Economists Expect Less Money Coming From Taxes, Schools and Hospitals Getting Nervous

The promise of a budget surplus in December has dissipated into cold reality.  As the South Dakota Legislature wraps up their main session this week, the funding projections are somewhat lower than first anticipated.  

Even though a growing economy is expected to boost the collections of sales tax, the state's largest general revenue source, collections from the bank tax and unclaimed property are predicted to fall, the economists said.

State economists told the Legislature's budget-writing committee Monday that ongoing general state revenue will be about $8.4 million below projections for the current year and about $6 million lower than expected for the next budget year, which begins July 1. This news does not bode well for school districts and facilities that provide health care to low-income people through Medicaid.

In his December budget proposal, Governor Dennis Daugaard did offer to increase the funding to schools by 3 percent.  Educators had been openly asking for a push to 3.8 percent in this session.  Considering past years when the funding formula for education was actually circumvented to balance the budget, 3 percent would be a huge victory.

The Affordable Care Act allows states to opt into a Medicaid program with an eventual 90/10 federal to state cost share for those who make 133 percent of poverty.  These revelations will most likely close off those discussions as well.