- Associated Press - Monday, December 5, 2016

PIERRE, S.D. (AP) - Gov. Dennis Daugaard says his budget plan to be released Tuesday won’t include cuts, but lower-than-anticipated tax collections will only allow for modest spending increases during the 2017 legislative session.

The governor is to outline his spending priorities in a budget address to lawmakers at the Capitol on Tuesday. He told The Associated Press that his plan for the upcoming budget cycle is “leaner” compared with some other years, but won’t require the spending cuts that the state faced early in his first term.

“People can see weakness in revenue, and then they can understand that translates into an inability to spend,” he said. “That happens in people’s personal lives and in their businesses.”

The House Republican leader didn’t answer a telephone call requesting comment, while the Senate GOP leader didn’t immediately return a telephone message from The AP.

State revenues for the first four months of the current fiscal year, which began July 1, were down roughly $20 million - or about 3.6 percent - from lawmakers’ projections.

Nearly all of that decline is from lower-than-expected sales tax collections, which officials have attributed to cautious consumer spending, low commodity prices and e-commerce transactions that avoid state sales taxes. Sales tax is the state’s main revenue source.

Daugaard said some of the revenue issues are also due to anomalies including a state sales tax increase that prompted people to make big purchases before it went into effect.

GOP Sen. Larry Tidemann, incoming chairman of the Joint Committee on Appropriations, said there won’t be a significant amount of money available for a lot of new programs unless lawmakers make cuts and shift funding around.

The Republican-held Legislature will reshape the current budget and approve the next one during the legislative session that begins in January. For the current year, the Republican governor has said that he wants to use one-time money to plug an expected budget shortfall.

Senate Democratic leader Billie Sutton said he anticipates Daugaard will take a very cautious approach with revenues. Democrats hope to find funding for priorities including pre-K education, he said.

The governor also has said that he doesn’t plan to include millions of dollars of funding in his budget proposal for a public campaign finance system established under a government ethics overhaul approved by voters last month. South Dakota doesn’t have the money to fund it, he said.

A group of Republican lawmakers and others filed a lawsuit last month in state court challenging the constitutionality of the ballot measure. Daugaard has said he’d support rolling back the measure if it isn’t struck down in court.

Those bringing the lawsuit are set to argue in a court hearing Thursday that the law should be put on hold while the case proceeds.


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