I don’t pay as much attention to state government news as I used to, but recently I read that South Dakota expects to have $125 million more in surplus than previously anticipated.
Wow. Back when I covered the Legislature, people almost would have killed for that kind of extra cash. Well, wait. They wouldn’t have killed. In my time that was just an expression. Nobody in politics thought anyone meant it literally. It’s only in recent time that people riot and hate each other and try to do great bodily harm in the political world. In my time, they would have argued, loudly and at great length, but I can’t think of any of them who would have considered getting physical.
Be that as it may, $125 million sounds like a decent chunk of change, even for a state that got something like $1.25 billion awhile back in coronavirus relief funds.
I remember way back when federal revenue sharing added something like $7 million to the state treasury. The year was 1972, I believe. Richard Nixon, a Republican, was president. Dick Kneip, a Democrat, was governor. Revenue sharing was a concept under which the federal government returned to the states and their local governments some of the tax money that the Internal Revenue System collected each April 15 from the nation’s taxpayers.
Revenue sharing was kind of a surprising program to come from Nixon, some people I interviewed in South Dakota thought. Maybe it was, but the guy was an enigma. When he wasn’t involved in political intrigue, Nixon was creating things like the Environmental Protection Agency and the Endangered Species Act. When Kneip reorganized the executive branch of state government in 1973, he created a South Dakota version of the Environmental Protection Agency. It quickly became one of the more controversial components of Kneip’s reorganization.
As much as some people disliked the EPA, just as much did they like revenue sharing. What’s not to like about getting money back from the feds? It wasn’t like having a surprise $125 million surplus or a $1.25 billion pandemic deal, of course. If I’m remembering it correctly and it was $7 million that first year, that’s something like $43 million in current buying power, according to a website I found. That’ll feed a lot of chickens.
A couple of years after revenue sharing started, the state finished the fiscal year with a large unobligated cash fund, something like $15 million. Hey, don’t laugh. That was a big number in the 1970s. Some Republicans saw that surplus and complained that Kneip had overtaxed the citizens of the state and needed to return the surplus funds. That sounded good as a sound bite, I suppose, but how do you actually return that kind of money? I mean, the lion’s share of state income then was the sales tax. Do you give every citizen an equal reimbursement? Do you try to figure out what each citizen purchased? Get sales receipts? Refunds didn’t happen, but the notion made for some political digs and prompted a flurry of news stories.
Things like revenue sharing and unobligated cash and budget items made me realize early in my Capitol reporting career that I should have taken a couple of additional classes in economics in college. I took one course, the required Introduction to Economics. What I remember is bear markets slide down and bull markets charge up. Good information, but I had to learn a lot on my own as I stared at state government budget books and legislative tax bills in the early days.
Mostly I recall years when the state was scraping to find enough cash to fund needed programs. I still have an image of Jan Nicolay of Sioux Falls, House Appropriations chair, standing at her desk on the House floor late on the last evening of one session, asking her colleagues to vote down one spending bill after another because the state didn’t have the money for them.
I can only imagine the look on her face that night if someone had come to her desk and said they’d found $125 million in surplus cash.