Governor Dennis Daugaard opened his 2019 budget proposal, delivered Dec. 4, explaining why the revenue projection would not include E-commerce sales taxes.
The state cannot budget in something that is so new, and a full annual estimate would not be valid. “Once you get a year’s worth of data, you can make a projection,” Daugaard said. The nation may see a $1.38 billion E-commerce quarter, but that is only about 10 percent of the $1.3 trillion total retail sales nationally. South Dakota sees only a small percent of the national sales, and probably including E-commerce. Any predicting figures would assume full compliance by out-of-state sellers, and not the small sellers who are too tiny to fulfill the out-of-state sales tax requirements. E-commerce deals with goods, “services no so much,” Daugaard said. “If sales taxes from E-commerce come in, we will deal with them then for the budget,” Daugaard said.
“We are currently growing 6.1 percent in sales and use taxes. Video lottery is 3.9 percent higher than the previous year. We anticipate a healthy housing market. Even with these, the anticipated revenue is approximately 2.3 million lower than the budget adopted last March,” Daugaard said.
Even with this lowered income, Daugaard proposes a 2.3 percent increase in medical provider state services. He also called for a 2.3 percent raise in state aid to education. Another 2.3 percent increase should go to state employees and the state health plan. S.D. should be saving some health expenses, since Federal Medical Assistance Percentages (FMAP) - the percentage rates used to determine the matching funds rate allocated annually to certain medical and social service programs in the U.S. - are going up a bit. “South Dakota has a self-insured health plan. It used to offer three plans, now just two plans. To maintain, not continue to eat away at it, the state employees will pay a premium for health care coverage. This change will require a change in state statute,” Daugaard said.
Softening the anticipated outgo for the state’s current 2019 budget are that there are fewer Medicaid enrollees than anticipated and there are fewer kindergarten-through-12th-grade students than expected. Property taxes within the counties are believed to be inching upward, and “the higher the local effort equals lower state effort,” Daugaard said.
Daugaard praised that ongoing expenses were supported by only ongoing income for the state. The state of South Dakota endured 10 percent cuts in all areas in 2012. Since that time it has made investments in key areas. It has held a strategically balanced budget since. “Something to be proud of,” Daugaard said. And, of all the full-time employees under the state government, during Daugaard’s administration there are now 58 fewer under the control of the governor administration.
Daugaard compared South Dakota’s budget principles with those of other states. “South Dakota is the envy of the nation. We have a balanced budget not only because it is the statute, but it is the right thing to do,” Daugaard said.
Since this is his final budget presentation, Daugaard included a fair-well.
He recalled the 2011 flooding of Pierre. “As high as the flood waters had rizen, South Dakotans rose even higher. South Dakotans helping each other; those were the times I was most proud to be the governor of South Dakota. As I end 22 years of service in this capital, I will miss the people. They believe, as my father taught me, that all work - all work - has dignity. Still, our best days are yet to come,” Daugaard said.
Governor-elect Kristi Noem was present at Daugaard’s budget proposal. She released this statement. “Governor Daugaard’s budget proposal focuses on the most important thing: balancing the budget. With that as the basis, I will work with the state legislature to strengthen families and communities according to the plan I laid out during the campaign – all without raising taxes for hardworking South Dakotans and maintaining our state’s AAA credit rating. I’m grateful for the opportunity to build on Governor Daugaard’s foundation of fiscal responsibility."
Immediately after Daugaard’s budget address, South Dakota Democratic Party Executive Director Sam Parkinson released this statement. "Governor Daugaard's proposed budget contains several items Democrats can support, such as much-needed funding increases for our public schools, state government employees, and community health support providers. At this same time, this budget is most notable for what's not there, such as no new money for our needs-based scholarship program or for early childhood education. Unfortunately, this is more of the same politics-as-usual approach we have come to expect from the majority party in Pierre."