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Charlie Johnson: Governor’s Surplus Economics Shift Tax Increases to Locals

Lots of my Democrat friends are knocking the Governor's celebration of not just balancing the state budget (again, as we always do, by law) but running a $47.8-million surplus. House Minority Leader Bernie Hunhoff notes that the "achievement" of piling up $134 million in unused taxpayer wealth seems rather pale compared to the potential achievement of investing in schools and new roads.

Neighbor and District 8 Senate candidate Charlie Johnson agrees that Governor Dennis Daugaard ("GDD") manufactures his fiscal good news by shifting increased tax burdens onto local governments:

Well, as a farmer if I didn't pay my monthly bills, not honor my loan payments, then perhaps I would show some positive cash flow also. GDD in 2011 decided not to fund the school aid formula, cut medicaid funding, cut higher education. In essence decided not to follow state law (had the legislature scrap the school aid formula funding). He put numerous students, teachers, and parents through financial disarray at nursing homes,colleges, and schools. Now he has the nerve "trumpeting" the good news that the state has a budget surplus while numerous counties and schools are or have gone through property tax op outs because of his neglect for local governments. GDD may just join another Republican in a short list of one term governors -- Frank Farrar [Charles Joseph Johnson, Facebook post, 2012.07.17].

Governor Daugaard and Charlie's opponent in the District 8 Senate race, Majority Leader Russell Olson, can pretend that they're balancing the budget without raising your taxes. But when you look at your local county assessment, you'll see that claim is smoke and mirrors.


  1. Steve Sibson 2012.07.17

    Yes, and they are increasing property taxes with enormous valutaions increases based on their income approach to land valuations without adjsuting the levies. Will they reduce those valuations in light of the current drought?

    Another source of state funding are tuitions to post secondary. They are also enormous and are subsidized by taxpayers via interest on student loans.

  2. mike 2012.07.17

    Russ Olson got 81% of the vote in the last election. Charlie Johnson now only needs to find a way to turn 31% of those voters.

  3. Dougal 2012.07.17

    Decades of diddling, deception and delivering diddly is the story of Republican governors and South Dakota’s education system. Meanwhile, property taxes go up, teachers are paid dead last and taxpayers have no clue how to solve the school underfunding crisis … except to listen to the pander bear governors blame teachers, administrators and school boards. Here’s the history:

    - Gov. Bill Janklow, first time – This was the era of Wild Bill. Blame teachers and get people fired if they complain. You’ll find plenty of people who work or once worked in education and state government who witnessed Janklow’s approach to solving problems. Janklow had other priorities (state rail line, screwing with usury laws to lure Citibank, a prison riot, sale lease-back of state properties). The farm crisis of the mid-80s quickly limited Janklow’s options to find a lot of money and he left behind a structural deficit.

    - Gov. George Mickelson – Campaign rhetoric brilliantly linked economic development with education. “The more we do for economic development, the more we can do for education.” Hence, he wore the mantle as “the education Governor” with the press and his supporters, and raised the state sales tax rate 25 percent to create the REDI Fund, which gave 3 percent loans to prospective business developments. Then he appointed a panel of educators to come up with a solution to education’s problems, which was framed as having the lowest paid teachers in the nation – not a big surprise, but it was a big mistake for solving the real problem. The teacher pay proposal was rejected, and legislators continued rejecting their obligation to fully fund the education formula – which was the real problem. That morphed into a string of charades to “study the formula” and reform it (they even studied the tax system for the 20th time), but the end result was more underfunding of education and falling further behind other states in teacher pay (but hell, we maintained our position at 50th!). A personally likeable person, Mickelson got re-elected wearing the mantle of education Governor and the legislature again wouldn’t allow more than minimal improvements, forcing property taxes to skyrocket. When the education community complained, Mickelson eventually referred to them as “the tax spenders,” nipping the complaints in the bud.

    - Gov. Walt Miller – Very sadly, Gov. Mickelson and several others died in April 1987 in that tragic plane crash. And, sadly, Walt Miller was saddled with three disasters: Buy a new state plane, repair the prison after a disastrous May 1987 riot (due to many years of incompetence in running the prison) and repair the legal standing of video lottery which was shut down that summer by the State Supreme Court. Walt never got credit for stepping up to the plate and showing unexpected leadership and ability to ably negotiate to get results. The state Republican Party showed him the door, giving Bill Janklow the nomination to be governor again.

    - Gov. Bill Janklow, part deux – In the campaign against Jim Beddow, Janklow had a secret plan to dramatically lower property taxes. Turned out, the secret plan involved creating a load of new sales taxes, shuffling the money and putting school districts in a growth box that amounted to slow death by starvation until districts were forced to opt out of the alleged freeze. Net result: No progress on education funding, no honest freeze on property taxes, voter confusion on how to fix property tax over-reliance, and more blame for the education community for doing a swell job educating our youth but failing to do it for free. Somehow, people forgot that state underfunding of the education formula was the unfulfilled promise that led to spikes in property taxes. And, true to his previous exit as governor, he failed to produce a budget for his successor.

    - Gov. Mike Rounds – Caretaker governor who perpetuated the myth that mediocrity creates progress. He kept the press and the public distracted with No Child Left Behind, the federal hoax that left the funding behind and delivered more misery and make-work. Mike was the guy who freakishly won the GOP primary in 2002 and didn’t have to do a thing for eight years. He delivered on that premise.

