Highlights of BFM’s latest state-revenue estimates

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.

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About Bob Mercer

I am a newspaper reporter in Pierre where I cover state government, issues and politics for the Aberdeen American News, the Black Hills Pioneer, the Mitchell Daily Republic, the Pierre Capital Journal, the Rapid City Journal, the Watertown Public Opinion and the Yankton Press & Dakotan. I began covering the Legislature in 1985 and have lived in Pierre since December 1986. I grew up in Wisconsin, worked my way through college, took my first full-time newspapers jobs in Wyoming, and have lived in South Dakota since the summer of 1984 when I moved to Aberdeen to join the American News. I worked for the Rapid City Journal as its state government reporter in Pierre from late 1992 through late 1998. I spent four years as press secretary and a senior aide to Gov. Bill Janklow during his fourth and final term from late 1998 through 2002. I returned to journalism in January 2003 as a self-employed reporter, providing state government coverage to the Mitchell, Watertown, Spearfish, Pierre and, depending on the year, Aberdeen newspapers. In 2008, the Aberdeen American News offered to hire me as full-time member of the AAN staff, with my reports continuing to be available to the Mitchell, Watertown, Spearfish, Pierre, Yankton and Rapid City papers. The new arrangement has been in effect since January 2009 as the seven papers continue their remarkable dedication to their readers and the general public, as the only South Dakota news outlets with a full-time reporter covering state government in Pierre throughout the year. In addition to focusing on the Legislature during the annual winter session and its various activities during the interim periods between sessions, I spend many days throughout the year -- traveling as often necessary -- to cover state government boards and commissions which oversee the state universities, technical institutes, outdoors, water, environment, business, public schools, banking, agriculture, utilities, health care and various other areas of public interest. I purposely don't register to vote because of my profession; the last time I recall voting in a presidential election was the first time, 1976, when I had just turned 18. I think I voted for Jimmy Carter over Gerald Ford. Make of that what you want, just don't make much of it.

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