On eve of legislative session, early lines drawnGovernor, 2 legislators talk about expectations as 2013 Legislature starts today.
By: Bob Mercer, The Daily Republic
PIERRE — Two of South Dakota’s top elected Republicans in state government said Monday they don’t trust the federal government to fulfill its financial promises to states.
Gov. Dennis Daugaard and Sen. Corey Brown of Gettysburg said the Legislature needs to be cautious in its budget work during the 2013 session that opens today.
Brown said it’s possible that lawmakers will need to come back later in the spring to further adjust the 2014 budget. He said Congress will be starting negotiations on adjustments to federal spending at about the time the Legislature finishes the state budget in March.
But a veteran Democratic leader, Rep. Bernie Hunhoff of Yankton, urged more spending by the Legislature this session.
Hunhoff said the Legislature should develop a multi-year average of one-time revenues and start appropriating that amount to ongoing programs.
He said lawmakers should provide more money in state aid to schools and should adopt the Medicaid expansion available to state governments under the federal Affordable Care Act, popularly known as Obamacare.
The three South Dakota political leaders made their remarks in separate appearances Monday at the annual pre-session gathering of South Dakota Retailers Association members. The 2013 session opens at noon today and runs for 38 working days.
Daugaard said he remains opposed to expanding Medicaid to cover adults up to 138 percent of the federal poverty level. He has scheduled a presentation for legislators on the topic Thursday.
“It’s not ‘no, never,’” Daugaard said. “That’s something we can revisit in future years, but for now, no.”
The governor estimated that state government’s cost would rise from zero initially to $36 million by 2020, when states have to pay 10 percent under the existing law. South Dakota currently must pay 43.8 percent of Medicaid costs and the state’s share will rise to 46 percent for the coming budget year.
Daugaard said he isn’t convinced the federal government’s commitment out as far as 2020 is dependable. He said the federal government received $2.4 trillion in revenue in fiscal 2013 and spent $3.5 trillion.
He said the tax increases passed under the fiscal cliff package would restore about $100 billion of revenue that was previously collected from all income tax payers and about $60 billion of new taxes from upper income taxpayers.
Meanwhile, the budget cuts that were threatened under the fiscal cliff law were about $120 billion, or about one-tenth of the 2012 overspending.
Daugaard predicted “a day of reckoning” for the federal government and he said South Dakota must “be very careful” to prepare for federal budget cuts. Approximately 40 percent of state government’s $4 billion budget comes from federal aid of various sorts.
“I don’t think we can rely on the federal government having the money tomorrow, because right now they don’t have it,” Daugaard said.
Brown said South Dakota would face an estimated $50 million to $70 million in federal reductions to state government under the fiscal cliff cuts that will take effect if Congress doesn’t reach a new deal this spring.
He said one discussion facing the Legislature is whether to spend all of the one-time revenue that is expected to be available from unexpected windfalls such as bank taxes.
Brown said his preference is that the Legislature adopt a 2014 budget that is structured the way lawmakers want it and they adjust later as necessary.
“I’m not going to wait for Washington to take care of South Dakota,” he said.
He said there’s “not a lot of room” for major new programs or major expansions if legislators go along with the governor’s recommendations of 3 percent raises to state government employees, approximately 3 percent inflation factor to Medicaid providers and 3 percent more in state aid to K-12 school districts.
Hunhoff said state government already has approximately $1 billion in savings if the budget reserves and all of the state trust funds are included.
“We’ve got to get smarter about how we spend these one-time dollars,” he said. “Every enterprise has one-time dollars every year.”
Hunhoff said there will be a broad discussion about economic development after voters rejected the governor’s program that would have taken 22 percent of the contractor excise tax revenues from the general fund and put the money — some $15 million or more annually — into grants to business projects.
Hunhoff said he supports the Medicaid expansion but understands why the governor wants the Legislature to receive a briefing on the issue. “I know he wants to make a good decision for South Dakota,” Hunhoff said.
Hunhoff praised Daugaard for leading the effort to reduce the growth in numbers of prison inmates. It’s an attempt to head off the need to build more prison space and the ongoing expense of staffing.
“The governor, to his credit, has taken it on,” Hunhoff said. “It needs to be done. We’re locking up way too many people.”
Hunhoff said one of the complications will be that people will be asked to give up some of their rights temporarily while they are under intensive probation or parole outside of a formal prison for crimes such as those involving alcohol and drug abuse.
“It’s going to be a complicated thing. It won’t be a quick fix. It needs to be done. It should have been done 20 years ago,” Hunhoff said.