~'1C Department of FY2016 Recommended Budget Department of - - PDF document

Agency Presentation - Revenue - FY16

Tuesday, January 27, 2015 10:28 AM

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FY2016 Recommended Budget

Department of Revenue

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Department Organizational Chart

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Director

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Department Mission and Goals

We partner with our stakeholders to provide customer-

• riented, fair, reliable revenue administration.

Goal 1 : Enhance Technology Goal 2: Invest in Employees Goal 3: Impact Legislative and Regulatory Environment Goal 4: Organize and Maintain Partnerships Goal 5: Ensure Organizational Learning

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The Department of Revenue is responsible for the administration and collection of business taxes, motor fuel taxes, motor vehicle fees, special taxes, operation of the state lottery, and regulation of the gaming and racing industries in South Dakota.

FY2016 Recommended Budget:

General Funds $ 1,228,995 Other Funds 7214091885 $73,638,880 FTE = 248.5

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FY2016 Recommended Budget

• The FY2016 Recommended Budget for the Department of Revenue

includes an increase of $1 ,367,719 over the FY 2015 budget and 1.0 FTE.

• Funding reflects an increase of $60,594 in general funds and an

increase of $1 ,307,125 in other funds.

• The general fund increase of $60,594 includes the additional FTE in

Property and Special Taxes to address the growing number of special tax licensees and to address the increased workload with the likely passage of direct wine shipment legislation. Also included in this increase is the approved reclassification of a position from a Statistical Assistant to an Accountant II.

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FY2016 Recommended Budget (cont.)

• The increase of $1,307,125 in other fund authority includes:
• 1. An increase of $1,285,000 in the Division of Motor

Vehicles for the annual maintenance costs of new plate production equipment, materials and other costs needed in FY2016 for the 2016 license plate production. 2. $22,125 for additional travel budget authority for the Division of Audits.

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Comparison of FY2015 & FY2016 Budgets

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I Budgeted Recommended

FY2015 FY2016

Increase Personal Services $15,464,267 $15,524,861 $60,594 Travel 812,499 834,624 22,125 Contractual Services 41 ,702,727 41,787,727 85,000 Supplies/Materials 4,481,933 5,681 ,933 1,200,000 Grants 9,175,000 9,175,000

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Capital Assets 341,735 341 ,735

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Other 293,000 293,000

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TOTAL $72,271,161 $73,638,880

$1 ,367,719

FTE 247.5 248.5 1.0

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SECRETARIAT DIVISION FUNCTIONS

Establish Department goals, objectives and policies Comprehensive customer education and public information programs

• Coordination, direction and application of technology in

support of eGovernment initiative Legal research, analysis, and representation Investigate and prosecute violations of the criminal statutes

• f the revenue code - Investigative Services Bureau

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Customer Education and Staff Training - FYl 4

Over 1,600 customers received training in FY14

One-on-one Training Seminars Webinars In-person training for Associations and Conferences

• Internal Training

32 Continuing Education Units (CEUs) issued to 24 people

• 55 Continuing Professional Education (CPE) certificates issued to 42

people Types of training - New Employee Orientation, Supervisory training, Policy and Procedures Updates, Professional training (Customer Service, Effective Writing, Computer training)

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Filed Returns for Reporting Periods 01/2007 to 12/2014 (Semi-Annual)

$110 $100 $90

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• - Paper Return
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FY2016 Recommended Budget

Personal Services $2,012,749

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Operating Expenses

$1 ,545,399

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Total FY2016 Budget $3,558,148

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Fund Source: Other Funds - Sales and Use Tax Collection Fund & State Motor Vehicle Fund

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PRIMARY FUNCTIONS

• Ensure compliance with all applicable tax laws in South

Dakota, and to promote sales tax equity on a national basis through simplification of sales tax laws and administration

