Purse strings looser on state's 2013 budget

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PIERRE — Tens of millions of dollars cut from state government agencies one year ago will be restored in the 2013 budget that the Legislature finished Friday and through 2012 budget adjustments that were adopted in the previous few days.

Many of the increases aren’t necessarily permanent, however. Economic conditions have rebounded sufficiently for lawmakers to feel confident, but they clearly remained careful Friday about how far they can loosen the purse strings again.

What they’re taking is a two-path approach.

The 2013 budget provides some ongoing increases, such as for state aid to public schools and better reimbursements for Medicaid providers, as well as the first raises in four years for state government employees.

But many legislators are cautious about becoming too exuberant and falling back into budget deficit problems that plagued state government for the past decade, until the hole finally became too deep to ignore as the Obama-era federal stimulus money ran out.

So the Legislature is providing millions of dollars in increases on a one-time basis for the remainder of the 2012 budget and for 2013, while they wait to see whether the economic recovery continues during the next 12 to 16 months.

Gov. Dennis Daugaard suggested that philosophy during his budget speech in December. Lawmakers likewise followed the Republican governor’s lead a year ago when he called for 10 percent cuts to eliminate a $127 million budget deficit.

In state aid to education, for example, the state cuts and local property-tax reductions last year totaled about $47 million, according to Jason Dilges, state commissioner of finance and management.

He said about $43.7 million is being restored for schools this year through a $12.8 million increase in state aid, an accompanying $9.9 million more from property taxes, and $21 million through various one-time increases in the 2012 and 2013 budgets.

“I can’t think of another entity that has had this kind of win this legislative session,” Dilges said.

Likewise, state employees will see a general pay raise of 3 percent, plus receive onetime bonuses that vary by salary and length of service, to compensate for the lack of increases the previous three years.

That combination approach is being used for Medicaid, too.

The entire state budget for 2013 totals about $4 billion from state, federal and other sources of revenue. The state’s general fund portion for 2013 will be about $1.216 billion, up from about $1.143 billion for 2012.

State general revenues for 2012 are now predicted to be $1.249 billion, which is about $12.5 million stronger than the December forecast had indicated. The 2013 revenues now are expected to reach $1.272 billion, approximately $6.7 million more than earlier thought.

Friday’s final round of work showed the different levels of confidence between the Senate and the House of Representatives about what to expect in South Dakota’s economy for the remainder of the 2012 budget, which runs through June 30, and the 2013 budget that starts July 1.

Senate members of the Joint Committee on Appropriations that oversees state government’s budget wanted to spend all of the revenue estimated for 2013. But the House members forced the final $4.2 million to remain unobligated, rather than earmark that too for schools and Medicaid.

“We really aren’t sure what’s going to be available at that time,” said Rep. Dean Wink, R-Howes, the House appropriations chairman.

In the end was fine with Sen. Larry Tidemann, R-Brookings, a past appropriations chairman who’s now in his eighth year as a legislator. He said the 2013 budget “leaves a little seed oats in the bin.”

Unlike some years recently, all three Democrats on the 18-member appropriations panel – Sen. Billie Sutton of Burke, Rep. Susan Wismer of Britton and Rep. Paul Dennert of Columbia – voted for the final version in the committee.

The committee added $2.7 million of additional spending through amendments Friday, including $500,000 for maintenance and repair of state-owned dams, which was a priority for Wismer.

The state’s Unified Judicial System was a multiple winner, with about $650,000 added for various teen court, drug court and DUI court expansions and restorations, including money for starting a DUI court in Brown County. Those specialized programs allow offenders to remain with their families and be employed while serving their sentences, reducing incarceration costs.

The committee finished its work on the budget just before 4 p.m. Friday. After about three hours to get the numbers squared, Senate Bill 197 began its final journey through the legislative process, passing in the Senate with a 24-5 vote at 7:29 p.m., and winning approval 50-18 in the House at 8:17 p.m.

All four of the Senate Democrats present voted against the bill on final passage, including Sutton. Sixteen of the 18 House Democrats voted against the bill on final passage there, including Wismer. Dennert and Rep. Steve Street of Revillo were the only Democrats in either chamber to vote for the bill in the final round.

Wink told House members they could be proud. “There are other states that are still going through process of cutting their budgets,” he said.

Democratic Rep. Larry Lucas of Mission spoke against passage. “It seems very clear to me last year’s 10 percent budget cuts were unnecessary,” Lucas said.

Legislators last year didn’t know what was in front of them, Rep. Justin Cronin, R-Gettysburg, said, and they now are making good on their promises of a year ago to start rebuilding the budget as finances improved. “We wanted to be safe, and consistent,” he said.

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