SD Dems Propose Three-Year Plan to End Structural Deficit

Last updated on 2012.03.31

The Democrats in the South Dakota Legislature today are proposing a plan to achieve the common goal of eliminating the state's structural deficit. However, they counter Governor Daugaard's Tea-Party-style all-at-once 10% cut and propose a three-year plan to get us out of this mess. Three years is still a pretty good time frame, since it took Republicans a decade to dig us into this deficit.

Here's the proposal, straight from Rep. Bernie Hunhoff and Sen. Jason Frerichs:

PIERRE — Democratic leaders said today they support Governor Dennis Daugaard's goal to erase the state's structural budget deficit, but say the state must take a moderate, responsible approach to solving the problem rather than an extreme plan that threatens to destroy public education.

"As the governor explained, the problem has been 10 years in the making," said Senate Minority Leader Jason Frerichs. "It would be irresponsible to try to solve the problem in one budget year by passing the buck to local taxpayers. The result could be the beginning of a dismantling of public education in South Dakota."

Frerichs said that to the governor's credit, he ended his budget address by pointing out that his budget is a starting point and that he welcomes other ideas.

In that spirit, House Minority Leader Bernie Hunhoff said Democratic lawmakers are looking for bi-partisan support for a plan to end the structural deficit in a three-year budget cycle.

"We are just beginning to emerge from a recession," Hunhoff said. "Our state revenues have flattened out, and our Medicaid costs have spiked because of the recession. So this is the wrong year to fix a long-term structural problem — especially if the fix is simply a shifting of expenses to local governments."

Hunhoff said priorities are colliding in the state capitol, and education came out on the losing end in the governor's budget. "The governor thinks it's ok to give tens of millions of dollars to a foreign oil company and another $10 million for REDI loans to corporations — all while crushing public education — easily the best investment in the future that a state can make. In the campaign last year, he said everything was on the table. Apparently what he meant to say is that education was on the chopping block."

Hunhoff and Frerichs noted that the state is hardly cash-poor. "Our reserve funds total $107 million, trust funds total another $700 million, and the state's cash flow account has swelled to over one billion dollars. Those monies belong to the people, not to the bureaucracy."

The Democratic leaders said they will introduce a separate appropriations bill or a "hog house" alternative to the governor's appropriations bill that will reflect the first of a three-year plan to correct the structural deficit. They may need the courtesy of Republican legislators to waive deadline rules if a second appropriations bill is introduced.

The Democratic proposal will include the following:

• Flat funding for health care and schools, rather than the governor's proposed 10% cuts.
• General fund cuts proposed by the governor apart from schools and Medicaid
• Judicious use of reserve funds over a three-year period
• Use of some monies from the state cash flow account, which has swelled to over one billion dollars
• Use of earnings from the Education Enhancement Trust Fund and the Health Care Trust Fund over the three-year period of adjustment
• Further review and analysis of revenue projections in March 2011
• Transfer of the Stimulus III funds totaling $36.9 million to the general fund for use in the 2012 budget to assist in education and health care funding as intended by the federal government
• Funding of one-time Special Appropriations (as identified in the governor's proposed budget) totaling $14.1 million from one-time funds rather than ongoing general fund revenues
• Other efficiencies to be determined by the legislature and appropriations committee

Good or bad, it's a plan! Read it over, compare it with the Governor's proposal, and tell your legislators (and your fellow blog readers!) which route you think is best South Dakota.