“[W]e might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress, and every man of any mind in the Union, should be able to comprehend them, to investigate abuses, and consequently to control them” [Thomas Jefferson to Secretary of the Treasury Albert Gallatin, 1802.04.01].

We're not that great at running elections (how'd your great-idea voting centers do on poll wait times in Sioux Falls yesterday, Secretary Gant?), but South Dakota gets good marks for online budget transparency. The U.S. Public Interest Research Group has scored states on offering online access to government spending data. South Dakota gets a B+, tying with North Carolina in the "Advancing" category, and just missing joining eight "Leading" states. Our only neighbor in the Leading category is Iowa, scoring 90 compared to our 89.5 (so close!). Minnesota and North Dakota both get D's.

South Dakota was among the top ten improvers, boosting its public finance website score from 70 to 89.5 in just one year. The big improvement was adding searchable datat on "Tax Expenditures," the tax revenue that South Dakota could collect under uniform application of existing laws but which it gives up in the form of sales tax exemptions, preferential rates, and other special favors. (The total listed this morning for all tax expenditures: $632,450,622.00. That's enough money to raise our teachers' pay to the highest in the nation and still have $304 million left. Or we could pay the $510 million it would cost to send all 36,000+ plus students in our Regental universities for free.)

Of course, since our EB-5 program went private, I can't find the checks Joop Bollen, Richard Benda, and friends were able to cash under his contract with the state. Open.SD.Gov allows us to follow the money... just not all of it.


We also get special mention for auditing our state checkbook each year. The online checkbook is fun: it allows to discover fun information like the fact that so far in the current fiscal year, the state of South Dakota has paid Lawrence & Schiller, the ad firm founded by state GOP chair Craig Lawrence, $3,039,006.20. It also lets us itemize state payouts to Northern Beef Packers over its unproductive five years for a total of $2,327,815.47. What fun!



Speaking of budget restraint, don't expect Mike Rounds to bring any to Washington. His soapbox bleating includes the usual platitudes about restoring fiscal discipline to a broken Congress, but even conservatives don't buy Rounds's credentials on that topic. See what conservative prof Jon Schaaf says about Rounds:

Schaff said the recent investigation into financial misconduct involving Rounds' former economic development director doesn't appear to have hit too closely to Rounds. Schaff said the main criticism Rounds is likely to face ahead of the June primary is that he overspent during his governorship.

"Clearly he was not a complete fiscal hawk, and so he's been already attacked by some folks on that," Schaff said ["Rounds Says Congress Needs to Regain Disipline," AP via KELOLand.com, 2014.04.06].

$127 million structural deficit, lax supervision of state programs that throw millions of dollars into a doomed beef plant (yes, I'm getting to Joe O'Sullivan's EB-5 article!), lost money in the Farm Loan mediation program and cement plant trust fund... yeah, I'd say the fiscal hawk is short some feathers.


Wait wait wait! Joe Lowe and I were wrong, and Dennis Daugaard was right: we can't rely on the federal government to keep funding the programs that South Dakota relies upon for its economic livelihood.

As IP notes and RCJ reports, the United States Air Force is looking to cut its roster by 5%. That cut includes a willingness to shed a quarter of its workforce at Ellsworth Air Force Base:

Col. Kevin Kennedy, commander of the 28th Bomb Wing, said that a little more than 1,000 airmen, including officers, have been given the opportunity to accept a cash payment and voluntarily separate from the wing.

...If not enough airmen do so, Ellsworth and other bases may need to terminate airmen involuntarily.

However, Kennedy stressed that the 28th Bomb Wing wasn't going to lose 1,000 airmen. If terminations are needed, he said, the total number would depend on how many chose to voluntarily separate across the Air Force and which career fields those departing airmen belonged to.

Ellsworth currently has 3,350 active duty personnel and 572 civilian employees [Daniel Simmons-Ritchie, "Ellsworth to Shed Jobs in Air Force Restructuring," Rapid City Journal, 2014.04.05].

The Air Force is downsizing and cutting other programs thanks to sequestration, brought to you by Rep. Kristi Noem, Senator John Thune, Senator Tim Johnson, and your Congress. Consider that at the polls this year.


Jumping to the gubernatorial contest, Democratic candidate Joe Lowe endorses one very specific policy: expand Medicaid!

