South Dakota Ag Connection - S.D. Revenue Projections Anticipate Downturn

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S.D. Revenue Projections Anticipate Downturn
South Dakota Ag Connection - 02/18/2019

A potential recession and soft agriculture economy could impact South Dakota's revenue in the coming fiscal year.

Legislators leaned toward conservative revenue targets on Thursday for the 2020 fiscal year, which begins July 1, due to predictions that there could be economic trouble coming, reported the Argus-Leader.

State employees consult economists and industry leaders, as well as use financial models, to determine the projections, and the Joint Appropriations Committee also takes into consideration several factors in determining what will likely occur in the coming year, said committee co-chair Rep. Chris Karr, R-Sioux Falls.

"I think we have a very fiscally conservative and responsible number here," Karr said. "It allows us to have enough buffer for some of the concerns that were brought up about a slowing economy or concerns in the ag industry."

The state's general fund revenue is expected to total $1.7 billion in the 2020 fiscal year, according to projections adopted by the Joint Appropriations Committee on Thursday.

There was a difference of $20 million in the projections completed by the Legislative Research Council and the Bureau of Finance and Management, and the committee adopted the more conservative tax revenue amounts.

The state had aggressive revenue projections when the last recession hit and the state found itself in "a bind" with a structural deficit, Rep. Justin Cronin, R-Gettysburg, said. Gov. Kristi Noem's budget proposal was "quite lean," and the committee is continuing that leanness, he said. He added that the committee's "extra conservative" budget is going to be "one of the best budgets" he has worked on because they're anticipating a potential softening in the agriculture industry.

During her weekly news conference, Noem said she has encouraged legislators to be conservative in their budget process to ensure that elected officials are "not back here cutting spending when we didn't do our job." She said she worked hard to fund her priorities in her proposed budget, and she was happy to see that the revenue projections were enough to cover her budget.

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