Governor presents â�?�?cautiousâ�?�? budget By David Lias
Plain Talk There may be pitched battles over next fiscal yearâ�?�?s budget during the 2009 Legislative session that gets underway in January. Gov. Mike Rounds, speaking to media Monday before his budget address to state lawmakers the next day, said South Dakota is facing tight financial times. â�?�?There is about $1.9 million in revenues between our current estimated budget for 2009 and our projection for 2010,â�? he said. â�?�?For those of you who have been around for awhile, that is a very, very small increase in revenues.â�? The governor said he is proposing, what he describes, as â�?�?a very cautious budget,â�? because of several factors, including an uncertain national and state economy. He added that the state is also running out of reserve funds to help shore up shortfalls in its general fund. District 17 Rep. Eldon Nygaard of Vermillion told the Plain Talk Tuesday that he plans to work with the governor and lawmakers from both parties to hopefully ease some of South Dakotaâ�?�?s fiscal woes in the upcoming legislative session. I look forward to working with Gov. Rounds, fellow Democrats and my Republican colleagues in what amounts to challenging times in South Dakota.�? We must all put South Dakota first,â�? Nygaard said. â�?�?Citizens across our state are already facing tough times. Many of our farmers who had contracted for higher corn prices are facing the possibility of having those contracts cancelled because of problems in the ethanol industry. Their living costs have gone up at the same time that their incomes are being impacted by�? uncertainties.â�? Nygaard said workers are worried about their jobs and retirees are concerned about their retirement funds. ?â�?If we accept the governor's budget, we'll have a $6 million property tax increase as a result of freezing the levy on property tax because of the increasing evaluations, and this will generate another wave of opt-outs. The $5 million in fee increases comes out of the pockets of people worried whether they are going to have the same incomes next year as they earned last year. The state government's actual spending on K-12 education will decrease by several million dollars because the governor suggests eliminating the sparsity formula in addition to other cuts in education funding. Rounds said he is proposing a budget that is committed to funding only basic needs. Emphasis will be placed on taking care of people, educating children and protecting the public. The governor is also proposing that certain fees in the state be increased, to raise a total amount of $4.9 million. â�?�?Some of that money will offset where general funds would be used, and some of it will be coming back in as other revenues. They will show up as additional receipts of $3.3 million,â�? Rounds said. â�?�?If we do not get approval of fee increases, our actual projected revenues would go down by $1.4 million from 2009 to 2010.�? I donâ�?�?t ever remember a time when we actually had fewer revenues coming in one year than the previous year.â�? The state is projecting that sales tax revenues will be up by 6.38 percent in 2009, but in 2010, they are estimated to increase by only 3.48 percent. â�?�?Itâ�?�?s going to cut the increase almost in half,â�? Rounds said. The bank franchise tax was down in 2009 projection, and revised figures show them to continue to drop another 6 percent. â�?�?Earnings on the trust funds and interest on the general fund balance â�?�? in 2009, it went down about .72 percent compared to the previous year, but for 2010, will will go down an additional 11.80 percent,â�? Rounds said. â�?�?There is a significant reduction in the amount of interest earnings and trust fund earnings that will impact the general fund.â�? The general fund has grown by $165 million to help take care of people since 2003. In the area of education, including the year 2010, funding for education in the general fund will increase by $130 million. Other general fund increases since 2003 include $49 million for protecting the public, and $17 million for all of the rest of state government. â�?�?What is the solution?�? Every department in state government must be scrutinized before we balance the budget by slashing our K-12 schools across the state.�? Also, we must look at private contracts, like the $12 million no-bid public relations contract with a private ad agency,â�? Nygaard said. â�?�?I share the governor's desire to look closely at both in-state and out-of-state travel.�? For example, partisan junkets like ALEC conferences funded by state government.â�? Major spending changes for fiscal year 2010 in the general fund, Rounds said, include mandatory increases of approximately $24.4 million. â�?�?Weâ�?�?re asking for discretionary increases�? of�? about $388,000,â�? he said. â�?�?Thatâ�?�?s means about 1.6 percent of our general fund increases will be discretionary in nature, and that includes salary policy for the coming year.â�? State aid to education will go up by 3 percent, which totals 12.5 million. Other general fund spending increases include $3.4 million for mandatory medical costs, $2.3 million for increases in payments for utilization of medical services, and $1.7 million for lost federal funding used for placement and services for juveniles. The state will also have to dip $1.7 million from its general fund for the growth of Title 19 Medicaid clients, and $1.5 million for increased utility costs. â�?�?All the rest of government will contribute about $1 million in reductions,â�? the governor said. â�?�?Those are the mandatory areas of government. There are some discretionary areas of government, and thatâ�?�?s where weâ�?�?ll probably have the most discussion.â�? Those â�?�?discretionaryâ�? areas include employee compensation at 1.5 percent, or $6.3 million; discretionary provider inflation at 1.5 percent, or $5.5 million; moving the meth programs at the womenâ�?�?s prison to the base budget , $1.8 million; moving the state fair to the base budget, $800,000, and $14 million in reductions in other state programs. The total increase in education funding is going by $4,449,000. â�?�?K-12, tech schools and regents all are considered under this category,â�? the governor said, â�?�?and itâ�?�?s going to account for about 17.2 percent of a total increase of expenditures for the year.â�? He noted that the board of regents and department of education employee compensation rate will be the same as other state employees at 1.5 percent, which will total $2.7 million. Board of regent utilities will go up by $1.1 million, Birth to 3 funding will increase by $337,000, and technical institute funding will go up by $280,000. According a Board of Regentsâ�?�? press release Monday, the eight institutions under the regentsâ�?�? authority will join with state executive branch agencies to evaluate spending approaches in the coming months. �? â�?�?Whereas university presidents and special school superintendents already review open positions on a regular basis, weâ�?�?re asking them to give special attention to whether these positions are indeed critical and essential at this time,â�? said Regents Executive Director Robert T. Tad Perry. The presidents and superintendents also have been directed to take a more intensive review of all out-of-state travel requests, as well as large capital expenditure items. �? â�?�?While it is necessary to maintain high quality educational opportunities for the citizens of South Dakota and continue to build our research enterprise to fuel the economy, this is the right time to redouble our efforts to ensure the careful use of public resources available to us,â�? Perry said. �? The directive to university presidents and special school superintendents remains in effect for the foreseeable future, Perry said. â�?�?As a board, the regents have for many years made system efficiencies and standardization of internal business processes a major focus of our cost-saving efforts,â�? Perry explained. â�?�?This directive continues, expands, and intensifies that work as we move through these challenging economic times,â�? he said. The most controversial change item likely will be Roundsâ�?�? request to repeal the increasing and decreasing enrollment supplements that were passed by the 2007 Legislature. â�?�?That is a savings to the general fund of $5.7 million,â�? Rounds said. â�?�?I am also asking that we maintain the current tax levies in their current position. That will save the general fund this year $6.3 million.â�? â�?�?Overall the cuts are really token except in education where they are very real.�? The real issue this coming session will be where does education rank in state priorities,?â�? Nygaard said. â�?�?State government has grown at 5.6 percent over the past two years. Perhaps we should have passed one of the bills introduced each of the last two years that would have limited growth of state government to 3 percent.â�? Nygaard said he would favor asking each department of state government to trim 2 percent of their budgets and return them to the governor. â�?Also,�? their is this thing called the Governor's Future Fund with $26 million in it; it could be appropriated to meet some of the revenue short-falls,â�? he said. â�?�?The Legislature should be responsible for dictating where that money should be spent. Time for change has come to Pierre.â�?