC estimates FY2019 General Funds Revenues to $1,666,229,378 a decrease of 0.14% from the Governors January revised budget. For FY2020 LRC estimates 1.19% (+$20,111,901) growth over the Governors revised January FY20 budget.
BFM uses more historical information and provided to the JCA an overall trends assessment using IHS economic indicators, employment levels, farm income and equipment spending- to reflect South Dakotas economy. In addition, BFM went thru the revenue forecasts by ongoing receipt category.
For FY2019 and FY2020, BFM estimates revenue from the Governor’s January revised to be neutral (FY19, 0.03 and FY2020, -0.01%). JCA adjourned and rechecked with each state agency; no changes were provided.
Both LRC and BFMs forecasts do not include any projected online marketplace sales tax revenues. LRC noted and expects actual sales tax collections to be substantially higher than what is forecasted due to e-commerce retail sales, since marketplaces represent at least 40% of all e-commerce retail sales.
The difference between BFM estimated revenue forecasts vs. LRC estimated revenue forecasts for FY2019 is +$2,751,455 and for FY2020 is (-$20,297,222).
On Thursday Feb 14th, the JCA reviewed these revenue estimates from the LRC and BFM and adopted the updated FY19 revenue numbers as well as the FY20 revenue numbers. These are the revenue numbers which the JCA will use in order to set the budget adjustments for FY19 and set the budget for FY20.
The FY19 revenue number will increase $3,694,230 from Governor Noem’s budget address at the end of January. This increase will provide for an additional $3.7M of on-time money in the FY19 budget.
The FY20 revenue number will increase $5,566,237 from Governor Noem’s budget address at the end of January. This increase will provide for an additional $5.56M of on-going money in the FY20 budget.
Now that the Appropriations Committees have a revenue target, they will begin their work on finalizing the spending priorities of the legislature. The Appropriations Committees, House, Senate as well as JCA will be working fast and furious over the next four weeks to hear all funding bills. The legislative number one priority to date is provider funding in a variety of formats. The JCA has put together a small subgroup to speak to providers about payment methodologies to further the conversation over the next couple of weeks.