South Dakota state budget
From Sunshine Review
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South Dakota is facing a $27 million budget gap for fiscal year 2009. The Center on Budget and Policy Priorities projects a larger deficit for fiscal year 2010, $32 million. [1] In February 2009 Gov. Mike Rounds announced that the state's budget gap between revenue and spending could grow to approximately $125 million in only a couple of years unless the state undergoes necessary cuts. In an effort to erase the looming budget deficit the Governor proposed using $63 million in reserves and covering the remaining $71 million shortfall by cutting spending, raising fees and removing some sales tax exemptions. [2] "This year we face two problems—a short-term financial slowdown and a structural budget deficit. We can survive the first with one-time solutions. But, we must correct the second with a commitment to avoid additional ongoing spending, unless that new spending has ongoing additional revenue sources," said Gov. Rounds. Additionally, the Governor noted that even though tax increases should be put on the table for discussion they should be considered only as a last resort to the current revenue shortfall. [3]
On March 18,2009 the Governor signed the $3.9 billion state budget for FY 2010. [4] Lawmakers said that the budget was ultimately a compromise. "The winner in this budget is the state's savings account. If you think that the most important priority in South Dakota is to save money you'd think this is a great budget. If you think our duty was to reinvigorate main street in South Dakota, stimulate the economy you wouldn't be very high on this budget," said Sen. Scott Heidepriem. [5]
[edit] Impact of budget woes
- According to the Bureau of Labor Statistics the seasonally adjusted unemployment figure for February 2009 increased to 4.6 percent [6] as compared to January 2009 at 4.4 percent and up from 3.7 percent in December 2008. The state has not seen an unemployment rate as high as 4.4 percent since 1987. In January, 4,022 initial unemployment insurance claims were filed, a 15.8 percent reduction compared to 4,780 claims the previous month. Compared to January 2008 there has been a 73.3 percent between the 4,022 initial claims in January 2009 and the 2,321 in January 2008. [7]
- In an effort to raise state revenue South Dakota lawmakers are looking at a proposal to add an additional 3 cent per gallon tax on gas. The state gas tax has not been raised since 1999. The proposed tax is expected to result in $17 million for road maintenance work. Legislators said federal stimulus funds are not eligible to fund road maintenance work thus and the decline in gas tax revenue due to high gas prices in 2008 has left the state with a need for additional revenue for road maintenance. [8]
- South Dakota State University is looking at nearly $1 million in budget cuts for the upcoming fiscal year. In total the university proper was decreased by $354,611, a 0.52 percent cut, the cooperative extension service lost $200,000 and the agriculture experiment station will see $421,883. Additionally budget cuts include a decrease in the university's maintenance and repair fund. [9]
- In March 2009 the South Dakota Senate approved legislation to raise the tourism tax to 1.5 percent from 1 percent to help fund arts programs and add money to the state's general fund. The new tax is anticipated to bring in $2.6 million in new revenue. [10]
[edit] Budget background
South Dakota's fiscal year begins July 1 and ends June 30 of the following year. State law requires annual preparation and approval of the state's budget and according to the State Constitution, the budget is required to be balanced before approval. The Governor presents the annual budget to the Legislature by the first Tuesday following the first Monday in December. Both the House and the Senate are then required to approve a budget by the end of the legislative session. The Governor has the power to veto individual line items in the budget approved by the legislature. [11]
Throughout the fiscal year the state budget must remain in balance and state agencies are not allowed to request additional funds. However, the commissioner of the Bureau of Finance and Management has the authority to authorize intradepartmental transfers of funds so long as the total spending levels are not exceeded. Transfers must first be accepted by the legislature's Interim Appropriations Committee. [11]
- The FY 2010 $4 billion is the largest budget the state of South Dakota has seen to date. The total budget includes $300 million in federal stimulus money. [12]
[edit] Budget figures
The following table provides a history of South Dakota's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $3.8 [13] | $23.1 [13] |
| 2001 | $4.0 [13] | $23.9 [13] |
| 2002 | $4.3 [13] | $26.4 [13] |
| 2003 | $4.4 [13] | $27.4 [13] |
| 2004 | $4.6 [13] | $29.5 [13] |
| 2005 | $5.0 [13] | $30.5 [13] |
| 2006 | $5.2 [13] | $32.0 [13] |
| 2007 | $5.4 [13] | $33.9 [13] |
| 2008 | $5.7 [13] | $36.0 [13] |
| 2009 | $6.0* [13] | $38.1* [13] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- State tax collections and other general fund revenue is predicted to decline as much as $38 million in the budget year that begins in July 2009 according to the governor's budget office. Officials predicted that total general fund revenue will be $1.13 billion in FY 2010, down $38 million from 2009. [14]
