The Joint Committee on Appropriations (JCA) has wrapped up their budget hearings during week five. The Legislative Research Council (LRC) and the Bureau of Finance and Management (BFM) presented revenue estimates to the JCA for FY2020 and FY2021 on Feb. 12 with the updated tax revenue numbers the JCA will begin to fill out the 2021 budget bill.
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.
From the Governor’s recommended FY2021 and the February Revised FY2021, BFM estimates revenue to increase to $10.8M or a 0.63 percent change. Year to Date collections on Sales and Use Tax is up 5.03% which is approximately 63% of FY2021 ongoing revenues.
LRC provided model explanation on their revenue estimates using the Holt-Winters Model and Auto-Regressive Integrated Model. From the Governor’s recommended FY2021 and the February Revised FY2021, LRC estimates revenue to increase to $39.4M or a 2.30 percent change. LRC noted the increase from remote sellers and marketplace providers was a $17.5M increase in CY2019.
The difference between BFM estimated revenue forecasts vs. LRC estimated revenue forecasts for FY2021 is $28.6M.
Gov. Noem anticipated in December that the state budget would be tight as the state recovered from weather related catastrophes this past year. But since then, revenue figures have come in higher than expected. Legislators have mentioned the need to find room in the budget to give pay increases to Medicaid providers, state employees, and education.