Setting the Revenue Target

Standard

Legislative rules require the Joint Committee on Appropriations to select general fund revenue targets for the current and next fiscal years by February 15th for the purpose of setting appropriations.

Legislative Research Council (LRC) fiscal staff and staff from the Bureau of Finance and Management make separate presentations to the appropriations committee on their projections for ongoing and one-time revenues for the state.  A revenue subcommittee considers these two projections and then makes a recommendation to the full appropriations committee. 

More than half of the state’s general fund comes from the sales and use tax.  The contractor’s excise tax, lottery receipts, insurance company tax, and tobacco taxes together contribute about twenty percent of all general fund receipts. 

While South Dakota has seen record increases in general fund revenue over the past two years, we do not think that growth is sustainable.  The average growth rate of sales and use tax collected in South Dakota was about 4.7% from 2011-2020.  The general fund projection for FY22, which ends June 30, 2022, is to finish at 6.5% above the amount collected in FY21.  However, the projection for FY23 is far more modest, with the revenue subcommittee recommending a growth of less than one percent

These numbers form the basis for ongoing spending, which is contained in the general appropriations bill.  Our Constitution provides that the general appropriation bill contains the appropriations for ordinary expenses of the executive, legislative and judicial departments of the state, the current expenses of state institutions, interest on the public debt, and for common schools.  The constitution also requires a balanced budget. 

The general appropriation bill needs to pass by a simple majority vote in each chamber.

The Appropriations Committee is also sifting through requests for one-time spending ideas including infrastructure projects, investments in higher education institutions, and other ideas for one-time expenditures.  While most bills must pass the house of origin by the 27th Legislative Day, the deadline for special appropriations bills to pass the house of origin is the 30th Legislative Day. Special appropriations bills need to pass with a two-thirds majority in each chamber. 

Budget information details are available on the LRC website at sdleigslature.gov, under the “Budget” tab.

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