Some things never change. The last few days of session are a frenzy every year, either finding money or discussing/arguing where any extra money goes. This year we not only were short for the current year by $25 million, but next year's revenue is estimated to be another $27 million short.
Sales tax revenue has been down every month but one in fiscal year 2017. The current budget has been reduced to address the shortage but at the end of fiscal year 2017 on June 30, the reserves or emergency fund will kick in to balance the budget if there is a deficit that can't be covered. The 2018 budget has been reduced further in anticipation of sales tax revenue continuing to decline. Agriculture is the main driver of our economy. It is anybody's guess when a turnaround will happen, so think conservatively.
SB 35 has caused some consternation. Teacher pay was increased with the half penny sales tax increase last year. The breakdown of the half penny was placed in statute near the end of session: 63 percent to teacher pay; 34 percent to reduce property taxes; 3 percent to competitive instructor salaries at the technical institutes. The anticipated $63 million was sent to the schools with the assumption incoming sales tax revenue would cover it. The revenue is $5 to $6 million short; this part of the statute would require that $5 to $6 million be taken back from the teachers. You can see how this would be a problem.
Also in statute is an indexed increase to schools each year (inflation or 3 percent, whichever is less) so the two sections were conflicting. In order to protect the base that went to teachers last year and have an annual increase, the section establishing the half penny breakdown had to be amended out and should have had a clause to sunset once the teachers had the increase in pay. The end result is teachers and schools will get the annual increase based on inflation.
As a result of the amendment to last year's half penny designation, $3 million for competitive salaries going to the technical institutes was amended out. That has been remedied and the annual money will also be increased by the index factor used for K-12. Technical training is critical for preparing skilled people needed by industry.
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Thank you District 20 for allowing me to be your ears in our state government process. Without the willingness to compromise nothing much would be accomplished so I commend the many good people who give up their time with family and friends to make South Dakota the great state it is. Stay in touch.
