2019 Session approaches the halfway point

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The 2019 Legislative Session will reach the halfway mark on Friday of this week.  The following week, our joint committee on Appropriations will adopt the projected revenue target for the state’s general fund for the fiscal year which begins July 1, 2019, and ends June 30, 2020.  The committee hears two independent revenue projections – one from the Legislative Research Council fiscal staff and one from the Governor’s Bureau of Finance and Management.  It’s interesting to note that while one projection is based on historical data and the other is based on future projections, both numbers are remarkably close.

One of the issues legislators will need to discuss is Governor Noem’s proposal to transfer $7 million out of the state’s reserve funds to pay for one-time projects in her recommended budget.  Economists are projecting that we might see a recession in the next 18 months or so.

After a great deal of work four years ago to improve road and bridge funding in the state, there are now a couple of bills under consideration which would reduce the amount of money in the state highway fund.  When SB1 was passed in the 2015 Session, we projected that it would take an additional $230 million per year to maintain the most cost-effective condition of South Dakota’s state and local road system.  The legislature’s final package generated less than 40% of what was needed, so any hit to the highway fund is a concern.

HB1118 would decrease the amount going into the state highway fund an estimated $7.4 million by getting rid of the excise tax on motor vehicle rebates.  While the state’s general sales tax is 4.5% and goes to the state general fund, the excise tax on motor vehicles is 4% and goes to the state highway fund.  This bill would eliminate the excise tax on any rebate credited to the vehicle sale.

SB110 would take anywhere from $1.5 million to over $1 billion from the state highway fund (depending on how you read the language in the bill), and give it to each county and township in the state.  The state highway fund has less than $300 million, so the $1 billion figure is hopelessly optimistic and makes me think I am not reading the bill correctly.

District 24 legislators will be at a crackerbarrel in Pierre on February 9, one in Onida on February 15, and one in Highmore on March 2.  We welcome your questions and comments!

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