The state Bureau of Finance and Management’s economist Jim Terwilliger is delivering the agency’s revenue estimates this morning to the Legislature’s Joint Committee on Appropriations. In a nutshell, things don’t look very rosy. The biggest source — sales and use taxes — is expected to grow faster than normal this year and slower than normal next year, while several other big sources such as bank taxes, video lottery and cigarette taxes are falling sharply, and contractor excise tax remain far below the peaks of a few years ago. Here are the highlights and historical summaries for the handful of largest revenue sources:
Sales tax revenue went up 2.35 percent, or $15.1 million, in fiscal 2009. It fell 1.15 percent, or $7.6 million, in fiscal 2010 which ended June 30. The projection for the current fiscal 2011 is growth of 7.09 percent, or $46.2 million, for a 2011 total of $698.3 million. The forecast for fiscal 2012, which starts this July 1, is an increase of 3.05 percent, or $21.3 million, for a total of $719.6 million. The annual average increase from 2002 to 2010 was 4.52 percent.
Contractor excise tax revenue fell 10.89 percent, or $8.6 million, in fiscal 2009. It fell again in fiscal 2010, dropping 13.13 percent or $9.2 million, to a total of $61.1 million. The projection for the current fiscal 2011 is 0.09 percent growth to a total of $61.2 million. The forecast for fiscal 2012, which starts this July 1, is an increase of 10.30 percent, or $6.3 million, for a total of $67.5 million. The contractor tax revenue had been steadily climbing in the earlier years, reaching peaks above $78 million in fiscal 2007 and 2008 before beginning its fall.
Cigarette tax revenue has been on a steady decline in recent years. The fiscal 2009 total was $62.5 million, while the fiscal 2010 total was $62.4 million. The projection for the current fiscal 2011 is a decrease to $58.7 million. The forecast for fiscal 2012 is another decline to $57.3 million. From 2002 through 2010, the number of packs of cigarettes sold in South Dakota dropped from 57 million to 39.5 million.
Bank franchise tax revenue has plunged in recent years. The fiscal 2009 total was $33.4 million, a drop of 26.47 percent or $12 million. Fiscal 2010 saw the slide continue, dropping 35.14 percent or $11.7 million, to $21.7 million. The bottom fell out in fiscal 2011, which began last July 1, with a drop of 81.6 percent or $17.7 million, with the projection calling for a final total of $3.98 million. The forecast for fiscal 2012 shows slight growth of 6.07 percent to $4.2 million.
Insurance tax revenue is showing a slight rebound. The fiscal 2009 total was $61.8 million, an increase of 2.37 percent or $1.4 million. Fiscal 2010 suffered a slight drop of 0.14 percent for a total of $61.7 million. The projection for the current fiscal 2011 is a minor gain of 1.52 percent, or about $937,000, for an estimated total of $62.7 million. The forecast for fiscal 2012 is 3.61 percent growth, or about $2.26 million, for a total of $64.9 million.
One bright spot is severance tax revenue. It’s been on a steady increase for years. Fiscal 2009 saw a 19.47 percent gain for a total collection of nearly $4.9 million. It climbed 26.52 percent in fiscal 2010 to reach $6.16 million. For current fiscal 2011 the revenues are estimated to grow 23.61 percent and climb to $7.6 million. The forecast for fiscal 2012 is 11.2 percent growth to a total of nearly $8.5 million.
Video lottery revenue for the state is expected to keep falling. In fiscal 2009, it stood at $109.3 million. Fiscal 2010 saw slippage to $106.5 million. With the smoking ban that took effect in November, fiscal 2011 is currently projected to drop $95.5 million. The 2012 forecast calls for further decline to $87.8 million.