    - Gov. DD – Caretaker regime, part deux. It was his turn to be governor.

    South Dakota has an education funding crisis and a property tax crisis exactly because we’ve allowed ourselves to be bamboozled by governors and legislatures. Democrats failed to frame this issue by routinely shrinking in their criticism while GOP governors did nothing, and they failed to culture governor candidates who could show they would vigorously fight for education and taxpayers. Yes, these two things go together, a fact that the news reporters in our state are still ignoring. Yes, you don’t need a personal income tax to do it!

    When the state pays its share of the education budget, property taxpayers win. When the state hoards its share from education, property taxpayers get stuck. It’s just that simple.

    Governor DD doesn’t care about education; he’s projecting himself as a Tea Party-style budget watchdog after campaigning that he didn’t think there was a budget crisis in Pierre. Now he’s shoving the blame on teachers in the oldest shell game in Pierre to point at faceless bad teachers as the distraction from an honest discussion on why and how South Dakota got into this mess.

    As Charlie Johnson pointed out, in a lot fewer words, when a governor fails to pay the bill on funding schools, that governor is a deadbeat. Same applies to legislatures. When is somebody going to amend the constitution which forces year-end budget windfalls like this to be moved to the education formula, which will reduce property taxes? I think that would stop the annual rope-a-dope on state budgets.

  4. grudznick 2012.07.17

    That's an interesting bit of history, Mr. Dougal. There was much there I was ignorant about. The part where your good friend Walt was saddled with all sorts of hell when "Governor Mickelson and several others died in April 1987 in that tragic plane crash" was of peculiar interest to me. Your rendition of history has educated this old coot about Governor Miller having to buy a new airplane in 1987.

  5. Justin 2012.07.17

    Well said Dougan. We are now hiking sales tax in Sioux Falls to cover our increase in local share. And as far as I can tell, our "surplus" is big enough that the cuts were never needed in the first place.

    Daugard is trying to win points from national conservatives for his idiotic think tank plan, plain and simple. When Louisiana is your model for "progress", people are bound to notice the emperor has no clothes.

  6. grudznick 2012.07.17

    Mr. Dougal, it seems the Department of Corrections was established in 1989. George S. Mickelson signed SB 131. You mix your opinion with flawed facts and cast doubt on your whole sloppy roadapple there, sir.

  7. caheidelberger Post author | 2012.07.17

    Easy, Grudz: one misstated date does not a history lesson undo. The Mickelson plan crash happened April 19, 1993; the state pen riot was May 1993.

  8. caheidelberger Post author | 2012.07.17

    I wonder, Justin: what do we need the approval of out-of-state Republicans for when South Dakota is supposed to be all self-reliant? Seriously, what do Daugaard and his advisors gain from such favor-currying?

  9. Justin 2012.07.17

    One can only speculate. Personally I think a lot of decisions are being made to promote Thune nationally. Which is an odd way for state policy to come about.

  10. Justin 2012.07.17

    Also, for bragging rights in the Governors' association. I believe a majority of that group have been GOP for quite a while.

    Jackley and DD have gone hook line and sinker on immigration and ACA with a certain group of states. There is a lot of groupthink in that group.

  11. Justin 2012.07.17

    Then of course there are campaign finance dollars. There is an excellent article in the July 10 issue of The Atlantic detailing how 80% of the superpac money spent to date in the Presidential election came from a group of 196 individuals. SD has been an early adopter of the ALEC legislative agenda, it can't be a coincidence.

  12. caheidelberger Post author | 2012.07.17

    Group think, bragging rights among govs, campaign finance dollars... that part I may buy. But boosting Thune? Do state policies really get much positive attention for members of Congress?

  13. Justin 2012.07.17

    Ask keystone xl, which got tax abatements from SD and not from ND or NE. Thune sure likes talking about that project when it doesn't make sense for a Senator to be involved like he was. Call me a crazy conspiracist if you will, the SDGOP is a political machine.

  14. grudznick 2012.07.17

    Mr. H, you are very young but you seem wise. I am sure you do not coach your debate students to mix flawed statements of "fact" with personal opinion and then throw it all on the table as some sort of "and there you have it folks."

    Mr. Justin does that every time. And he spells Mr. Dougal's name wrong. I'm just sayin...

  15. Justin 2012.07.17

    I clearly stated I was speculating.

    It must be frustrating to claim yourself as a national media player but to show up below an unknown guitar player from PA in a Google search.

  16. caheidelberger Post author | 2012.07.18

    No doubt, Grudz: I do coach students to get all of their facts straight. But I also coach students to recognize the difference between minor misstatements and errors that undermine arguments. The timeline is not crucial to the argument Dougal is making. He loses points for accuracy, but his thesis is not refuted.

    Justin, I welcome your continued speculation. The Keystone XL point is an interesting big-picture hypothesis. (Hey, who drew the guitar player search result?)

  17. Jana 2012.07.18

    Keloland TV has a story tonight on the Governor looking to reign in the costs of our prison system.

    Education isn't a part of the story, but maybe it should be given that 68% of State prison inmates nationwide did not receive a high school diploma.

    Any takers that GDD's ALEC inspired junior staffers are going to start promoting that we privatize our prisons?

  18. Dougal 2012.07.18

    Sorry for posting the wrong year. Cory is correct. It was 1993 when those event occurred, not 1987.

Comments are closed.