SD lawmakers hope to cut governor’s spending plan in preparation for the following year

SD legislators hope to cut governor’s budget plan

PIERRE, S.D. — The South Dakota Legislature will try to make substantial cuts in Gov. Mike Rounds’ proposed budget to get a head start on handling the more severe budget gap the state is expected to face a year from now, legislative leaders said.

Rounds has proposed using $32 million in reserve funds to balance the state budget for the year beginning July 1.

However, the governor also told lawmakers in his budget speech a month ago that the gap between ongoing revenue and spending could grow to more than $100 million in the following budget year, which begins in July 2011. That projected budget deficit would exceed the remaining reserves, expected to total only about $75 million by then.

Any cuts made in the next budget will make the following year’s budget problems easier to solve, legislative leaders said.

“We can’t throw caution to the wind and handle this year’s budget as if next year weren’t going to happen,” said House Republican Leader Bob Faehn of Watertown.

Rounds’ proposed budget would increase spending of state general funds by $52 million, with nearly all of that going to the state-federal program that pays the medical expenses of poor people. He has said the state cannot afford to boost state aid to schools or give pay raises to state workers.

The governor and lawmakers hope an economic recovery will cause tax collections to increase substantially at the same time spending would decline on programs for jobless people, but many economic forecasts indicate the recovery will be slow.

Senate Democratic Leader Scott Heidepriem of Sioux Falls, who is running for governor, said he believes the budget can be cut by getting rid of some service contracts that were not bid, limiting overall state budget growth by the same 3 percent limit imposed on schools and local governments, and making other changes. Across-the-board cuts might also be needed, he said.

“We spend money on things that are unnecessary in South Dakota right now,” Heidepriem said. “We just have to have a fundamental change in the way we view taxpayers’ dollars.”

Senate Republican Leader Dave Knudson of Sioux Falls, also running for governor, said he believes the Legislature will try to balance next year’s budget without using reserves, which would mean cutting at least $32 million in spending. Lawmakers might seek to keep next year’s spending at this year’s level, which would mean a $52 million reduction from the governor’s proposed budget, he said.

“I think the focus will be on budgetary issues as people recognize the mess we’re in,” Knudson said.

Knudson said he expects budget cutting efforts will include reductions in specific programs and a general across-the-board cut.

Rounds is prevented by term limits from seeking re-election next year, so his successor will inherit the budget problems. That means Heidepriem, Knudson and others seeking their parties’ gubernatorial nominations are very interested in the budget issue.

Faehn said all agencies should be ready to take part in budget cuts.

“I think my attitude is there’s going to be a lot of pain to go around. I hope everyone is prepared to share in a little bit of that pain,” Faehn said.

The House Republican leader said lawmakers and the public have to understand that the budget problem is serious.

“If we don’t start addressing that now, we wouldn’t be doing our job,” Faehn said. “There’s going to be some unpopular decisions made, but we’ve got a giant deficit coming up next year.”

Heidepriem said the number of state employees has grown too much during Rounds’ time as governor, so the growth in the state work force should be slowed.

House Democratic Leader Bernie Hunhoff said he believes the Legislature must take a long-term approach to getting rid of budget deficits.

Hunhoff noted that lawmakers every year say they will focus on the budget, but then get sidetracked on other issues. “This year it really is going to be about the budget,” he said.