SIOUX FALLS -- The Democrats' plan to address an expected revenue shortfall in the next state government budget includes an across-the-board spending cut and an infusion of video lottery revenue and money otherwise targeted for economic development.
The plan outlined by Senate Democratic Leader Scott Heidepriem on Monday would exempt K-12 education and Medicaid from a 2 percent cut in general fund spending and would boost the state's share of video lottery revenue by 10 percent for two years.
"We don't have any illusions that these will be adopted unanimously by the other side," said Heidepriem, D-Sioux Falls. "By the same token, we don't imagine that they will all be rejected.
"What we're encouraging both the governor and the Republicans in the Legislature to do is sit down with us and work cooperatively, to lay aside partisan interests and try to come up with a series of revenue enhancements and job reductions that get us to a balanced budget, and then give some serious thought to where we are on a going-forward basis."
Lawmakers and Republican Gov. Mike Rounds will have to come up with a fiscal 2010 budget in the face of an expected drop in tax collections because of the recession. Rounds withdrew his initial budget recommendation after the shortfall worsened and will present a new one Thursday.
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Republicans are expected to give their budget plan later in the week, said Senate Republican Leader David Knudson, of Sioux Falls.
Knudson said lawmakers need to be mindful of the relationship between ongoing revenue and ongoing expenditure in state government.
"We have got to be very cautious and careful about using one-time monies which are coming from the reserve fund or federal stimulus or anything like that to fill these gaps," he said.
"Yes, our revenues are lower than expected due to general economic decline and we can expect recovery over time of those, but I think we need to look very carefully at that ongoing revenue and ongoing expenditure issue."
The bulk of the Democrats' $54.9 million savings would come from a $10.7 million general spending cut, taking $15 million out of the emergency reserve fund and diverting $23 million that otherwise would go to the Futures Fund and REDI fund, both of which are used to encourage economic development.
"There are times when we need to allow the free market system and our excellent business tax climate to attract infusions of capital and we may not be able to make these gifts or loans or grants out of the Futures Fund or the REDI fund," Heidepriem said.
Raises for state employees would be limited to those at the bottom of their pay grade to save an additional $4.7 million, he said.
The Democrats' proposal to raise an additional $29.3 million in revenue includes increasing the state's share of video lottery revenue from 50 percent to 60 percent for two years to bring in $20 million.
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Another $5.2 million in federal grants would be available if the state makes its seat belt law a primary law rather than a secondary law, Heidepriem said. That would allow law enforcement to stop and ticket someone solely for a seat belt violation.
"Seventy-three percent of South Dakotans buckle up. I don't think this is a serious infringement on anybody's liberty interest and it's $5.2 million we could put to use immediately in terms of roads in South Dakota."
Democrats also propose an additional $1.6 million in revenue from Deadwood gaming and $1 million by changing the way smokeless tobacco is taxed.