• Administer municipal and special jurisdiction sales, use

taxes, excise tax, prepaid wireless, and 91 1 emergency surcharge

• Taxes collected and payments totaling $338,607,923 went

to 263 municipal and special jurisdiction entities for FY2014

• Process sales, use, and contractors' excise tax payments

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FY2016 Recommended Budget

Personal Services $3,445,825

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Operating Expenses $ 873,949

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Total FY2016 Budget $4,319,774 FTE 57.5 No Recommended Increases Fund Source: Other Funds - Sales and Use Tax Collection Fund

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Sales & Use Tax Collections (FY2010 -FY2015 to-date)

$80

$75

$70 $65

$60 $55 $50

$40 - -~--~---------------

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..,_ FY2014

• - FY2013
• SFY2012
• FY2011
• -SFY2010

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Contractors' Excise Tax Collections (FY2010 - FY2015 to-date)

$11 $10 $9 $8 $7

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$3 $2 $1 $0

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PRIMARY FUNCTIONS

Administer:

Motor vehicle licensing and registration Motor vehicle titles License plate issuance motor fuel tax programs Motor vehicle dealer program

Collect:

Motor vehicle license and registration fees 3% motor vehicle excise tax $0.22 gasoline tax and other fuel taxes

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FY2016 Recommended Budget ,n

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Total FY2016 Budget

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FTE Recommended Increases:

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2016 License Plate Re-issue

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$2,270,315 $6,372,282 $8,642,597 46.0

$1 ,285,000

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Fund Source: Other Funds - State Motor Vehicle Fund ~ and License Plate Revolving Fund

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2016 License Plate Re-Issue - Timeline

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2014 - Customer Portal system design; RFP issued , Legislature appropriated $1.8M to start the project in FY15 2015 - Ready, set, go ... .. Go live with new online customer portal , Pilot test of Firefighter plates on demand ,., Final system preparation to issue standard plates on demand

r Begin bulk plate production Sept 1st_ Counties stocked with

3 month supply by end of December. 2016 - Plate reissue begins: standard and specialty 2017 & 2018 - Reissue non-standard plates (city, county, etc.)

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2016 License Plate Re-Issue

Projected 1.5 million plate sets to be issued at a cost of $4 per set. Total Cost of Project= $6 million Funding Source - Registration Fee Revenues , 2.5% of fees collected go to the License Plate Revolving Fund 3 year Project for re-issue , FY 2015 Budget Year - 20% of project budget expended , FY 2016 Budget Year - 60% of project budget expended , FY 2017 Budget Year - 20% of project budget expended Ongoing: Will issue 400,000 standard plate sets per year for each

• f the remaining 4 years of the 5 year plate cycle.

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$180 $160 $140 $120 $100 $80 $60 $40 S20 $0

Total Fuel Revenues (2005-2014)

1.48.8 5161.9 $156 7 $1.48.4 $152.2 $ 153.3 . S140.6 $141.0

S138.7 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY,012 FY2013 FY2014

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Motor Vehicle Excise Revenues (2010-2014)

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$10 $0 FY2010 FY20ll FY20U FY2013 FY2014

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PRIMARY FUNCTIONS

• Responsible for overseeing the property tax assessment and

tax laws of South Dakota

• Assist local government units in making property tax

assessments that are fair in compliance with the law

• Responsible for licensing and collecting a multitude of state

taxes to include:

Bank Franchise ,.. Cigarette ,.. Beer, Wine, and Distilled Spirits

',,- Mineral Taxes

• Responsible for the property tax refund program for the elderly

and disabled.

(Property tax assessments and collections are the primary source of funding school systems, counties, municipalities and other local government units)

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FY2016 Recommended Budget

Personal Services $ 967,449 Operating Expenses $ 261 ,546 Total FY2016 Budget $1,228,995 FTE 15.0 Recommended Increase: Additional FTE & Employee

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Reclassification Total Increase Fund Source: General Funds $ 60,594 $ 60,594

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Total Bank Franchise & Bank Tax Collections (FY2005-FY2014)

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FY2005

FY2006

FY2007 FY2008 FY2009

FY2010 FY2011

FY2012 FY2013 FY2014

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PRIMARY FUNCTIONS

• Conduct audits of sales, use, contractors' excise,

motor fuel, and severance taxes to ensure compliance

• Provide on-site taxpayer education as part of the

audit function

• The Audit Division completed 2,210 audits in

FY2014, with audit assessments of $20.9 million.

