Knudson: Economy is top priority

Something happened as Dave Knudson made plans to launch his campaign for governor.

The field got more crowded than expected. He is one of five Republican gubernatorial candidates. And, there is one Democratic seeking the governor's office.

"The thought that there would be three or four people in the race isn't all that surprising," he said during a campaign stop in Vermillion Monday. "It's a genuine effort to get the needed 2,200 petition signatures, plus an extra 1,000 or so extra signatures you collect just to make sure that everything about your petitions is valid.

"That takes real effort, so I was impressed that all five of the candidates were able to garner the needed number of signatures," Knudson said. "That shows that you are really out there working, and that you've got some people listening to the message that you are offering."

Knudson, a Republican and Yankton native, now lives in Sioux Falls, and while he is on the campaign trail, he finds himself rubbing elbows with fellow Republican gubernatorial candidates Dennis Daugaard, Gordon Howie, Ken Knuppe and Scott Munsterman, and Democrat Scott Heidepriem.

The campaign has taken him to all corners of the state, and in the last month, he and his fellow candidates have been guests at numerous Lincoln Day dinners, a traditional GOP event.

"I think trying to distinguish yourself is a challenge. I've been to close to 30 Lincoln Day dinners, and the people who attend those must face a barrage of statements from five gubernatorial candidates and three candidates running for the U.S. House of Representatives," Knudson said.

Knudson was first elected to the South Dakota Senate in November 2002. He currently serves as the Senate majority leader.

Knudson has practiced law at Davenport, Evans, Hurwitz & Smith, LLP, in Sioux Falls since 1975. He is a graduate of Harvard College and the New York University School of Law. He received an MBA from the University of South Dakota School of Business.

He's been in full campaign mode since this year's legislative session ended approximately a month ago. It's given him the opportunity to listen as citizens throughout the state share their concerns for him. Right now, the issue that gets top priority is the economy and state budget.

"The thing that is striking is how few people have any confidence about the future," Knudson said. "People that have a job are very pleased to have it, but are worried about whether they will have that job at Christmas."

South Dakota's small business owners have, for the most part, been able to weather the economic storm being experienced nation-wide without having to reduce employee numbers.

"But a lot of them have shortened hours; if someone left as an employee for some reason, they typically have not filled that position, and I think most businesses are trying to do the same work as before with fewer people and fewer hours involved," he said. "There is not a mood of confidence."

During the campaign, so far at least, Knudson said he's clearly detected that the state of the economy has clearly pushed all other issues aside.

And, he added, the budget seemed to be the dominant topic of this year's legislative session.

"The governor essentially handed us a budget with a $40 million deficit once you decided that you weren't going to shift some of the K-12 funding burden onto local property taxpayers," Knudson said. "I think even before the session, the legislators on the Republican side – and the same views were shared by Democrats – really wanted to have a zero deficit budget. We did not think that in view of the potential $100 million deficit next year that we didn't want to spend any of our reserves this year."

He voices disappointment when recalling that Gov. Mike Rounds and Lt. Gov. Dennis Daugaard, who is now one of Knudson's GOP opponents for the gubernatorial nomination, offered little assistance in meeting the goal of a zero deficit budget.

At the very end of the session, Knudson said, Rounds was "very much opposed" to across-the-board cuts offered by lawmakers. "We accepted some alternative cuts that he proposed in lieu of the 2 percent across the board cut that we had in our plan, and that was the final deal passed … I think that was quite an achievement," he said.

South Dakota's Legislature and new governor, Knudson noted, will face huge budget challenges – including an estimated $60 million deficit – next year.

"But I think you're going to have a governor," he said, describing himself, "who wants to be part of the solution rather than spending reserves. For the Legislature to come through and find $40 million in cuts and savings to the budget was a pretty impressive achievement."

South Dakota, he said, is experiencing a budget crisis. "I know Dennis Daugaard doesn't think we have a crisis, but at $40 million or $100 million deficits, I don't know how big it would have to be to be considered a crisis."

He believes that a 2 to 3 percent across-the-board cut to a good portion of state government – he excludes K-12 education, Medicaid and state higher education – will pose an administrative challenge but also add efficiency to the system.

"I think we can go one round with that across-the-board cut," Knudson said. "I think most small businesses in South Dakota have seen sharper reductions in their revenues than 2 to 3 percent, and they're figuring it out. State government needs to be part of that as well."

In the long run, South Dakota must grow its way out of its current budget crisis.

"That gets you into economic development, and we're likely to have a very serious opportunity. The federal government, for the past two-and-a-half years, has shouldered an extra 5 to 6 percent of the Medicaid program," he said. The U.S. Senate has already passed a bill to extend that six more months, which would save South Dakota $36 million."

Those funds, Knudson said, should be directed toward economic development.

"Whether that's into the REDI Fund or the Futures Fund, or we should have some flexibility to adjust to new developments – I think it is the best opportunity we have to get some growth started in South Dakota," he said. "I think the state needs to work with the local development foundations and figure out what they need to help businesses in their communities grow."

The key to increased economic success in South Dakota lies with small businesses, Knudson believes.

"While you may see some high profile businesses move into a state or a community, in the end, the real growth comes from existing small businesses that grew by five people or 10 people, and I think we need to concentrate on that area," he said. "You're always going to be looking for new opportunities by perhaps attracting out-of-state businesses here, but I think the sweet spot, the place where you are going to see real economic growth, is from the businesses that are already here that are in a position to expand."

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