A former mayor of Mission Viejo, a community of 100,000 people in southern California, Lowe is critical of the current administration’s failure to expand Medicaid, calling it “unconscionable.”

It leaves 48,000 South Dakotans without health insurance, and puts a $4 million annual burden on counties for paying indigent medical bills, he said.

Expanding Medicaid would have cost the state $1.5 million, but it would have received $274 million from the federal government over three years, he said at the Beadle County Democratic Forum on Thursday [Roger Larsen, "Lowe Would Push for Expanding Medicaid and Better Teacher Pay," Huron Plainsman, 2014.04.07].

Did you catch that part about indigent care at the county level? According to a December 14, 2013, Mitchell Daily Republic report, South Dakota's counties spent $3.3 million in the preceding year (I'm guessing FY 2013?) on caring for folks too poor to cover their medical bills (the kind of people Mike Rounds says we should not help). MDR says $2.5 million of that might have been covered by the ACA Medicaid expansion that Lowe advocates. Lowe says the Medicaid expansion would cost South Dakota $1.5 million.

Spend $1.5 million, save counties $2.5 million. Right there, without any other fiscal analysis, Medicaid expansion makes sense. It reduces the tax burden on South Dakotans by $1 million.

Why would Republicans deny counties this modest but useful bit of tax relief? They will claim that we can't count on the big federal money backing the Medicaid expansion to continue, but find me one county commissioner who will say, "Well, heck, if there's a chance we aren't going to be able to save a million bucks five years from now, there's no sense in our saving a million bucks this year."

Lowe recognizes the absurdity of that fiscal position:

Gov. Dennis Daugaard has said he doesn’t trust the promises of the federal government.

“Well then, surrender the flag, shut down the state,” Lowe said. “Over half of the state’s spendable budget is federal dollars” [Larsen, 2014.04.07].

Lowe rightly notes that expanding Medicaid is immediate tax relief for counties. Why South Dakota would leave that money on the table and burden local taxpayers with higher-than-necessary taxes is beyond me.


We're rich! So says Rep. Bernie Hunhoff as he gazes upward at the towering pile of money in South Dakota's state budget reserves:

South Dakotans, your state trust & reserve funds grew $21 million in the last month to a total of $1.065 billion. Reserves and trust funds have grown $98.9 million since last June 30. Some of my friends on the right side of the aisle don't like it when I suggest that we are "flush with cash" -- but these are the latest actual numbers and I just don't know how else to explain it? [Bernie Hunhoff, Facebook post, 2014.04.02]

Folks have asked me where South Dakota would ever get the money to meet my moonshot goal of raising teacher pay by $10,000 to raise us from 51st to 34th in the nation in compensating teachers. With 9,200 teachers in South Dakota, my proposal would cost $92,000,000. At the rate Rep. Hunhoff says we filled our reserve in March, we could fill the "End the Embarrassment!" teacher compensation fund in four and a half months without raising any taxes or cutting any programs.

Or let's be even less ambitious: suppose we just wanted to raise teacher pay to the average per capita personal income. In its April 3 update on the South Dakota economy, the Bureau of Finance and Management reports that per capita income in South Dakota in 2013 was $45,558, 21st in the nation and 2.3% higher than the national per capita income of $44,543.

South Dakota per capita income: 21st in the nation, 2.3% higher than the national average.

South Dakota teacher pay: 51st in the nation, 29.8% lower than the national average.

Ending that embarrassing fiscal disconnect would require only two and a half Marches of reserve fund diversion. State reserves would still grow by tens of millions of dollars. The only people who would pay more taxes would be those 9,200 teachers, who would buy more stuff (sales tax), hire contractors (excise tax) to improve their homes (property tax), and convert that money gathering dust in Pierre into real economic stimulus in every school community in the state.

Joe Lowe, Sue Wismer, Lora Hubbel, you're listening, right?


Balanced budget? What balanced budget? asks Rep. Stace Nelson (R-19/Fulton):

The general appropriations bill SB 187 for this year increased spending from last session’s HB 1185 general appropriations bill by about $169 million and 124 new full time state employees.

