Gov. Rounds Says State Revenues Weaken

Press Release

Gov. Rounds Says State Revenues Weaken

Gov. Mike Rounds said Friday that the state revenue situation has grown worse since he proposed the fiscal 2010 budget to the South Dakota Legislature on Dec. 2.

The weak economy resulted in state tax receipts last month that were $5.1 million below estimates, the governor said. It had been estimated that revenues through December would be $86 million, but they instead totaled $80.9 million.

"The economy has continued to soften," Gov. Rounds said. "State revenues are significantly different than those projected in the budget that was adopted by the Legislature last year and even worse than the revised estimates that I proposed in my budget address last month."

The state sales and use tax, which is the largest general fund revenue source, has shown dwindling returns in the last four months, compared to the same months in 2007. September growth was 9.3 percent, October growth fell to 4.3 percent, and November growth was 3.3 percent. But collections in December declined by 2.1 percent, compared to December 2007.

The downward trend is distressing, the governor said.

Gov. Rounds has advised legislative leaders that he intends to revise the 2010 budget proposal to reflect the anticipated reduction in revenues.

The governor told legislators in his December budget address that they must be cautious with spending because of the economic uncertainty. He proposed a $3.67 billion budget that would cover basic needs in education, public safety, and care of the needy.

The governor said last month that state reserves were dwindling, and there is not enough money to fund every worthy program and service. Gov. Rounds also warned legislators in December that revenue estimates may not hold up.

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