South Dakota Capitol

South Dakota Capitol

Journal file

PIERRE | The Legislature’s Executive Board received a revenue update Tuesday, and the news is getting worse.

“The estimates continue to be revised down,” Sen. Jeff Partridge, R-Rapid City, said.

Legislative Research Council budget analyst Jeff Mehlhaff said state general fund receipts through March were down more than $9 million from the revised estimate adopted by the legislature’s appropriations committee in February.

Partridge said the insurance tax revenues came in lower during the past few months, as companies prepared for new federal standards that would require a greater level of neutrality by financial advisers.

House Democratic leader Spencer Hawley of Brookings disagreed with Partridge’s point on the insurance rules. “That never did go into force,” Hawley said.

But Partridge said companies put “a number” of steps into place. “Pieces and parts of it are happening,” he said.

Mehlhaff said there are three months remaining in fiscal 2017. Year-to-year growth has been negative for every month other than September, he said.

Rep. Mark Mickelson, R-Sioux Falls, chairs the executive board. Mickelson, who is the House of Representatives speaker, said his concern “is the erosion of our ability” to keep pace.

Mickelson said the downturn in state revenue is “the No. 1 issue” facing state government. Mickelson asked Mehlhaff what direction revenue is headed.

“I wouldn’t say it’s getting better,” Mehlhaff responded.

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“And I just see it getting bigger and bigger and bigger,” Mickelson said about the gap that has developed.

As for payouts on unclaimed property, which also have been higher than expected, people are more aware, Mehlhaff said. “We could see, potentially, a steady payout of unclaimed property,” he said.

“The question is, will it get better?” Partridge asked about the general situation. He then answered the question, calling the matter “extremely concerning.”

State government’s fiscal year ends June 30. Mehlhaff said 13.4 percent growth is needed to hit the legislature’s revised target adopted in February.

He said 9 to 10 percent growth — the pace that’s being achieved with the half-cent sales tax increase that was approved by the legislature in 2016 at the recommendation of Gov. Dennis Daugaard — still means coming in $5 million to $10 million short in sales tax.

“So we’d be looking around $15 million,” said Rep. Mike Stevens, R-Yankton.

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