...It exceeds the amount of money the governor’s office projects will be available by more than $7 million. This means the budget, as passed, returns to the deficit-spending ways that occurred during the Rounds administration, which created the accumulation of the $127 million deficit that forced the Legislature to make cuts that so adversely affected education in South Dakota. I believe the passage of SB 187 violates Article 12, Section 7, which prohibits spending more money than what is anticipated in revenue, by the Legislature and governor [links added; Rep. Stace Nelson, "Legislature, Gov Increased Spending, Size of SD's Government," Mitchell Daily Republic, 2014.03.21].

U.S. Senate candidate Nelson is giving fodder to challengers of both Mike Rounds and Dennis Daugaard. He also reminds us that South Dakota's balanced-budget ballyhoo is easily turned into a bluff. Review that constitutional amendment that we passed in 2012: "Appropriations by the Legislature may not exceed anticipated revenue"—anticipated by whom? On what basis? And if the Legislature wants to look past the Bureau of Finance and Management's projections and roll the dice on more revenues, who's to stop them? Who brings the lawsuit to put a stop to such deficit spending? Or do we wait until the state coffers run dry, and then... what, arrest the Speaker of the House and the Governor?

We won't arrest Nelson: he voted against the budget, as did just nine other members of the Legislature. Now we'll see if he can make that vote gain traction with the fiscal conservative voters the Republican party expects to show up at its Senate primary in June.


My post on the reformulation of the rules for funding the "Building South Dakota" economic development fund brought some instructive commentary from a couple of political figures in the know.

First, Rep. Bernie Hunhoff (D-18/Yankton), a critic of the changed funding formula, notes that the problem is not that economic development is taking away from basic government responsibilities in the budget (and I am pleased to see the House Minority Leader use language that says corporate welfare is not a basic government responsibility). Rep. Hunhoff says the real problem with Senate Bill 158, the funding formula revision, is that it hitches the Building South Dakota Fund to a currently spiking but historically unreliable funding source, our unpredictable reserves. "It's a non-funding source," says Rep. Hunhoff, "so in effect they've unfunded Building South Dakota."

Another political insider notes that Senate Bill 158 removes BSDF from competition with K-12 education, Medicaid, and state employee salaries in the budget process. Instead of taking up oxygen in the general appropriations debates, BSDF waits until the fiscal year is done and takes its share from the remaining reserves. "This was a good deal for K-12, Medicaid, and state employees," says the observer, "because it freed up $15.9 m in ongoing money, which allowed increases of 3.0% rather than 1.6%."

But here's my sticking point: if we have any gravy left on the plate at the end of the fiscal year, should an economic development fund be the only piece of bread that gets to sop that gravy up? Why not maintain the leeway to direct any excess reserves to bonuses for teachers and state employees who may have contributed to those surpluses by keeping expenses down?

1 comment

American Indians make up 9% of South Dakota's population. That's about 76,000 American Indians out of 845,000 South Dakotans.

South Dakota has a Department of Tribal Relations to help us relate to all those tribal people. The Fiscal Year 2015 state budget passed last week spends $619,017 on those relations. That's 0.015% of the $4.259-billion state budget.

The Department of Tribal Relations gets five full-time positions to do its work. That's 0.036% of the state's 13,947 full-time-equivalent workforce in FY 2015.

Looking just those percentages is perhaps an unfair assessment of the state's investment in working on tribal issues. Other lines of the budget include tribal services. American Indians make up 27% of South Dakota's male correctional facility inmates and 41% of our female inmates, so we could estimate that $5.7 million of the state penitentiary budget and $2.1 million of the women's prison budget is directed toward American Indians... both more than the amount the Department of Tribal Relations may spend relating with non-incarcerated Indians.

Some big chunk of the Department of Social Services' $1-billion budget goes toward placing and supporting around 3,800 children in foster care, in which Indian children are overproportionately represented.

6 of the 67 budgeted veterans service officers are tribal VSOs. Veterans Benefits and Services gets $1.66 million to serve 73,000 South Dakota veterans.

The Department of Education does a variety of programs to boost American Indian student performance; alas, none of those programs are separately lined in DOE's $636 million budget summary. (I invite passionately statistical readers to submit their estimates.)

But in terms of agencies dedicated to addressing big populations and prominent problems in the state, South Dakota's investment of 0.015% of its public wealth in promoting better relations with 9% of its population seems to suggest slightly misaligned priorities.


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