- Sales tax, the largest source of state general revenue, is expected to grow about 4 percent in FY 2009 to $670.2 million, however, officials expected only a 0.23 percent growth for FY 2010 to a total of $671.8 million. The contractor's excise tax is expected to fall about 4 percent for FY 2009, but it should increase by 1.6 percent FY 2010. The bank franchise tax is also predicted to fall 24 percent in 2009 and fall by 12 percent for FY 2010. Tax on insurance companies, however, is expected to increase 3 percent in 2009 and approximately 5.5 percent 2010. [14]
- Despite the steady decline in state revenue, it is expected to fall even more in spite of a ban on smoking in bars and casinos in turn causing video lottery gambling to decline by 15-25 percent, said Jim Terwilliger, economist for the Bureau of Finance and Management. [15]
[edit] Proposed actions
[edit] Governor Mike Rounds
Originally the Governor proposed using $63 million in reserves and covering the remaining $71 million shortfall by cutting spending, raising fees and removing some sales tax exemptions in his FY 2010 recommended budget. In early 2009 Gov. Rounds proposed $46 million in cuts to help balance the budget. [16] In mid-February 2009, the Governor announced that the federal stimulus funds will help reduce and even eliminate the need for some budget cuts. More than $100 million in federal funds for education said Rounds will help avoid cuts. Previously the Governor suggested eliminating extra aid to schools with significant increases and decreases in enrollment and the sprawling districts that cover large areas with few students. "The question for us is what is the most responsible way to use those dollars to ease the pain and to get us through a difficult economic time," said Rounds. [17]
[edit] Republicans
Despite some lawmakers criticism of budget cuts and proposed cuts by Gov. Rounds Republican lawmakers said that they are necessary to eliminate deficits. House Appropriations Chair Larry Tidemann noted that school districts are being treated well in the budget. "There's a lot of money going to K-12," he said. In addition, Republican legislators said that the cuts to state employee pay raises is not as harsh as it may appear and are necessary. Sen. Jeff Haverly said,"This is the time for everybody to tighten their belts and be thankful they have jobs." State employees in most years get a 3 percent across-the-board pay raise, with those below the midpoint of their salary ranges getting an extra 2.5 percent. [18]
[edit] Democrats
In regards of the approved state budget Democrat lawmakers said they believed more should have been done to give pay raises to state workers and provide extra money for nursing homes and others who provide medical services. Lawmakers ultimately passed a budget that eliminated a 3 percent pay raise for state employees for FY 2010. Rep. Paul Dennert said salary increases should be given at least to state employees in lower pay ranges. [18] Senator Heidepriem added that although the FY 2010 budget resolves the state's deficit the bill does not "stimulate the economy." [5]
[edit] Economic Stimulus Package
South Dakota is expected to receive between $500 and $600 million of the $787 billion dollar economic stimulus package. [19] According to White House officials the package is expected to create approximately 10,000 jobs. [20]
According to preliminary reports South Dakota is expected to receive:
- $1.2 million for unemployment insurance [21]
- $$28 million for workforce programs [21]
- $485,000 for senior nutrition programs [22]
- $45 million for water projects [23]
- $100 million for education [23]
[edit] Budget transparency
Open.sd.gov is the name of South Dakota's publicly available spending transparency database. It was announced on March 12th, 2008, approximately 6 months after transparency legislation from State Representative Hal Wick had been vetoed.[24] South Dakota Senate Bill 143 (2009), which was signed into law on March 13, 2009[25] required "a searchable internet website for the posting and access of certain public records and financial information."[25]
[edit] News
South Dakota's Initiated Measure 10, the Open and Clean Government Act, would have required the creation of an online database for state contracts over $500. This, and other aspects of the Measure, lead the National Taxpayers Union to believe the Measure's passage would have a positive impact on taxpayers.[26] However, unfortunately this measure fell by a margin of over 100,000 votes.[27] Although South Dakota recently launched www.open.sd.gov, Measure 10 would have protected taxpayer funds even more directly by outlawing their abuse by government officials.
[edit] Legislation
- South Dakota Senate Bill 143 (2009)[25]
[edit] Government tools
Open.sd.gov provides a database of state financial information, organized by broad topics such as budget, expenditures, revenues, vendor contracts, and payroll. Much of the information is updated twice per week. And, since data populating the database is tied directly to South Dakota's accounting system, payroll information is updated in real-time (that is, as soon as information enters the general accounting system software, it will appear on this database).
