The staff at the Vermillion Chamber of Commerce and Development Company set up more chairs in their building's conference room as they prepared for last Saturday's District 17 legislative cracker barrel meeting.
Two weeks earlier, a crowd of over 50 people filled every chair for the first legislative meeting held in Vermillion.
On Feb. 12, the extra chairs weren't enough. An audience of approximately 70 local citizens turned out to both listen and share their concerns with District 17 Reps. Tom Jones and Jamie Boomgarden, and District 17 Sen. Eldon Nygaard.
As in the first legislative meeting, the atmosphere in the room was tense. Gone, for the most part, was the more relaxed mood that historically has accompanied these meetings, as constituents voiced concerns about proposed deep cuts in the state budget and the effect they will have on Medicaid and education.
Boomgarden noted that the state budget is still in the appropriations process, and various agencies and groups are starting to have meetings with legislators and the governor.
Your messages are being heard, he said. We're getting tons of mail on education, both higher ed and K-12, and we're starting to get a lot more e-mails from health providers.
Boomgarden told the Vermillion audience that, in hindsight, it might have been wise for the Legislature to not appropriate extra money to education in recent years.
Education always got a good majority of that money, but should they have got that money at that time? he asked, or should we have just kept in the reserves for later and spent it on today's situation. That's arguable we dished it out; we gave a big chunk to education in terms of one-time monies, and I think health providers at one point got some dollars.
Now, with the new governor, things have totally changed right now, we're putting our hands up and playing defense because of what we went through before. Now it's so broad and so vague, and it's up to the agencies to plead their case to governor to say why they should be supported, Boomgarden said.
Lawmakers urged to be
Former long-time Vermillion School Board member Tom Craig noted that he didn't believe Boomgarden's assertions about education funding were accurate.
Jamie was talking about one time money and working to provide money for public education. One time monies are beneficial, but that's not the answer to your problems, because you can't increase salaries for your teachers with one time money, and more importantly I'd like to point out that in the last 10 years, and he (Jamie) has been there for seven of those, the general fund on the state level has increased over 5 percent per year, Craig said. During the same time frame, the increase for education, for K-12, has increased 2.7 percent. I don't think that public education is getting their fair shake on that.
The general fund has increased almost twice as much as it has for public education, and in that same time frame, monies for education were at one time 34 percent of the general fund. Today they are at 31 percent of the general fund, he said.
Craig noted that patrons of the Vermillion School District have stepped up to provide extra funding on the local level for education.
We've approved an $800,000 opt-out (of the property tax freeze). At the same time, the school board has reduced the general fund by $1 million. So this community has stepped up and is willing to step up. What I would like to see is you people step up, Craig said to the three legislators. I'm not worried about what's going on behind the scenes because I can't control that. What I would like see is for you to be proactive and be involved right now and give them (legislators) some alternatives to a 10 percent cut, which I consider to be absolutely devastating to education and Medicaid.
Craig suggested that lawmakers concentrate on formulating a budget plan that would include increasing the state sales tax to provide more revenue, and taking a portion of state reserve funds to help balance the budget while adequately funding education and Medicaid.
I think this is a rainy day and perhaps freezing jobs, perhaps freezing salaries rather than this 10 percent reduction which is just absolutely devastating to the state economy, to the local school districts, and to Medicaid, would be a better approach, Craig said. I would like to see you guys get real proactive with this.
South Dakota is wealthy
The concerns you have with the one-time monies is the same concerns we have, Boomgarden told Craig. We have $107 million in money we can play with in terms of the budget reserves. That's part of the property tax reduction fund, which includes video lottery.
He implied that because it was one time money, it couldn't be allocated to fund education.
You can't give raises with it because it's ongoing, so, again, if we give to education, it's going to be expected to be ongoing as well, and we won't have it a second year, Boomgarden said. It would get used by year one, and then in year number two, we would be in the same boat.
I've said this before, the District 17 legislator added. South Dakota is wealthy. Our personal income is going up. I don't think we feel it in our pocketbook, but when we compare ourselves to other states, our personal wealth in South Dakota is probably number one or number two in the nation. Because of that, that money goes into a formula in Washington, and we get penalized as a state. Our amount that we get reimbursed by the federal government for Medicaid because of that personal wealth, we get penalized a certain amount.
