South Dakota lawmakers reach deal on balancing state budget using spending cuts and transfers

SD lawmakers reach deal on budget, using some cuts

PIERRE, S.D. — South Dakota lawmakers voted mostly along party lines Tuesday to use a combination of spending cuts and one-time transfers from various accounts to balance next year’s state budget.

The Legislature’s Joint Appropriations Committee approved the spending plan after meeting for nearly eight hours. The Senate then passed the budget 20-14 and the House passed it 44-25 to end this year’s legislative session around 11 p.m.

Members of the Republican majority voted to pass the spending measure after praising it as a fair way to balance the budget by making most state agencies share in cuts.

“We would all like to give more money to everybody, but we don’t have it to give,” said House Appropriations Chair Larry Tidemann, R-Brookings.

Democrats criticized the budget bill, arguing the cuts will hurt schools, cause tuition increases for university students and threaten services in facilities for developmentally disabled people.

“My frustration this year is probably the highest it’s ever been,” said Democratic Rep. Paul Dennert of Columbia, who has been on the Appropriations Committee for 14 years.

The Legislature had to fix an approximately $43 million gap between expected ongoing revenue and ongoing spending in the budget year that begins July 1. That’s a relatively small portion of the total $1.2 billion portion of the budget that spends state general funds.

Senate Democratic Leader Scott Heidepriem of Sioux Falls said the Legislature missed a chance to trim state government.

“So the size of government does not go down. Essentially we shift some funds and call it a balanced budget,” Heidepriem said.

Republicans said the cuts will help lawmakers a year from now deal with budget problems that are expected to be much worse.

“I think this is a tough budget for tough times,” said Senate Republican Leader Dave Knudson of Sioux Falls.

The budget compromise was reached after Gov. Mike Rounds met Monday night with House Speaker Tim Rave and Senate President Pro Tem Bob Gray, who head the Joint Appropriations Committee.

“Nobody will be real happy with all of it,” the Republican governor said. “At the same time, I think we accomplished the goal of passing a general bill for next year that will take care of basic needs.”

Lawmakers accepted Rounds’ recommendation, made in December, not to increase state aid to education or to give state employees a pay raise.

About $14 million was gained by reducing the size of tax refunds given to large construction projects, and an additional $6.4 million was saved by increased federal payments for people who are in both the Medicare and Medicaid programs.

The Appropriations Committee on Tuesday approved $19 million in spending cuts and the one-time transfer of $3.6 million from various accounts to help pay for general fund spending.

One of the largest cuts was $4.3 million to be spread across the six state-run universities.

“This will mean higher tuition and fees than what we had planned,” said Monte Kramer, vice president of administration for the Board of Regents, which runs the university system.

The panel also cut $1.4 million, or about half the increase the governor had recommended, for the state’s four technical institutes. That also could cause an increase in student fees and could limit enrollment in some courses, lawmakers said.

Another $4.2 million in spending was cut from the Medicaid budget after state Social Services Secretary Deb Bowman said the number of new people signing up for the program has slowed in recent months. The federal government pays about two-thirds of the cost of the program, which covers the medical costs of poor people, with the state paying the other one-third.

Increases in Medicaid spending accounted for nearly all the spending increases the governor had recommended for next year. Bowman said the program gained 600 to 800 people a month last year because of the recession, but growth has slowed to between 300 and 350 people a month recently.

An extra $3.1 million was gained because of changes in calculations of state aid to school districts. A law was changed on how to calculate special payments to growing school districts, and some extra money was carried over from last year to this year.

Lawmakers also saved nearly $1 million by scrapping a planned new doctorate program in physics in the university system, and they trimmed $270,000 from a program that pays college students to help professors with computers and other technology.

In addition, the committee cut $1.5 million from a Health Department program that tries to prevent young people from starting to smoke and helps smokers quit. That move freed up $1.5 million for other programs.

The governor’s budget director, Jason Dilges, said the budget changes eliminated the equivalent of 104 full-time jobs, but he said most of those either are unfilled or had just been proposed in the governor’s suggested budget.

Members of the Republican majority had pledged to balance the budget without using reserve funds because they believe those reserves might be needed a year from now.

The governor, who originally recommended using reserves, agreed to spending cuts and other measures in the compromise. Rounds also insisted that if lawmakers cut spending, they should trim specific programs rather than approving across-the-board cuts that would leave it up to agencies to decide where to trim.

The Legislature delayed passing a budget two weeks ago because of uncertainty about whether Congress will provide the state with an extra $28 million to $34 million next year to pay for Medicaid. Rounds said if Congress later provides that extra money, a special session of the Legislature might be needed to reverse some cuts.