Proposed budget cuts dominate Saturday discussion

District 17 Sen. Ben Nesselhuf of Vermillion had to fly solo at Saturday's Cracker Barrel meeting, held at the William J. Radigan Fire Hall Saturday morning.

No one in the audience seemed to mind that his colleagues, Reps. Jamie Boomgarden and Eldon Nygaard, were unable to attend. It gave the audience made up of local citizens who have supported Nesselhuf the past decade one last, one-on-one chance, to meet.

Saturday marked the last legislative Cracker Barrel meeting Nesselhuf participated in. He is not seeking re-election to the state Legislature; he has decided, instead to campaign for election as South Dakota's next secretary of state.

"This is certainly the most difficult session that we've had in the 10 that I've been through," Nesselhuf said. "It's all about the budget, of course."

He earlier had distributed a list of proposed budget cuts for fiscal year 2011, and proposed spending reductions in the fiscal year 2012 state budget introduced last week by Republican lawmakers. The cuts and reductions total approximately $52.6 million.

"The budget cuts that were announced have, in essence, been described as across-the-board cuts," USD President James Abbott told Nesselhuf, "but essentially, the (state) universities take three times the hit that anybody else does … it is particular unfair. Why should we take three times the hit of anybody else? I just don't get that, and I hope there are enough votes to block that."

"This could be interesting," Nesselhuf replied, "because the Republican legislators decided to pick a big fight with the governor. They just haven't seen eye-to-eye for a number of years, and since this is Rounds' last year, I think it's just boiling to the surface."

"The thing that is really alarming is we cut out a total of about $3.6 million last year (from higher education), so, you're really looking at some significant cuts," Abbott said. "There are also across-the board cuts of 2 percent, so when you add them all up, it looks like our share, between USD and the medical school, is $2.3 million – it's a significant hit."

The Republican legislators also proposed to cut the funding for the Opportunity Scholarship by $2 million, with the intent of finding alternative funding resources for that program.

"It means that the Opportunity Scholarships, are getting cut in half, so any kid that was getting $1,000 will be getting $500," Abbott said. "What's going to have to happen, is that to the extents there are cuts (to higher education funding), a big chunk of that is going to have to come back in terms of increased tuition.

"Eighty percent of our budget goes to labor, and we're not exactly overfunded," he said.

Abbott noted that the University of North Dakota, with 13,000 students, has a budget of $449 million. USD, with its 9,200 students, has a budget of $150 million.

He added that he would prefer that state legislators not get involved in making specific budget cuts involving higher education.

"If they want to cut funding by 2 percent, then cut by 2 percent, but let the Regents and the university presidents and anybody else that wants to talk about it try to figure out where to make the cuts," Abbott said. "The Legislature should not be micro-managing."

The Associated Press reported March 9 that Gov. Mike Rounds is seeking more details about many of the Republican legislators proposed cuts for fiscal year 2011.

The cuts could reduce a childhood vaccination program, courses offered by television to rural schools and the state's economic development efforts, state budget director Jason Dilges said.

"We've got more questions than answers at this point," said Dilges. "I've asked them to show me their math."

After the GOP lawmakers unveiled their proposals, Rounds said many of their ideas would not work. The Republican governor also said he stands behind his proposed spending plan, which would use $32 million in reserve funds to balance the state budget in the year beginning July 1.

However, members of the Republican legislative minority hope to balance next year's budget without using reserve funds because they are worried about even bigger budget problems looming in the following years.

One of the biggest parts of the GOP plan would narrow the gap between revenue and spending by $11.5 million by reducing the size of tax refunds given to large industrial and agricultural processing projects. The budget cannot be finished until lawmakers decide the details of the tax refund measure.

House Republican Leader Bob Faehn of Watertown said GOP lawmakers are sticking to their budget-cutting plan. Senate Republican Leader Dave Knudson of Sioux Falls said legislators will sit down with the governor's budget staff to work out details.

Dilges said he has asked Republican legislative leaders to give him details of how they want some state agencies to respond to the suggested spending cuts. He said some of the proposals could have unintended consequences and others are flawed because they could cut the same dollars two or three times.

For example, the plan to close the intensive treatment program for women inmates addicted to methamphetamine would affect nearly 100 inmates and those in aftercare, Dilges said. It's unclear whether those inmates would be turned free or put into the main women's prison, he said.

A $300,000 cut would remove about half the funding for a program that provides courses over a television network to rural schools, Dilges said. But he said lawmakers need to provide more information on what courses or services they want to eliminate.

The GOP proposal would cut $7 million by a 2 percent across-the-board cut to all programs except K-12 education and Medicaid, the state-federal program that provides medical services to low-income people.

Dilges said a $4 million cut in personal services and another $4 million cut in travel, equipment and supplies would also amount to across-the-board cuts. The general across-the-board cuts, combined with the cuts in personal services and equipment, would add up to cuts of 6 percent or more to agencies, he said.

"There's not $15 million of fat that's floating around in state government that we can do without and not have to discontinue services," Dilges said.

The cuts also could have unintended consequences such as preventing South Dakota Public Broadcasting from getting some federal matching money and reducing a Health Department program that vaccinates children for mumps, measles and other diseases, Dilges said.

A $1 million cut in the Department of Tourism and State Development is likely to hamper economic development efforts because tourism promotion does not use any general state funds, he said.

Saturday morning, Nesselhuf speculated that much of the continuing debate over the proposed budget cuts would take place in the state joint Appropriations Committee.

"This is what's frustrating about that process," he said. "Those folks lock themselves away for the entire session, and it's usually the night before our last day of session that all of the amendments show up, and that's when they actually vote on the appropriations bill.

"It's irritating," Nesselhuf said, "because it doesn't matter when the last day of session is. We won't have the final numbers until the day before that last day, so no one can make any votes until the day before. It's a broken process."

The Associated Press contributed to this report.

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