Boomgarden told the cracker barrel audience that penalty amounts to approximately $15 million. That's why you're seeing this shift from the federal mandates. Education isn't getting less dollars from year to year. They're getting less of a percentage of the overall budget because there are more dollars that have to be shifted. If we get more dollars, it gets shifted over to the social services and the Medicaid which is being forced upon us by the federal government, he said.
The Legislature convened on Jan. 11. It will continue until March 11, and then it will take a two-week recess and reconvene on March 20 to consider any vetoes or last minute issues.
The governor has proposed a budget that cuts $127 million or about 10 percent from the state's general fund.
Virtually every corner of state government would be affected, including state aid to K-12 education, higher education and Medicaid providers. Education and social services take about 85 percent of the general fund.
Daugaard said his proposal would wipe away a structural deficit in one year, paving the way for future growth and spending increases once the economy and state revenues recover. His cuts go far deeper than those proposed in December by former Gov. Mike Rounds, whose budget proposal used reserve money to buffer programs and resulted in only 5 percent cuts for K-12 education and Medicaid.
It's all going to go through Appropriations, and it's all going to come down to that final day where they (lawmakers) will see how much money they have left and they'll go bill by bill, yes or no, and most often, every bill that gets proposed this year is going to go south just because of the current budget situation, Boomgarden said, because of the current budget situation and the proposal from the governor.
Jones: We are not
Rep. Jones said he is concerned about how the proposed cuts will affect education in school districts across South Dakota, and especially in Vermillion and other communities in District 17.
I know you've done a $800,000 opt-out, and there's a lot of other schools that have done that, he said to Craig. I think about a third of the school districts are already opted-out, and I think if this goes through, we could see close to seeing everybody doing an opt-out. So what good is an opt-out? What good is the law? That's what I don't understand.
Jones said three bills have been introduced this session in an attempt to be proactive, as Craig suggested earlier Saturday morning. They've been introduced to do something about solving this budget cut to education and to Medicaid, and that's 85 percent of the budget, so that's what we're really addressing, he said. But what's happened to each one of those bills is they've failed in committee. They've all been tied to a sales tax increase there was one that I thought might be a good one, and that would have gotten rid of the 4 percent state sales tax on food, and in turn, to balance that out, if you lose 4 percent revenue on food, you have to find it some other place.
That proposed other place was to increase sales taxes by 1 percent on everything else that is taxed, Jones said.
When you do that, it not only offsets the 4 percent income off of the food tax, he said. It also raises approximately $100 million extra, but I think that has failed.
Legislation, as of last Saturday, still waiting to receive attention from lawmakers would increase the state sales tax by 1 percent during only the months of June, July and August with the goal of capturing extra revenue from tourists' spending in the state during the summer.
To me, I think that's a grandiose way of starting, but I think at best it's a band-aid, Jones said. I think we have to understand that we are not revenue-flush in South Dakota. We don't have the coal mines of Wyoming. We don't have the oil fields that they've discovered in North Dakota.
We have to find some way to support our quality of life, he said. And I'm not sure which way is going to do that. Everything that has come up through the Senate has failed. We do have independent thinkers that are starting to do interesting things, but the thing that has had us all concerned is the governor has stated he would veto any tax increase.
Jones said he was hearing one message loud and clear from the audience Saturday. You want good education. You want good health care for your folks and for the young kids that are served by Medicaid, he said. There are some things trying to be worked on, and I think they could be coming in two or three weeks. I think something positive could come from this.
He noted that the estimated $650,000 that would have to be absorbed by the Vermillion School District should Gov. Daugaard's budget plan become reality would greatly affect the quality of life in the community. He also was critical of Sioux Falls Superintendent Pam Homan, who noted in a recent news story that she would be satisfied if education received a 4.5 percent cut rather than 10 percent.
I think that's a bail out. I think she should stand her ground and say 'no,' and at worst, receive a zero percent cut, Jones said. Our law says we will fund education at 3 percent or the rate of inflation. So education grew at 3 percent until the recession hit, and the rate of inflation was at 1.2 percent. And even that didn't work last year, so they changed the law and we gave education no increase.
I just think this is ridiculous I think we need to stand up and stand firm.
Boomgarden told the audience that K-12 education would not be receiving a 10 percent cut in revenue as the governor had originally proposed.
The 10 percent across the state should actually be a 5.4 percent cut for K-12 education, he said. It's the state portion of what they get. Fifty-seven percent of it comes from the state, and 46 to 47 percent comes from local effort which means the property taxes, and that's the part they are going to be addressing.