Woster: What happens when you give government more money to spend?
Inflation hit big time in the 1970s. A lot of us remember it as a time of double-digit inflation, even though the average inflation rate for the decade was something like 7 percent.
The first year I covered the South Dakota Legislature as a news reporter, the state’s general fund budget was something like $100 million.
That was 1970. The general fund is mostly made up of state tax money. These days budget folks talk in billions, especially the last couple of years when the federal government has heaped money on states in response to the COVID-19 pandemic. I haven’t been directly involved in legislative coverage for a while, and I can’t comprehend how much money is flowing around.
I’m pretty sure it will be spent, one way or another. My first legislative session, Rep. Otto Stern of Freeman and Sen. Bill Grams of Sturgis headed the Joint Appropriations Committee, the group responsible for turning a governor’s budget proposal into a spending plan for the next fiscal year.
An aside: Grams possessed a brass spittoon embossed with the state seal. My understanding is that at one time every legislative desk had such a spittoon. Over the years the spittoons, well, disappeared. Grams brought his to the Capitol when session opened and took it home on the final day.
Stern and Grams were Republicans, as were most of the members of the Legislature then. Some things don’t change. Republicans nearly always control South Dakota’s Legislature. Grams and Stern were tight-fisted, although in the 1970 budget they maybe had some breathing room. The previous Legislature, I think it was, raised the sales tax a penny, at least in part in response to demands for more money for schools. Still, a $100 million general fund wasn’t a big old slush fund or anything.
I don’t know how many times I heard the appropriations co-chairs, Grams in particular, say, “Give government more money, and it will get spent.’’ On the one hand, that’s generally true. On the other hand, he was one of the people in charge of deciding how and how much to spend, so he was part of the government of which he spoke.
These days, a governor presents a budget plan to legislators in December. In 1970, the budget was part of the governor’s session-opening address. The change was to give part-time lawmakers a month to consider other ways to spend the state’s money. Legislators have final say over the budget. An old saying Gov. Dick Kneip often repeated went, “The governor proposes and the Legislature disposes.’’
That’s how it’s supposed to work. The governor is head of the executive branch of government. Lawmakers are part of their own branch. The Supreme Court is the third branch. During the decades I covered the Legislature, the executive and legislative branches sometimes let the boundaries slip, especially when the heads of both branches were of the same political party. That isn’t necessarily a bad thing, although keeping a bright line between the branches is the essence of the “checks and balances’’ thing the founders believed was of particular importance for good government.
Thinking about the billions of dollars of pandemic-response aid, I recall the time — maybe 1972 or so, because Richard Nixon was president — when a federal revenue sharing program gave South Dakota’s budget something like $7 million. You talk about Christmas in the Capitol. It didn’t take long for folks to come up with ways to spend about $70 million of that money.
Inflation hit big time in the 1970s. A lot of us remember it as a time of double-digit inflation, even though the average inflation rate for the decade was something like 7 percent. High inflation can be a revenue producer for a state that has a broad sales tax as a budget source. I mean, if you tax sales of food, clothing and other necessities, people pay the tax because they can’t starve or go naked.
Maybe I’ve told this story, but that first session? I hardly knew the Appropriations Committee existed. During the last week, Grams and Stern stopped by my desk and said they had the final budget put together. Grams pulled a wrinkled envelope from his jacket pocket. Numbers scribbled in pencil covered the back of the envelope. That was the budget. Simple, but then, it was only a $100 million general fund.