SIOUX FALLS, S.D. (KELO AM) - Governor Dennis Daugaard will open tomorrow's budget address with the state's sales tax shortfall of $20 million so far this fiscal year.
Daugaard says low commodity prices in agriculture is one factor which has weakened tax revenues.
Daugaard says while South Dakota exempts most agricultural inputs from the state sales tax, large equipment purchase are not exempt. He says when crop prices were higher producers bought more equipment, and they had more money for personal items.
Lower commodity prices means fewer dollars in farmers and ranchers pockets and less money cycling through the economy.
He says the state's inability to collect sales tax from online shoppers is another reason for lower tax revenues.
Daugaard hopes holiday shopping shored up November's revenues but his budget will be lean and he adds he doesn't anticipate cuts.
Even if November's numbers are positive Daugaard says there won't be much to support spending increases or take on new expensive projects. He says the situation is not as dire as it was in 2011 when revenue had been declining for two years and the state had a structural deficit. He says revenue has increased in the last two months but not as much as had been projected.
Daugaard says "over the last few years we have maintained structural balance and adhered to conservative budgeting practices. We don’t have unfunded liabilities or out-of-control spending problems. If we remain vigilant this year, we’ll continue on the right track.
The Governor delivers his budget address to legislators tomorrow afternoon at one in the state House chamber.