South Dakota’s latest revenue forecast came in nearly $31 million higher than Gov. Larry Rhoden’s original projection.
The higher revenue number gives lawmakers breathing room to consider increased spending on education, state employee salaries and community services.
The Joint Committee on Appropriations learned Thursday that the state will collect $30.9 million more than projected for the current fiscal year. Lawmakers use the revenue estimate to set the general fund target for the state budget.
Senate Majority Leader Jim Mehlhaff said the additional revenue could provide a 1.25 percent increase for what legislators call “the big three” — K-12 education, state employee compensation, and community service providers.
“I think the pulse that I’m picking up, although it’s not official because I don’t have it on paper, is that there is an appetite to provide more funding for education, more funding for state employees and our community service providers,” Mehlhaff said during a Republican leadership press conference Thursday morning.
The Legislative Research Council estimated that a one percent increase would cost $24.8 million. Mehlhaff said reaching the 1.25 percent increase would require finding “almost another million dollars somewhere else.”
Democrats welcomed the revenue boost as an opportunity to reverse Rhoden’s proposed 0 percent increase in school funding.
“It’s a real chance to put people first. We can invest in public schools, protect access to healthcare, support working families, especially those working families who are state employees,” said House Minority Leader Erin Healy during a separate Democratic leadership press conference.
Rhoden has said he would be open to revisiting his budget recommendations if revenue numbers showed a continuing positive trend.
“I know the governor said earlier that when we saw the optimistic or the actual returns for December, that he would be open if it looked like a trend that was going to continue, that he would be open to readdressing his recommendations,” Mehlhaff said.
Both chambers plan to poll their caucuses to determine spending priorities. The Legislature faces competing demands for about $163 million in one-time spending requests while available one-time funds fall well short of that total.
House Majority Whip Greg Jamison said the additional revenue provides opportunities rather than complications.
“It doesn’t make it more complicated. It actually just provides more opportunity. If it had gone the other way, now you start to get a little more complicated because it’s getting tighter and harder,” Jamison said.
Thursday was the final day for the Joint Committee on Appropriations to select general fund revenue targets for the session.
Democrats said any increase would be welcome after Rhoden’s proposed funding freeze.
“1.25 percent is better than zero,” Healy said.
The Legislature must still negotiate final spending priorities between the House and Senate before sending a budget to the governor.
