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Funding, tax cuts, nursing homes to round out final weeks of session

Lee Strubinger

As South Dakotans dig out from underneath a recent blizzard, lawmakers are digging into the state budget.

While the legislature is considering tax cuts, they’re also putting money into dozens of one-time spending projects.

They’re increasing funding for several construction projects at state facilities and universities. There’s also $5 million for Capitol renovation and $13 million for expanding laboratory space in the Sanford Underground Research Facility in Lead. Lawmakers are also spending millions for purchasing designs and constructing prisons in Sioux Falls and Rapid City.

Republican Speaker of the House Hugh Bartels is excited about providing full tuition for National Guard members.

“We have a National Guard that you just have to be proud of,” Bartels said. “They win—constantly—top awards in the nation. We’re fully equipped. Last time I heard, we are 103 or 104 percent readiness with numbers, which just isn’t heard of in other states. They do great work for us. I’m really proud of them and I think that’s a wonderful thing we can do.”

Another bill appropriates $20 million into a scholarship fund for students pursuing a degree in behavioral health.

Democratic Representative Linda Duba sits on the appropriations committee. She said the bill is essential.

“Mental health services are necessary,” Duba said. “This bill is one of the tools we can use to help pay for college expenses for people going into the field and then having them stay here for an additional five years because they’re getting their tuition paid for.”

Co-Chairs of Appropriations Senator Jean Hunhoff and Representative Mike Derby
Co-Chairs of Appropriations Senator Jean Hunhoff and Representative Mike Derby

The state does that for other health-related occupations.

The one-time funding projects are part of a process in putting the state budget together. Next week, budget wizards will focus on fitting in the state’s ongoing costs. That, alongside ongoing debates about tax cuts, will likely take up the bulk of the last two weeks of legislative session

The tax cut debate is now in the hands of the state Senate.

On Wednesday, House lawmakers passed an overall sales tax reduction. They want to reduce the overall state sales tax rate from 4.5 percent to 4.2 percent. That would result in a $104 million dollar reduction in revenue for the state.

Some lawmakers and the governor anticipate hundreds of millions in permanent ongoing revenue growth. But the tax cut reaches the finish line could look a lot different.

Senate leaders maintain the public will see a tax cut.

Senate President Pro Tempore Lee Schoenbeck said he’s been the most skeptical about whether a tax cut is possible. However, the Watertown Republican said he’s convinced some version of a tax cut can be made.

What that is, Schoenbeck did not say.

“There has to be the ability to be sure year in and year out that we can pay our bills. I think that’s the fiscal responsibility issue. None of us want to be in a position where we can’t meet our bills every year,” Schoenbeck said. “Sustainability of whatever tax cut that we do—and the ability to make sure that it can adjust to whatever economic realities we may face in the future—in my opinion is the responsible and conservative way to approach that.”

Another Senate leader said leadership will work closely with their counterparts in the House on a tax cut proposal.

“We’re going to get a tax cut. We just don’t know which one and how much. We do know it’s going to be significant,” said Senate Majority Leader Casey Crabtree. “You got to keep in mind, we’ve already cut $18 million in taxes this year. I think that’s the second highest since the [Governor Bill] Janklow cuts, which were the record high. SO, we’re in a great position.”

The leader of the Senate Democrats said he still supports cutting the state sales tax on food. That proposal died earlier this week and is unlikely to get revived.

Senators also question the long-term viability of another House-endorsed proposal to require 100 percent funding for nursing homes.

The move comes after nearly a dozen closed in the state in the last year.

A recent report by the Department of Human Services said South Dakota nursing homes are reimbursed for Medicaid residents at a rate of 75 percent.

Nursing home advocates say recent closures are due to the low reimbursement rate. Fifty-five percent of nursing home residents are Medicaid recipients. Nursing homes are also seeing increased costs because of the pandemic and are understaffed.

Representative Chris Karr wants the state to fund nursing homes at 100 percent. He said the state has starved Medicaid providers over the years.

Republican Rep. Chris Karr.
Lee Strubinger
Republican Rep. Chris Karr.

“I have always said we need to take care of our obligations," Karr said. "That’s the one thing we absolutely should be doing every year, instead of growing—that’s why I vote against a lot of new programs or starting new programs or expanding new programs, we need to take care of the obligations we already have. We haven’t been doing that.”

House lawmakers agreed.

Some say there’s nothing to prevent the state from funding nursing homes at 100 percent, currently. They anticipate being able to meet that this year.

However, Senate leaders are unsure the House bill is the best way to address the issue.

Majority Leader Crabtree said the idea will be debated heavily the rest of session. He’s unsure this mechanism is the best way to address the problem.

“The model itself has to change. It’s not going to work for us going forward. We’re not going to be able to afford it the way it is today. And that’s okay,” Crabtree said. “It’s alright for innovation. We’re going to be alongside of that and help that happen. Really, what we’re seeing is an industry that knows they need to change and are working on that too.”

Crabtree and other Senate leaders say there’s a big desire to study the nursing home funding formula during the summer.

Lee Strubinger is SDPB’s Rapid City-based news and political reporter. A former reporter for Fort Lupton Press (CO) and Colorado Public Radio, Lee holds a master’s in public affairs reporting from the University of Illinois-Springfield.