South Dakota Legislature’s Republican majority pledges budget cuts

SD Legislature’s GOP majority pledges budget cuts

PIERRE, S.D. — South Dakota Republican lawmakers pledged Friday to cut Gov. Mike Rounds’ proposed budget by $36 million so next year’s budget is balanced without using any of South Dakota’s reserve funds.

The Republican governor has proposed using $32 million in reserves to balance next year’s budget.

Senate Republican Leader Dave Knudson said the GOP majority in the House and Senate plans to cut programs so spending is covered by ongoing revenue, thereby leaving reserve funds intact.

Republicans also will reject a part of the governor’s budget that would require local property taxes to pay a bigger share of school district budgets, Knudson said. That will require another $4 million in cuts to offset a corresponding increase in state aid to schools.

GOP lawmakers have not yet identified specific state programs that would be trimmed or eliminated, Knudson said. The Legislature’s Joint Appropriations Committee will make those decisions after determining which programs no longer meet the state’s needs and priorities, he said.

Knudson said all programs will be reviewed. He noted Medicaid is difficult to cut because it is subject to federal requirements and said lawmakers are reluctant to cut state aid to schools.

“I think you look everywhere at what makes sense,” Knudson said. “We are looking at all options.”

The governor said Thursday he hoped the Legislature would stick closely to his proposed budget, which holds the line on most spending but seeks an additional $50 million for the Medicaid program that pays health care costs for people with low incomes. Spending from general tax funds would be nearly $1.2 billion.

Rounds also noted that cutting the budget is difficult because 85 percent of the general fund goes to education and social services.

House Republican Leader Bob Faehn of Watertown said lawmakers need to cut the governor’s proposed budget to avoid an even bigger problem the following year. The projected gap between ongoing revenue and spending exceeds $100 million for the budget year that begins in July 2011, so Republicans are looking at a two-year budget plan, he said.

Rounds cannot seek re-election because of term limits. Knudson, who is seeking the Republican nomination to run for governor, said cutting the budget this year will make things easier for the new governor and Legislature when they put together the next budget a year from now.

House Democratic Leader Bernie Hunhoff of Yankton expressed pleasure that Republicans are considering spending cuts, but he said the Legislature also must set long-term policies to prevent future budget messes.

Democrats have proposed that the annual growth in overall state spending be limited to the inflation rate, up to a maximum of 3 percent, the same limit placed on schools. They also support a plan to limit spending each year to around 98 percent of anticipated revenue.

Hunhoff said the state’s financial problem is due partly to Republican-passed budgets that spent reserves even before the recession hit. “I don’t know how else you would define overspending.”

However, Knudson said the budget gap was created by the national recession, which caused state revenue to drop for the first time in anyone’s memory.

The Senate Republican leader said he expects the budget to be passed in the final days of this year’s legislative session, just as in most years. The main run of this year’s session ends March 12.