Rounds: More money from federal government for Medicaid could help South Dakota balance budget

Rounds says extra federal aid could help SD budget

PIERRE, S.D. — South Dakota could get help in solving its budget problems if the federal government decides to give states another round of stimulus money, Gov. Mike Rounds said Tuesday in his state of the state address to kick off the Legislature’s 2010 session.

As part of the proposed health care reform measure, Congress is considering providing states with extra money to cover steep increases in Medicaid, a state-federal program that pays health care costs for low-income people, the Republican governor said.

However, Rounds said he and state lawmakers couldn’t count on the extra money when putting together the next state budget.

The governor urged the Legislature to hold down spending in the next year and use reserve funds to balance the budget. If the economy recovers and tax collections increase, the budget can be balanced in future years, he said.

“No matter what Congress or the national economy dumps on us in the next year, I’m optimistic,” Rounds said. “We will recover. We will have more jobs and we will continue to improve our quality of life here within our state.”

Rounds, who cannot run for re-election this year because he has reached his two-term limit, will likely be remembered for his efforts to improve the economy and education. He spent much of his final state of the state address outlining what he and the Legislature accomplished since he became governor in 2003.

Senate Republican Leader Dave Knudson, who is running for governor, noted that Rounds proposed no new programs.

“The speech was thin on any solutions to our budget problems,” Knudson said. “I think the heavy lifting on budget issues is being left to the Legislature.”

Leaders of the Democratic minority criticized Rounds for increasing the number of state employees in the past seven years. State government spending has grown by an average of 5.5 percent a year, but it should be held to the 3 percent limit imposed on schools and counties, they said. Across-the-board budget cuts also are needed, Democrats said.

“As things stand right now, state government isn’t working very well. State government is broke,” Senate Democratic Leader Scott Heidepriem said.

The governor last month proposed a state budget that would not increase aid to schools or give state employees a pay raise. The main increases in spending would be for Medicaid, and he proposed using $32 million in reserve funds to balance the budget for the year starting July 1. Rounds said the gap between ongoing revenue and spending could widen to more than $100 million in the year that begins July 2011.

Rounds said Congress is talking about increasing the federal share of the Medicaid program for part of next year, which would give South Dakota an extra $36 million or more. That could allow the state to avoid spending its reserves to balance the budget in the year beginning July 1, he said.

The governor said if lawmakers want to trim state spending, they must propose specific cuts to programs. He said he will not accept across-the-board cuts that call for agencies to provide the same level of services while reducing spending by a certain percentage.

The governor also chastised lawmakers who complain that the number of state employees has grown too much. He said many of those positions, the equivalent of 861 full-time employees, have been added at state universities to support increased student enrollment and research.

The key to South Dakota’s economic growth is keeping more young people in the state, Rounds said. New scholarship and advanced degree programs, additional research and increased university enrollment have helped that effort, he said.

Rounds also asked lawmakers to back a plan that could eventually establish a new state park at the Blood Run historical site, an area straddling the Big Sioux River on the South Dakota-Iowa border where up to 6,000 Oneota Indians are believed to have lived from 1300 to 1750.

The Blood Run historical site was designated a national historical landmark in 1970. South Dakota now has an option to buy a critical piece of land at the site with a combination of state, federal and foundation money, he said.