Rising tax collections boost SD budget outlook

PIERRE (AP) – South Dakota officials are offering hope – but no guarantees – that climbing tax collections will allow for more spending in areas like state employee pay as lawmakers prepare to craft the state budget.

Legislators will set revenue targets Tuesday that will dictate state spending levels for the current budget year and the next. Gov. Dennis Daugaard in December outlined funding priorities constrained at the time by disappointing tax collections.

Daugaard proposed leaving most state workers without raises for the second straight year.

But new figures show revenues for the first seven months of the current budget year are $18.2 million, or 1.9 percent, higher than Daugaard projected in December. That includes roughly $7.6 million in higher-than-expected sales taxes receipts, which are the state’s main revenue source.

The Republican governor had more optimism recently that the “brighter” picture could allow inflationary increases for education, Medicaid providers and state workers.

“There’s certainly hope for that now, where I would say in December there was little hope for that,” Daugaard said. “But time will tell.”

Lawmakers will revise spending for the current 2018 budget year and craft the budget for the upcoming fiscal year before the legislative session ends in March. House Majority Leader Lee Qualm would only describe his mood as “guardedly optimistic.”

House Speaker Mark Mickelson said he would like to see increased funding for the state’s tech schools, adding that the Legislature’s priorities appear to be helping community support providers and state employees.

Eric Ollila, executive director of the South Dakota State Employees Organization, said the group would like to see an emphasis on state employee compensation and benefits considering the new numbers. Ollila said workers are the “backbone” of the state, and he’s fed up with their flat pay.

“Employees never contact me and say, ‘Hey, you know, I’ll be happy with a zero raise.’ I’ve never had that,” Ollila said. “They work hard. They’re worth it.”

The employee advocacy group is pushing a bill this year that would write cost-of-living increases for state employees into South Dakota law. But Daugaard said officials wouldn’t be able to execute such a law.

“I think it would be nice to say we should automatically make payments based on inflation, but if our revenue doesn’t meet inflationary targets, then that law is just a statement of attitude,” he said.

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