What’s going on with sales tax revenue was once again a topic of discussion during the legislative interim.
“We’ve got to keep this issue front and center if we’re going to keep funding public education and social services,” Rep. Mark Mickelson said during Monday’s (5/15) Legislative Executive Board meeting.
“We’re lagging a little bit in terms of our sales tax revenue,” S.D. Bureau of Finance and Management Deputy Director Jim Terwilliger said, adding that “in the last year and a half” the sales tax has been “softer than what we’ve seen historically.”
S.D. Legislative Research Council Fiscal Analyst Jeff Mehlhaff expounded on Terwilliger’s statement, saying “At the start of the new fiscal year…we’ve had a reduction in taxable sales.”
BFM’s report on April, 2017’s General Fund Receipts showed sales tax was behind more than $3 million from the revised FY17 revenue estimates adopted by the legislature in February, with total ongoing receipt collection coming in less than $11.4 million than the revised estimates.
During the update the discussion on the effects online sales was having on sales tax was broached with Rep. Mickelson saying he was “kind of convincing myself the boogey man’s this remote sales tax.”
Rep. Mickelson noted a previous year’s report provided by Terwilliger cited up to $56 million was lost in sales tax due to online purchases.
Terwilliger noted the amount lost is “probably smaller” this year because the state reached an agreement with Amazon where the online retailer began collecting and remitting sales tax of online purchases for the state earlier this year, but the amount gained remains uncertain.
“It’s not an easy question to answer,” Terwilliger said. He added that in addition to losses due to online sales, a stagnant farm economy and lack inflation, and in some cases deflation, were contributing factors to lower sales tax revenue.
Two months of sales tax and ongoing receipt collections remain in the fiscal year and are likely to be topics discussed during the legislative interim. The Executive Board and Appropriations committee are scheduled to meet on June 6 and June 7-9, respectively.