Budget Plans Use $136M In One-Time Funds

Dec 4, 2013

Governor Dennis Daugaard presents his FY2015 budget to lawmakers.
Credit Kealey Bultena / SDPB

Governor Dennis Daugaard has his plan for fiscal year 2015 which includes millions of what leaders call unexpected money. That starts just about seven months from now. The governor’s suggestions are a far cry from deep, overarching cuts he proposed just a few years ago, and the plan capitalizes on one-time money.

Governor Dennis Daugaard faces State Senators and Representatives from the speaker’s lectern in the state capitol. A projector illuminates slides to the left of the podium, and the governor meticulously talks lawmakers through the details of his recommendations for fiscal year 2015.

Daugaard first addresses an onslaught of dollars available to state government. He says a portion of $136 milion dollars in one-time money needs to apply to the current fiscal year to address amendments and special appropriations. That leaves him with $118 million for the next budget.

$30 million of the one-time money comes in the form of unclaimed property. When banks can’t deliver assets to people, South Dakota law gives them a few years to find the owners. After that, financial institutions turn unclaimed money over to the state.

"We knew we’d get a one-time bump this year because of changing the rule that unclaimed property is deemed abadoned now after three years instead of five," Daugaard says. "It was certainly much more than we expected."

Daugaard says South Dakota should put those millions to good use. He says the state can eliminate liabilities and save cash by pre-paying several bonds. The governor says it makes sense to use one-time dollars to pay off higher-interest bonds. He says it doesn’t effect the state’s net worth, but it does save more than $6 million each year and more in future fees.

The other way Daugaard plans to free up money in the general fund is to use one-time money to fund the new Building South Dakota.

"At the rate that we’re getting applications and applications are being approved, it might carry it for three, four years. In the interim, if we have other income (one-time dollars), we could still add more to Building South Dakota," Daugaard says. "We’re not abandoning it by any means. In fact, we’re pre-funding it early with a pretty good sum."

The governor says lawmakers would need to pass legislation changing the funding mechanism for Building South Dakota, but he says the lump sum investment could keep the program on track with funding for several years.

Daugaard’s rationale is that using one-time money to pre-fund the program is okay, because Building South Dakota accepts and awards grants individually. He says you can’t fund education that way, because you can’t increase teacher’s salaries based on a one-time influx. 

Sandy Arsenault is president of the South Dakota Education Association.

"You know, SDEA is really pleased with the governor for taking the steps to make eduation funding more of a priority. I think the proposed three percent is good news for schools," Arsenault says. "I think we still need to deal with the effects of 2011, but that 3 percent will really help. I think we’re also very pleased that the governor is taking steps to help South Dakota’s college students with tuition costs."

Under the governor’s financial suggestions, the Board of Regents gets a 2.6 percent increase to freeze tuition for in-state, on-campus college students. South Dakota’s K-12 and technical schools get a three percent boost. Daugaard also suggests a three percent cost-of-living increase for state employees.

Because of the flexibility the governor employs with one-time money, all of those proposed increases are part of on-going funding. That’s stability state workers and school districts appreciate.

Additional one-time money comes to the state’s budget because South Dakota’s Medicaid program isn’t yet feeling a projected surge. The governor says the program is likely to feel that in the future, but it doesn’t need the allocated funds right now.

That touches on, arguably, Daugaard’s most contentious recommendation. The governor is not proposing lawmakers expand the state’s Medicaid program to insure about 26,000 adults. They make too much to qualify for Medicaid as it is but not enough to buy insurance on the federal exchange.

"These are not people that have disability, because we cover disabled people. They’re not old, frail people; we cover the frail elderly. They’re not children; we cover children. These are adults. They’re not disabled. And if they work 30 hours at the minimum wage, they will, as a single adult, be over 100 percent of the poverty line and qualify to participate on the exchange and get subsidized," Daugaard says.

That move – or lack thereof – disappoints members of the South Dakota State Medical Association and the South Dakota Association of Healthcare Organizations. Both groups say it’s best for the overall health of South Dakotans to expand the state’s Medicaid program to include people who need care. 

"There’s a lot at stake. Coverage for 48,000 South Dakotans who we all know will do better from a health perspective, from a quality of life perspective if they have insurance coverage," SDAHO President and CEO Dave Hewett says. "These people are at a point in their life when they really can’t afford to pay for health insurance and this would be a step up from the state to help them with that very necessary service."

About half of the people in the coverage gap can qualify to buy healthcare on the federal exchange, taking advantage of a voucher to bring down a portion of the cost.

The plan the Governor presents lawmakers is dense, but a takeaway remains that South Dakota’s economy is performing well above the country as a whole. Daugaard says South Dakota now exceeds the number of jobs the state had before the recession, and unemployment is second lowest in the nation.

Now lawmakers and researchers take Governor Dennis Daugaard’s budget proposal and analyze it, before they begin work on their vision for the state’s finances when the 2014 legislative session begins next month.