I noted in yesterday's post on South Dakota's exported tax burden that, according to 2010 data, South Dakotans earned nearly the national average per capita income but paid over a third less in state and local taxes on that wealth.
Jon Walker updates: according to new 2011 data, South Dakota's income beats the national average, while South Dakota puts less of that income to public use in the state budget than any other state. Here are some key numbers from Walker's paywalled report:
- South Dakota per capita income in 2011 was $44,217, up nearly $4,200 from what I reported yesterday and beating the national average by nearly $2,700.
- We rank 13th in the nation on per capita income.
- We still don't beat Minnesota, North Dakota, or Wyoming.
- Farm income rose 107%; non-farm income rose 5.7%.
- 88,000 South Dakotans remain in poverty.
In a glaring endorsement of the red-state moocher model, Governor Daugaard's chief of staff Dusty Johnson complains that our increasing income means we'll have to bear a larger share of our Medicaid costs. Our Medicaid share will rise three points to 45.8% next year, taking $20 million more from our pockets to help the sick and poor among us (who have not enjoyed a great trickle-down effect from the ag boom).
Don't let Dusty's tears (or the flim-flam show he's helping Governor Daugaard prepare for next week's budget speech) fool you: if our increased Medicaid bill is $20 million, we can cover that with half a percent of the $3.9 billion in new income brought in last year. If our tax system is accurately capturing increasing wealth (which is the basic assumption of both the Medicaid cost-share policy and the Daugaard argument that economic growth is the best way to increase government revenue), we won't even notice that $20 million as an added burden.
South Dakota's rising wealth is coming mainly from an ag boom, and every farmer watching corn dry out last summer can tell you that ag booms don't last. As Rep. Bernie Hunhoff (D-18/Yankton) tells Walker, "If it doesn’t rain soon, we may be 43rd again real soon."
Given our fluctuating wealth, we should probably avoid going on a fiscal bender this year... although there is an argument to be made that we should intensify investment in roads, bridges, school buildings, and other lasting infrastructure that can continue to serve as a basis for economic development when corn and beans go bust. Maybe it's time to invest some of our growing wealth in an education trust fund that would allow the state to fund schools according to the statutory funding formula during the coming lean years without resorting to the disruptive cuts of the first Daugaard budget.
Whatever the proper policy, we need to approach our next state budget with the understanding that we are not a poor state. South Dakota's wealth is growing. We should make sure that wealth benefits everyone. Instead of continuing to strangle public services, we should invest in infrastructure and programs that benefit everyone, including the thousands of our neighbors who are struggling to get out of poverty.