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Senate leader says the governor faces difficulty on tax increase for teacher pay

PIERRE--Gov. Dennis Daugaard said Monday he supports counting other funds received by school districts, such as traffic fines, wind turbine taxes, federal impact aid and bank taxes, as part of an effort by local governments to calculate state aid...

PIERRE-Gov. Dennis Daugaard said Monday he supports counting other funds received by school districts, such as traffic fines, wind turbine taxes, federal impact aid and bank taxes, as part of an effort by local governments to calculate state aid to public schools.

Past attempts at making that change failed in the Legislature. He said it makes no sense to have a formula that attempts to equalize taxpayer support per student when some of the funds are outside the formula.

"What's unfair is what's happening right now," he said.

The Republican governor spent about 40 minutes speaking to a pre-session conference of the South Dakota Retailers Association on Monday afternoon. He apologized for being unavailable to attend the retailers' evening reception.

"I'll be trying to persuade the legislative leaders my way is the right way," he said.

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Daugaard said he would offer specific proposals on raising teacher pay in South Dakota during his State of the State speech opening the 2016 session of the Legislature on Tuesday afternoon.

The Blue Ribbon Task Force he appointed has issued a long list of recommendations on school funding including finding $75 million to improve salaries for South Dakota's approximately 10,000 public school teachers.

The task force set a target of an average teacher salary of $48,000.

Daugaard said the task force found South Dakota's public schools aren't spending too much on administration and that teacher salaries remain low even when adjusted for taxes and cost of living.

"It's going to take new money," he said.

Daugaard sounded confident about his plan to expand Medicaid to about 50,000 more South Dakota adults whose incomes are just above the current eligibility level.

His administration is negotiating with the federal Centers for Medicare and Medicaid and the federal Indian Health Service. He expects the letter from federal authorities by the end of January agreeing to the plan.

Daugaard wants Medicaid to pay 100 percent of the cost for American Indian residents' health care, regardless where they receive it.

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Currently, South Dakota pays 48 percent of the costs for their services from non-IHS providers.

State government last year paid $69 million as its share of $139 million of bills for non-IHS services to American Indian people.

Daugaard said the savings under that arrangement would more than cover the estimated cost for expanding Medicaid, which is expected to reach $57 million for 2021 and then level off.

"In a way, you can say we'll wind up ahead," he said. "Just think about all the human benefits beyond the financial."

The Medicaid expansion would occur through the state budget legislation, which requires a simple majority in each chamber to pass.

He said the only increase in the budget for the expansion would be additional federal spending authority. He said he wouldn't support increases in state general funding or state taxes for the expansion.

Two senators, Republican Corey Brown, of Gettysburg, and Democrat Troy Heinert, of Mission, also spoke to the retailers.

Brown is the Senate Republican leader. Republicans have majorities of 27-8 in the Senate and 58-12 in the House of Representatives. Brown acknowledged there are philosophical and financial considerations on Medicaid expansion.

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Brown said he has asked for research on inserting circuit-breakers for the Medicaid expansion, so that South Dakota could withdraw if the next U.S. president agrees to repeal the Affordable Care Act.

"Because I think that's a legitimate question," Brown said.

Republicans in Congress recently sent a repealer to President Barack Obama, who has said he would veto it. South Dakota U.S. senators John Thune and Mike Rounds and the state's one member of the U.S. House, Rep. Kristi Noem, voted for the repeal. They are Republicans.

Brown said American Indian patients could see "a drastic improvement" in their health care if Daugaard's plan is achieved.

He said South Dakota's economy could benefit from half of a billion dollars being injected by the federal government between Medicaid expansion and IHS upgrades, such as for tele-health and behavioral health services.

On teacher salaries, Brown didn't sound enthusiastic about the chances of a half-cent sales tax increase winning approval.

"That's a two-thirds vote in the Legislature. That's a pretty high bar. That may be difficult to achieve," Brown said.

He offered that the teacher salary package might require three to four years to achieve through other means. "I think we'll spend a lot of time debating that," he said.

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