Daugaard Proposes Fiscal Year 2020 Budget, Bids Adieu To Lawmakers

Dec 4, 2018

South Dakota Governor Dennis M. Daugaard holds a press conference following his budget address. Daugaard is term-limited and will leave office next month.
Credit Kent Osborne / SDPB

South Dakota Governor Dennis M. Daugaard presented his Fiscal Year 2020 budget on Tuesday afternoon. 

The Governor's plan calls for a state budget of $1.694 billion. 

Daugaard stressed continued conservative spending during the budget address. 

While acknowledging his final budget is a blueprint for Governor-Elect Kristi Noem, Daugaard says he hopes the next administration will spend state funds with caution.

“As the outgoing governor, it's my duty under statute to offer this address to you today.  And so I want to fulfill that duty.  And the budget I'm going to present represents a “needs” budget, not a “wants” budget— what we need, in my estimation.  But it’s just a starting point, because the Governor-Elect will present her proposed budget to you after the session begins.  So, consider this just sort of an orientation, if you will.”

State Employee Premiums

Daugaard recommends charging healthcare premiums for state employees for the first time. This proposal comes after he recommended a 2.3 percent salary increase for state employees in Fiscal Year 2020.

Daugaard notes an existing five million dollars in what he called “emergency cushion” money in the state health plan. He says this change would maintain that number.

“Right now as a state employee I don’t pay a premium for my healthcare coverage. I pay a premium for Linda’s healthcare coverage as a dependent, but I don’t pay a premium as an employee. I’m recommending we start charging a modest premium. This along with some prescription plan changes will bring about 4.1 million dollars into the plan.”

Daugaard adds this would require an amendment to state statute, which currently prohibits the state from charging employee premiums.

He also proposes a 2.3 percent increase for medical providers. Daugaard has also included a 2.3 percent hike in funding for education, which he says is required by state law. 


The Governor took several opportunities to mention what’s called the “Wayfair Decision.”  That’s a U.S. Supreme Court case won by South Dakota that forces most out-of-state online retailers to submit state sales taxes. 

“However, the F-Y [Fiscal Year] '20 revenue will NOT—WILL NOT incorporate any potential new e-commerce sales tax revenue in the projection.”

Daugaard says online sales taxes have only been collected for a little more than a month, and no one can be certain of the revenue that will come from them.  He says it’s irresponsible to craft a budget that uses numbers that can’t be pinned down.

Possible FY 19 Spending

Daugaard also took time to discuss the current fiscal year budget that ends on June 30th. He wants to make mid-year budget adjustments for a few emergency expenditures.

State revenues are ahead of projections for this fiscal year, giving lawmakers a chance to catch up on some work many agree needs to be done.

Daugaard says he wants to take about half of the adjusted budget savings to construct a health care facility at the Jamison Annex. That's the building that provides medical services to inmates at the State Penitentiary in Sioux Falls. 

"I've never had the money to propose this expenditure, this appropriation. I even went to the Helmsley Foundation to ask for a charitable gift, because I truly believe we need this. But, we've just not had the ability to do this - this year, we do. This building is needed due to an increased count of inmates that occured over a number of years. The Jamison Prison Annex was built 25 years ago to serve 288 inmates. The inmate count just a few months ago was 521 inmates. And, in addition to that, there are additionaly 214 more in the Sioux Falls Community Work Center - and they also receive their helathcare at the Jamison Annex facility." 

Daugaard says the lack of space has caught the attention of the National Commission on Correctional Health Care.

That board says nurses and security officials need more work space, doctors should have private offices, and medical supplies need a storage area other than the current janitor's closet. Daugaard says space is so cramped, dental patients can touch other patients while they're being worked on.

Saying Goodbye 

The Governor combined his budget address with a farewell message.  After being introduced to a joint session of the State Legislature, Daugaard showed his appreciation for the opportunity to serve two terms as South Dakota's chief executive. 

“Well, thank you—thank you so much.  It’s been a great eight years, and Linda and I have been so honored—and you honor us, again today.  Thank you so much.  As you know, this is my last budget address, and before I get to the nuts and bolts of that, I’d like to congratulate and welcome Governor-Elect Kristi Noem, and her husband, Bryon Noem.  Let’s welcome them." 

Daugaard told lawmakers his final budget addresses state needs, rather than wants.  Noem will present her budget proposal to lawmakers during the upcoming legislative session in January. 

Soon-to-be Speaker, House Minority Leader Weigh-In 

Representative Steven Haugaard (R-Sioux Falls) is the incoming Speaker of the House.  He says Daugaard’s Budget Address was consistent with his style over the past four to six years.

“Even when the Governor came into office and he saw the need to tighten the budget by 10 percent-what he had told the agencies at that point is he told them ‘I want to see a 15 percent reduction’- but ultimately he reduced it by [to] 10. He just wanted to make sure that they had the fat that they could trim out of there. That they were actually doing that.” 

Haugaard says he expects Governor-Elect Noem to handle the budget similarly, keeping it a little tighter and trying to make state agencies more efficient. He says he doesn’t expect to see much growth in the budget for the next two years.

State Representative Jamie Smith (D-Sioux Falls) is the recently elected House Minority Leader. Smith says he appreciates Governor Daugaard’s suggestion to increase pay for education, health care providers and state employees. He says some of these ideologies are shared by Governor-Elect Noem. 

“Right now the tenets that she ran on were to help education, help healthcare, help government accountability and all those things. As a Democrat I want those things. And so together we’re going to figure out how to move forward on that. We’re going to find out where we have commonalties and where we can work together. And where we have disagreements, we will work to overcome those.”

Smith says he would also like to see new money spent on things like Pre-K education and Needs Based Scholarships.

Lawmaker Wants To Keep Nursing Homes Open 

Representative Lana Greenfield (R-Doland) says when Governor Daugaard came into office in 2010, he had to cut the budget - and now the economy is solidified. One thing that still needs focus, Greenfield says, is trying to keep nursing homes open.

"This has been a real problem in the last couple of years and I think I have the positive side of the Governor-Elect that she will probably try to do something to increase our Medicaid money so that we can get more money coming into our nursing homes so that they can stay open.”

Greenfield says she’d like to keep people in their communities instead of moving them to unfamiliar surroundings.

Looking Ahead

Governor-Elect Noem, Lieutenant Governor-Elect Larry Rhoden, and the rest of the state's constitutional officers are sworn into office January 5th. The 2019 legislative session begins with the State of the State Address on January 8th.