Between the Lines: Is it good news or bad news?

Is a surplus in a government's budget good news or bad news?

If you're in the business of spending government money, I suppose it's good news.

If you're in the position of being taxed to provide those funds, you may not be as inclined to think such a development is hunky dory.

Gov. Dennis Daugaard believes the fact that South Dakota finished its 2011-12 fiscal year in the black is very good news.

The state's ongoing revenues exceeded ongoing expenses by $47.8 million.

That is no small chunk of change. For us South Dakotans, anyway.

A little over a decade ago, in contrast, Gov. Bill Janklow was not happy with many of South Dakota's public school districts.

Why? The districts were following a budget approach that in many ways is similar to Daugaard's. School boards across the state, at a time of relative uncertainty following the establishments of property tax freezes and infusions of state aid from Pierre, began taking a very conservative approach when it came time to formulating their budgets.

They began building reserve funds. Janklow was not pleased.

During the 2000 session of the South Dakota Legislature, Janklow repeatedly called for imposing some conditions and restraints on how school districts handle reserve funds. He argued at that time that some schools had built excessive reserves with money they should instead have been using to educate students.

According to Janklow, school boards needed to strive to spend nearly all of the taxpayer-generated revenue they received. Those dollars were not being paid by South Dakota taxpayers to be, well, NOT spent.

After negotiations that included Janklow and leaders of both houses in Pierre, a bill was approved, and eventually signed by the governor that merely prohibited districts from transferring general operating money to capital outlay funds that are used for equipment and buildings.

Janklow had said he might veto nearly $300 million in state aid to school districts to make sure lawmakers discussed school reserves before ending the legislative session.

He also noted back then school districts' total general fund reserves had increased from $77 million in 1994 to $197 million in 1999. During that period, state aid to schools increased substantially, and schools contended they needed even more state money, he said.

But Janklow wound up signing the budget bill without striking the part of the state budget that provides state aid to school districts.

The issue of school district reserve funds came at the beginning of a new era in the way school districts are funded in this state.  Janklow and the Legislature had cut property taxes by 30 percent for owner-occupied homes and agricultural land by boosting state aid to education, but the reduction was partly offset by increased taxes for capital outlays.

After Janklow criticized schools in 1999 for building their reserves, some districts shifted general operating money into capital outlay reserves that are used for equipment and buildings.

After 2000, school boards could no longer do that. They, naturally, began spending as Janklow wanted them to. They really didn't have a choice. The new law passed by the 2000 Legislature took one more bit of local control away from school boards, and forced local districts to handle their revenue in very specific ways.

One message seemed to be driven home loud and clear that year, even though it may not, at that time, been adopted as a formal policy: school district reserves were to be spent, not built up.

Should the same philosophy be followed with our state budget?

It's easy to celebrate the $50 million extra in our state coffers. But it's not like it just came from nowhere. It came from me and you, in the form of taxes. And it came from a host of other sources.

It came from school districts that have endured years of cuts in the amount of state funding they receive from Pierre. Remember the state law that says state aid to school districts must increase each year by the rate of inflation or 3 percent, whichever is less? That law was first deliberately broken by Gov. Mike Rounds during his last year in office, and it has pretty much been ignored by lawmakers ever since.

Gov. Daugaard had barely finished moving into the governor's mansion in 2011 when he proposed 10 percent statewide budget cuts. In late January 2011, he noted that schools could make cuts or go to local taxpayers and ask for an increase in property taxes in order to stave off the effects of his proposed budget slashing.

The state budget excess that was revealed this week also came, in part, from cuts to higher education budgets, which has forced our public universities to, among other things, hike tuition fees by at least 7 percent annually for the last two years.

Education isn't the only aspect of state government that has felt the pain of budget cuts in the past couple years. A listing of every state entity that has been affected by the cuts would likely fill this paper.

South Dakota House Minority Leader Bernie Hunhoff of Yankton talked about some dollar figures this week that haven't been mentioned by governor. At least not yet .

The $50 million surplus comes at a time when the state is sitting on approximately $134 million in reserve funds. South Dakota also has about $800 million in trust funds, according to the Yankton senator.

We know that state lawmakers work hard every year to balance our state's budget. These have been challenging times, with a weak national economy, catastrophic flooding of the Missouri River last year, and a severe drought this summer. We know lawmakers in other states that are facing severe budget deficits are likely feeling a bit envious of South Dakota's fiscal position right now.

So, is the budget surplus good news or bad news? As you contemplate that question, keep a couple things in mind. You've personally helped create that surplus with the taxes you've paid.

And if you're a teacher or a state employee, you've added just a bit extra to that amount in the form of the freeze in pay you've been asked to endure, or a reduction in hours or perhaps even the elimination of some of your co-workers, all in the spirit of cost-cutting.

Personally, if anyone is to be congratulated for South Dakota's envious fiscal condition, it's you. And everyone else who loves this state, and loves their job, and tries to do the best they can every year.

Let's hope the increased productivity and the cuts in services we've all had to endure so that we may further pad our state's budget surplus will someday be rewarded with the wise allocation of those extra dollars in a way that will benefit us all.

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