The Building South Dakota Fund, the new economic development fund created in closed negotiations and a rush of last-minute Legislative action, had safeguards to ensure that, in tight budget times, education, health care, and pay for state workers would take priority over economic development handouts.
Last week, the Governor got that changed. Governor Dennis Daugaard asked for and got Senate Bill 158, which strikes from SDCL 1-16G-47, the statute enacting the Building South Dakota Fund, this key restriction:
Notwithstanding the provisions of this section, no deposit or transfer to the building South Dakota fund may be made by the commissioner of the Bureau of Finance and Management if the projected ongoing revenues adopted by the Legislature for the prospective fiscal year are insufficient to accommodate:
- The statutory increases for state aid to K-12 general education, special education, and the technical institutes;
- Projected Title XIX and the Title XXI spending adjusted for increased provider payments, increased utilization, or enrollment growth, and as affected by any reduction in the Federal medical assistance percentage; and
- The state employee salary policy increase, commensurate with the K-12 inflationary increase, in addition to funds necessary to meet actuarially projected increases in health insurance costs [excerpt from SDCL 1-16G-47, enacted 2013; clause to be stricken effective July 1, 2014].
That restriction was important to passing the bill last year. House Minority Leader Bernie Hunhoff, who was instrumental in levering the BSDF into something some Democrats (though not all!) could tolerate, disagrees with decoupling BSDF from behind the Ed/Med/Worker car of the budget train:
“Well last year we passed Building South Dakota. It was a good bipartisan effort to expand economic development, recognizing that education is critical, that affordable housing is really a big part of it and that we need more grassroots economic development. And now, just a year later, we’re stripping out or defunding a lot of those really good parts of it by a really complicated mechanism that’ll allow the administration to play budget games. They’re leaving it intact, but they’re just leaving lots of opportunities to spend down reserves,” Hunhoff says [Cassie Bartlett, "Changes to Building South Dakota's Funding Raise Concerns," SDPB Radio, 2014.03.13].
Senate Bill 158 further bolsters the over-prioritization of economic development in South Dakota government. Even if we can't fulfill our obligations to our children, the sick and injured, and the folks who work for the state, Senate Bill 158 ensures that the Governor will still have plenty of money to hand out to well-to-do corporations.
The hits just keep coming, if at first they do not succeed in screwing you over, you can bet that there will be a new way right shortly. It is a great game plan and us rubes seem to not be able to get the grasp of the game...yet.
Cory, good article but just a tad off on one point: no one disagrees with being certain that Building South Dakota be funded only when the basic responsibilities of state government are covered. That was not the issue this year or last year.
The problem arose because we chose Unclaimed Property as the main funding source, and they have skyrocketed so the governor's office wanted to change the funding source ... and so they changed it to budget reserves after each fiscal year, which is a joke because except for the last two years which are an anomaly due to the bounce back from the recession and Unclaimed Property and Bank Franchise windfalls, there have been no reserves to speak of for the last 15 years. It's a non-funding source, so in effect they've unfunded Building South Dakota ... in my opinion ... and yet their corporate incentives continue unaffected. It's a betrayal of a compromise that was only on the books for nine months or less. (It should be noted that BSD is funded for the next three years ... but with a 30% turnover in the legislature, there'll be few left who even understand the issue in FY 2018.)
Unfunded it? Remarkable, Bernie. Why on earth would the Governor do that to his own initiatives? Are we going to see the Governor coming back two years from now asking for another change in funding source, or does someone foresee some surprising continuance of unclaimed property and bank franchise windfalls?