PIERRE, S.D. (MITCHELL NOW) We finished legislative day 25, 13 days remain in the 2024 Legislative Session.

The Joint Committee on Appropriations completed its task of setting revenue projections for the balance of fiscal year 2024 and for fiscal year 2025. For 2024 revenue is expected to be $2.4 billion, $41 million over the governors estimate. For FY2025 revenue is estimated to increase by .7%, significantly less these prior years and far below the rate of inflation. It should be noted that revenue estimates generally come within 1% of actual numbers.

This is our baseline from which a budget is formed. We will be setting budgets for all State Departments next week the sum of their expenditures cannot and will not exceed revenue estimates. While our responsibility as a Joint Committee on Appropriations is to balance the budget, as legislators we also carry the responsibility of doing what we can to encourage revenue growth in our state. We are a low tax state without personal and corporate income tax. As such, 62% of our revenue comes from sales and use tax. The more jobs we have will create more consumer spending which drives our single biggest revenue source, sales and use tax. We are hearing a lot about carbon pipelines in South Dakota. It is a hot topic putting on a collision course property rights and industry. As legislators we wrestle with finding the right balance in being fiscally responsible without government overreach and respecting the personal rights of our citizens.

Admittedly, my time in the appropriations committee will move me and others into how we grow our economy so we can take care of citizens that need and have become dependent on government. Those being, Medicaid recipients, elderly, developmentally disabled, teachers, inmates and the list goes on.

As a committee we must look at the short term as well as keeping the long-term health of our state in mind. So, what do we hear from our Governor’s council of economic advisors?

• Real personal consumption expenditures increased from 0.8% in the second quarter to 3.1% in the third quarter and 2.2% in the fourth quarter.
• Tight labor markets and rising real wages have allowed consumers to maintain growth in spending.
• Real personal consumption expenditures grew 2.2% in 2023.
• Projected growth is at 1.8% in 2024 and 1.2% in 2025.
• Real business fixed investment is projected to slow from 4.5% in 2023 to 2.4% in 2024 and 1.8% in 2025.
• Residential investment finished 2023 at -1.8%. It is projected at 0.0% in 2024 and 1.7% in 2025.
• Housing starts are expected to slow from 1.41M in 2023 to 1.39M in 2024 and 1.37M in 2025.
• Inflation-adjusted home prices are estimated to have fallen 1.5% in 2023 before rising 2.3% in 2024 and 1.4% in 2025.

These and many other factors are used to project on-going revenues in support of state government.

In addition, we will be drafting a supplement bill to the FY24 General Appropriations Act, which is the money that comes from move revenue than forecasted as well as budget dollars reverted by state agencies. So how do we pick which of the 31 bills to fund? That list currently overspends by $157 million.

The house and senate both are and will continue to seek their caucuses to pick the ones to fund from which the appropriations committee will decide. This process was refined by leadership last year and worked very well as it took the personal agenda’s away from the appropriation committee members.

The big elephant in this process is the new men’s prison with the governor recommending we take $132m of one-time money to fund the prison. That means that several other one-time needs would not be funded.