PIERRE—Legislators hoping for better times in South Dakota’s economy to help ease state government out of its budget problems didn’t get the news they wanted Thursday.
Revenue estimates for the remaining four months of the 2011 fiscal year show some economic conditions improving. But the state’s general-fund revenue is now estimated to be $1.152 billion, according to the governor’s budget office. That’s $11.8 million below what lawmakers predicted a year ago, when they built the 2011 budget.
Worse, the budget office’s forecast for fiscal 2012 that starts July 1 suggests general-fund revenues will be only $1.138 billion. That’s $14.4 million behind the revised 2011 estimate.
Growth is predicted to be slower than average for several key sources of government funding, such as sales tax. And other large sources of money are expected to continue to lag or further decline such as cigarette taxes, video lottery and bank-card taxes.
The Legislature’s Joint Committee on Appropriations received professional estimates from its research staff and from the governor’s Bureau of Finance and Management in a two-hour briefing.
“One of the things this committee has always been conscious of is getting more than one opinion on the revenue forecast,” said Sen. Corey Brown, R-Gettysburg, co-chairman of the joint Senate-House panel.
He said both forecasting models have “pros and cons.”
That was shown throughout the two presentations Thursday. BFM’s sales-tax estimate for 2011 is $698 million, while the Legislative Research Council’s estimate is $706 million. Their respective forecasts for 2012 are $720 million versus $724 million.
Research council fiscal chief Fred Schoenfeld said his estimate is based on the percentage of sales tax that has been collected to this point in recent years. He said the 2012 sales-tax forecast calls for a 2.5 percent increase.
“We’ve used quite conservative growth rate,” he said.
The bottom lines in both cases left no doubt: Economic growth can’t come close to getting state government out of a structural deficit that Gov. Dennis Daugaard has estimated at $127 million, or roughly 10 percent of the general-fund budget, for fiscal 2012.
Daugaard has recommended 10 percent cuts throughout much of state government. Legislators on the appropriations committee will put together their final version of the 2012 general budget next week as the 2011 session comes to a near-end.
“The trend is still moving in the right direction. We’re still adding jobs,” BFM economist Jim Terwilliger said. But, he added, “We’re still going to be slow over the next 12 to 18 months.”
Lawmakers are scheduled to work five days next week, take off two weeks, and return March 28 for their final day of regular business this year.
A subcommittee of legislators will meet at 8 a.m. Monday to further discuss the estimates and present their views three hours later to the full committee starting at 11 a.m.