Pierre Report: Workable budget solution top goal

We are in our fourth week in Pierre, continuing the careful and diligent process of working through the complexities of the state budget through the appropriations process. The South Dakota Senate and House of Representatives are working hard to identify the areas where cuts can be made and efficiencies can be found. The legislature is committed to finding the best workable solution with the least amount of pain on the people of South Dakota. We are committed to coming up with workable solutions to balance our budget and make progress towards the goal of eliminating the structural deficit.

South Dakotans believe that we cannot spend more than we take in. We all agree the over-spending and the debt load that our country is facing is like a cancer. Our national debt is out of control, now over $14 trillion. That�s $45,300 of national debt for every man, woman, and child in the United States.

We are committed to putting South Dakota taxpayers first. The appropriations process is the careful and thorough review of government spending. This process is where budget cuts and efficiencies will be vetted out, resulting in a balanced budget- required by state constitution. 

Some have asked about the State�s Cash Flow account. It is an account that holds a balance of over $900,000,000.  It is made up of over 240 separate accounts that are all committed funds for state expenses.  The cash flow account does earn interest and that is placed in the general fund to help fund the budget.

The State�s Trust Fund Accounts are a topic of discussion regarding balancing the budget.  Here are the facts:  Health Care Trust Fund � It was created by a vote of the people in 2002 (Constitutional Article XII Section 5). These funds are from the inter-governmental transfer (IGT) fund and a small, one-time amount from the increase in 2007 tobacco tax revenue. Each year an amount calculated by law (SDCL 4-5-29.1) is transferred from the trust fund to the state general fund. All funds must be appropriated for health care related programs. The trust fund may not be diverted for other purposes nor may the principal or earnings be invaded unless appropriated by a three-fourths vote of the entire Legislature.

Education Enhancement Trust Fund � It was created by a vote of the people in 2002 (Constitutional Article XII Section 6). These funds are from three sources: 1) the tobacco lawsuit settlement agreement; 2) the balance of funds in the Youth-at-Risk trust fund; and 3) a small, one-time amount from the increase in 2007 tobacco tax revenue. Each year an amount calculated by law (SDCL 4-5-29.2) is transferred from the trust fund to the state general fund. All funds must be appropriated for educational enhancement programs. The trust fund may not be diverted for other purposes nor may the principal or earnings be invaded unless appropriated by a three-fourths vote of the entire Legislature. 

Dakota Cement Trust Fund — It was created by a vote of the people in 2001 (Constitutional Article XII Section 20). The funds came from the sale of the state-owned cement plant. Each year $12 million is transferred from the trust fund to the state general fund. After the first $12 million, Legislature can make distributions from the difference between the $12 million annual general fund transfer and five percent of the fair market trust fund value. If losses have occurred, the original principal amount must be restored before this provision can be used. The amount over and above the $12M must be appropriated for the support of education, but not for the replacement of state aid. In recent history, this money has been used to fund the Opportunity Scholarship Program. Except for the $12M annual transfer, the original principal of the trust shall forever remain inviolate. 

Budget Reserve Fund � It was created by the legislature in 1991. This fund was started with $20 million of general funds which were unobligated at year end. Each year thereafter, the maximum level of funds in the reserve is set at 10 percent of the general funds appropriated for the prior year in the General Appropriations Act, with the funding coming from any unobligated cash remaining in the general fund at the end of the fiscal year. Expenditures out of the budget reserve fund shall only be by special appropriation of the Legislature, which requires a two-thirds vote of the entire Legislature. 

Property Tax Reduction Fund (PTRF) � It was created by the legislature in 1995 (SDCL 10-13-44). These funds come from four sources: 1) the state�s percentage of net video lottery machine income (excluding administrative expense); 2) sixty percent of the telecommunications tax; 3) thirty-three percent of the tobacco tax revenues after the first $30M has been receipted into the General and $5M into Tobacco Prevention and Reduction Trust Fund 4) money still remaining in the general fund at year end after the Budget Reserve Fund has been fully funded, if the amount in the Property Tax Reduction Fund does not exceed 15 percent of the prior year�s general fund appropriation. The Commissioner of Finance and Management may transfer moneys available from the property tax reduction fund to the general fund necessary to provide property tax relief through state aid to education. The Commissioner may also transfer amounts form this fund in order to balance the state�s budget. This is only possible if the amounts transferred from PTRF do not exceed the amounts budgeted for state aid to education, as mentioned in the previous statement. Money may also be transferred to the general fund by a simple majority of the Legislature.

We are proposing a $460,000 cut in the Legislature�s budget for 2012; this amounts to more than a 10 percent cut of the $4 million budget.  I will keep you posted on the process of the Legislature as we proceed.  Tuesday, Feb. 8 is the 18th legislative day of this proposed 36 day session. We are just over half way through the process.

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