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| Open.sd.gov |  | | |  | | |
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[28]
- South Dakota will receive an estimated $523,121,310.[29]
[edit] Limitations and Suggestions
- Provide line-item expenditure information.
[edit] Support for creation of the database
In January, 2008, State Representative Hal Wick introduced South Dakota House Bill 1233 to create a searchable transparency database. Although the bill passed both the House and Senate, it was vetoed in March by Governor Mike Rounds.[30] On September 12th, 2008, the Governor's Office announced the launch of this website.[31]
The National Taxpayers Union issued a press release questioning Governor Mike Rounds's decision to veto South Dakota House Bill 1233 in March, 2008.[32]
[edit] Public employee salary information
The Argus Leader in South Dakota is providing this Interactive State Salaries database. It is searchable and current as of June 2007.
[edit] See Also
South Dakota taxpayer-funded lobbying
[edit] External links
- Great Plains Public Policy Institute
- www.open.sd.gov, official website
- Bureau of Finance and Management
- South Dakota Government spending
- South Dakota state and local spending
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
[edit] Additional reading
- Gov. Mike Rounds,"State of the state," January 13, 2009
- Associated Press,"Governor says spending plan passed by Legislature will help balance state budget," March 17,2009
[edit] References
- ↑ Center on Budget and Policy Priorities,"State budget troubles worsen," March 13,2009
- ↑ Associated Press,"South Dakota gov: Budget gap will continue to grow," February 27,2009
- ↑ Gov. Mike Rounds,"State of the state 2009," January 13,2009
- ↑ Associated Press,"Governor signs $3.9 billion state budget," March 18,2009
- ↑ 5.0 5.1 Keloland Television,"Lawmakers Reflect On Budget," March 14,2009
- ↑ Argus Leader,"Jobless rate inches up," March 19,2009
- ↑ Associated Press,"South Dakota jobless rate up to 4.4 pct in January," March 2,2009
- ↑ KSFY Television,"Gas Tax May Go Up," March 6,2009
- ↑ The Collegian,"SDSU still facing state budget cuts," March 18,2009
- ↑ Associated Press,"South Dakota Senate approves tourism tax increase," March 11,2009
- ↑ 11.0 11.1 State of South Dakota,"Budget Overview," retrieved March 25,2009
- ↑ Keloland Television,"Reaction To $4 Billion Budget," March 13,2009
- ↑ 13.00 13.01 13.02 13.03 13.04 13.05 13.06 13.07 13.08 13.09 13.10 13.11 13.12 13.13 13.14 13.15 13.16 13.17 13.18 13.19 US Government Spending,"South Dakota State and Local spending," retrieved March 25,2009
- ↑ 14.0 14.1 Associated Press,"Economists predict South Dakota revenues will fall," March 6,2009
- ↑ Associated Press,"SD governor signs ban on smoking in bars, casinos," March 19,2009
- ↑ Keloland Television,"Programs Spared In Latest SD Budget Proposal," March 13,2009
- ↑ Associated Press,"SD governor says stimulus money will help budget," February 20,2009
- ↑ 18.0 18.1 Associated Press,"Lawmakers near end of work on South Dakota budget," March 13,2009
- ↑ Argus Leader,"Stimulus money eases S.D. budget squeeze," March 9,2009
- ↑ American Recovery and Reinvestment Act,"Estimated job effect," retrieved March 25,2009
- ↑ 21.0 21.1 TMC net,"SOUTH DAKOTA Department of Labor receives $1.2 million," March 20,2009
- ↑ The Daily Republic,"Senior meals among programs slated for federal stimulus money," March 21,2009
- ↑ 23.0 23.1 Associated Press,"SD governor says stimulus money will help budget," February 20,2009
- ↑ "Gov. Rounds Announces Government Records Website," Office of the Governor Press Release, September 12, 2008
- ↑ 25.0 25.1 25.2 South Dakota Senate Bill 143 (2009): Bill Status
- ↑ National Taxpayers Union, "General Election Ballot Guide 2008: The Taxpayer's Perspective"
- ↑ South Dakota General Election Results, 4 November 2008
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State," March 12,2009
- ↑ Veto Letter HB 1233, Mike Rounds, March 13, 2008
- ↑ "Gov. Rounds Announces Government Records Website," Office of the Governor Press Release, September 12, 2008
- ↑ National Taxpayers Union, "Taxpayer Group Asks, "What's to Hide?" after Rounds's Veto of Budget Transparency Bill," March 18, 2008
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