PIERRE, S.D. (KELO) — The Legislature’s budget assemblers have received two very different outlooks on South Dakota’s economy.
The Joint Committee on Appropriations heard presentations Monday from the Legislative Research Council staff and the governor’s Bureau of Finance and Management.
The appropriators named a subcommittee to work later Monday through the competing forecasts for the remaining months of fiscal 2022, which ends June 30, and for fiscal 2023 that starts July 1.
The appropriators use the revenue forecasts to adjust the current 2022 state budget and to set the 2023 budget.
The BFM estimates for fiscal years 2022 and 2023 are here. The LRC estimates are here. Senator Reynold Nesiba, D-Sioux Falls, said his ‘back of the envelope’ numbers suggest the two outlooks differ by about $48 million for the remainder of fiscal 2022 and $132 million for 2023.
Sales and use tax represents about 64 % of state government’s general fund receipts for 2023, according to BFM state economist Derek Johnson. He said state sales and use tax will slow to a 7.3% increase for fiscal 2022, and fiscal 2023 will finish down 1.5% from fiscal 2022
South Dakota’s economy has received about $9 billion in COVID-related federal stimulus funding, roughly 15% of the $60 billion total, according to Johnson. Looking ahead to fiscal 2023, he said, “Consumer confidence is falling.”
LRC chief fiscal analyst Jeff Mehlhaff said his forecasts weren’t as negative. “I’m a glass half-full kind of guy,” he said, adding that LRC’s estimates are “optimistically conservative.” He said sales and use tax receipts will finish up 11% higher for fiscal 2022 and grow 3.0% in fiscal 2023.
Mehlhaff said his modeling suggests sales and use tax receipts will peak in 2023. He said he is concerned about 2024 and 2025.