PIERRE, S.D. (KELO) — Businesses won’t report their South Dakota sales and use tax numbers for March until later this month. But state government’s take from video lottery machines has plunged by nearly half, as the effects of COVID-19 shudder through South Dakota’s rapidly slowing economy.
According to state economist Mark Quasney, 426 video lottery establishments throughout South Dakota have temporarily closed, as of April 9.
It’s meant 3,420 video lottery terminals — 38 percent statewide — are disabled. The gambling machines are privately owned. State government takes 50 percent of the money that players lose in them.
Quasney said Monday evening that state government’s take from video lottery for the week of March 30 through April 5 was down nearly 49 percent, compared to the weekly average for the first 37 weeks of state government’s fiscal year.
He said net machine income — money left behind by players — was about $2,351,000 versus the weekly average through March 15 of about $4,590,000. State government takes 49.5 percent for its general fund and the South Dakota Lottery takes 0.5 percent for its operations. The other half is kept by the private side.
Quasney is a key member of Governor Kristi Noem’s financial team. The governor has said she plans to call a special session of the Legislature in June to deal with budget matters.
“The COVID-19 pandemic began to have a dramatic economic effect on revenue collections throughout South Dakota, including, but not limited to, our sales tax receipts, in March 2020,” Quasney said.
“This includes state and municipal tax revenues, but it is difficult to put an exact figure on this until March 2020 sales tax returns are filed,” he continued.
The filing due date for the March 2020 reporting period is April 20, and state government officials anticipate statistical reports being available in May, according to Quasney.
“With many businesses and events throughout the state either temporarily closed or postponed, we anticipate a decrease in tax collections during this reporting period,” he said.
Video lottery ranked as the second-largest source of revenue to state government’s general fund in the 2019 fiscal year, after the state sales and use tax.
Music and Vending Association of South Dakota President Britt Bruner issued this statement Tuesday:
“The video lottery industry in South Dakota has been greatly impacted by the coronavirus pandemic. The revenue loss reported by the state is also revenue loss for the video lottery industry. Video lottery operators have closed businesses and furloughed staff as a result of revenue loss. This has impacted thousands of people across the state.”
Last month the governor issued a statement about how precarious state government’s revenues have become during the coronavirus pandemic. She had waited to sign into law most of the final spending legislation that state lawmakers passed just before COVID-19 was detected in South Dakota.
““At the moment, it is unknown how much relief the federal stimulus bills will give to South Dakotans,” Noem said. “I’m signing these 15 bills with one caveat – we may need to come back in June and make drastic changes to both the current budget and next year’s fiscal year budget. As we receive further guidance from the federal government on what resources may be available to us, I will provide updates to the Legislature and the public.”
Quasney said the Minneapolis Federal Reserve has conducted a number of surveys of businesses that have helped the Noem administration to better understand the pandemic’s impact.
He said the first survey conducted in mid-March found that 49.3% of businesses have had a medium to large negative impact on business sales and revenue due to the pandemic.
“A followup survey conducted the first week of April provided further insight to the situation in South Dakota, where 46.3% of businesses that responded reported March revenues that were at least 25% lower than the January and February average,” Quasney said.