55°/o of FY14 sales, use and excise tax audits

were conducted out of state.

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FY14 Total Taxpayers vs. Audits Conducted

80.00% 70.00%

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30.00% 20.00% 1000% t~ 9 .21 0.00% Refund 0.47% 1.77% Unlicensed 73.45%

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$100,000 s100,ooo to $1,000,000

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$1,000,000 or More

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FY2016 Recommended Budget

Personal Services Operating Expenses Total FY2016 Budget FTE $3,835,365 $ 588,888 $4,424,253 55.0 Recommended Increase: $22,125 Operating Expenses for travel increases

Fund Source: Other Funds - Sales and Use Tax Collection Fund & State Motor Vehicle Fund

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INSTANT & ON-LINE OPERATIONS

PRIMARY FUNCTION

• Operation of the state lottery established in SDCL 42-7

A in a secure and efficient manner in order to maximize revenue to the state through the sale of instant and on-line lottery games.

• Market instant tickets, lotto games, and regulate video lottery to

raise revenues for state programs and initiatives .

., 610 Lottery Retailers ,. 1,395 Video Lottery establishments

• Oversee the SD Lottery Commission (7 members) to help

establish policy for lottery operations statewide. Instant & On-line is an informational budget.

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WHERE THE MONEY GOES

• Scratch Tickets: All net proceeds go to the General Fund.
• Lotto Tickets: The first $1.4 million goes to the General
• Fund. The remaining net proceeds are transferred to the

Capital Construction Fund.

• Video Lottery: Net machine income (cash in minus prizes
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• wners. Of the state's share, 49.5% goes to the Property

Tax Reduction Fund and .5% is used by the Lottery for

• peration costs.

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FY2016 Recommended Budget

INSTANT & ON-LINE OPERATIONS Personnel Services $ 1,362,082 Operating Expenses $36,909,173 Total FY2016 Budget $38,271 ,255 FTE 21.0 No Recommended Increases Fund Source: Other Funds - Instant and On-line

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VIDEO LOTTERY

PRIMARY FUNCTION

• The Division of Video Lottery establishes policy for

and provides direction on operations of the South Dakota Lottery .

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$17,500,000

Video Lottery Net Machine Income

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$14,000,000 $13,500,000

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FY2016 Recommended Budget

VIDEO LOTTERY

Personal Services Operating Expenses Total FY2016 Budget FTE No Recommended Increases $ 628,301 $1,956,133 $2,584,434 10.0 Fund Source: Other Funds - Video Lottery

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PRIJlfARY FUNCTIONS

• Responsible for the promulgation of rules and

regulations governing limited gaming in South Dakota.

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• Regulates the state's gaming and racing

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industries and collects and distributes funds

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FY2016 Recommended Budget

Personal Services Operating Expenses Total FY2016 Budget FTE No Recommended Increases $ 1,002,775 $ 9,606,649 $10,609,424 16.0 Fund Source: Other Funds - Deadwood Gaming Administration

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FY2014 Distribution of Gaming Funds E

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City of Deadwood SD Tourism SD General Fund Lawrence County School Districts Other Municipalities in Lawrence County State Historical Preservation SD Department of Social Services $7,124,547.24 47.61% $3,175,377.19 21.22% $3,136,981.05 20.96% $793,844.31 5.30% $306,382.24 2.05% $306,382.24 2.05% $100,000.00 0.67%

$21 ,370.84 0.14% $14,964,885.11 100.00%

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445 E. Capitol Avenue Pierre, SD 57501 605. 773.3311 1.800.TAX {829).9188 HTTP://DOR.SD.GOV/

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