Governor Dennis Daugaard presented a lean budget proposal to legislators on Tuesday, holding the line on spending due to sales tax collections that are projected to be lower than expected.
The $1.62 billion general fund budget for fiscal year 2018 includes 1 percent increases for education, health care providers and state employees. The budget includes about $20 million in general fund spending increases.
The total budget for FY 2018 is $4.6 billion. In addition to general funds, this includes roughly $1.65 billion in federal funds and $1.35 billion in other state funds.
Daugaard explained that a variety of factors have led to the lower than expected sales tax collections. He noted that tourism numbers were down after a record year in 2015, a slow ag economy had led to fewer equipment sales and consumers are more cautious about their spending because of concern about the election or the future of the econ-omy.
Daugaard emphasized the effects of online shopping on the state’s efforts to collect sales tax.
“Online purchasing continues to erode sales tax collection,” Daugaard said.
In a press conference after the speech, Daugaard said it’s difficult to put a precise num-ber on how much state and local governments are missing out on in online sales tax col-lections, putting the number somewhere between $30 million and $50 million.
The governor also went through some changes that are needed in the current budget due to lower than expected sales tax collections. Estimates used in making the current budget may miss the mark by $26.1 million in sales tax collections.
“As you know, revenue collections have been running below expectations,” Daugaard said, “but happily, expenses have also been lower as well.”
With lower expenses picking up some of the slack, Daugaard proposed $22.7 million in one-time spending for the current budget.
Daugaard went into some detail about a $5 million appropriation for the animal disease and research diagnostic lab on the campus of South Dakota State University.
“Its purpose is to provide critical research and diagnostic support to protect our citizens and livestock industry from disease outbreaks,” Daugaard said, noting recent outbreaks like avian influenza. “This lab has demonstrated the value of quickly and effectively di-agnosing and responding to these outbreaks.
The current lab was build and 1967 and updated in 1993.
“It is out of date and needs to be modernized to correct aging infrastructure, accommo-date new technologies and meet current and future standards,” Daugaard said.
SDSU has contributed $6 million to the project leaving $46.2 million left to fund. Daugaard said agricultural industries must provide significant participation in funding the project.