South Dakota state lawmakers have passed a $7.3 billion budget.
It’s one of lawmakers' constitutional requirements and many say they're proud of several items contained in it.
The budget included a range of big-ticket items from airport terminal infrastructure improvements and expansion to setting aside more funding for two prison projects in Rapid City and near Sioux Falls. Lawmakers also included funds for tuition freezes for the state’s university and tech school students and increased money toward the state’s judicial system for indigent legal services.
The budget also featured a four percent inflationary increase for education, state employee salaries and Medicaid providers. SDPB employees are state employees and subject to the salary increases.
Republican Sen. Jean Hunhoff sits on the legislative committee that puts together the state budget. She said the new budget is focused on services for South Dakotans.
“We did the tuition freeze. We did the Medicaid providers. We did the four percent. So, we were looking at existing services," Hunhoff said. "The one piece we didn’t give that much direction to was economic development.”
Hunhoff said some remaining federal pandemic relief dollars will go toward economic development for a few years. In the future, Hunhoff says the state should continue efforts to attract businesses and people to the state.
Democratic Rep. Linda Duba is celebrating the budget.
“The public needs to understand it’s not just a number on a page, it’s a service or something that we’re delivering to people. That’s the most important thing when we’re talking about the budget,” Duba said.
Republican Rep. Tony Venhuizen also sits on the budget committee. He called it a "meat and potatoes budget," but issued caution about the future.
“We’re going to have to absorb about a $30 million ongoing change next year because of Medicaid expansion. So, that’s going to come right off the top when the budget’s being prepared for next year," Venhuizen said. "Hopefully, we’ll continue to have strong economic growth and be in a good position. There’s potential that next year could be a little tight when it comes to ongoing increases.”
The current fiscal year runs through the end of June.
Just over 40 percent of the budget is federal money. Lawmakers are also tucking away 10 percent into reserves to maintain its AAA bond rating.
However, some worry about increasing costs and decreasing revenues looming on the horizon.
Lawmakers on both sides of the aisle are concerned about the increased costs the state facing while dealing with a temporary sales tax cut, and a looming permanent one.
Republican State Sen. Lee Schoenbeck said if a proposed ballot question to remove the sales tax on food passes, the state budget will be in a bind.
“You take all of that money out of the budget and you’re going to train wreck — you’re not going to be talking about can you do a tuition freeze. You’re going to say how many of these programs that are generating the welders, and the robotics and the LPN’s, how many of those are we going to have to cut because you’re not going to have money. Period.”
Sales tax is the largest revenue source for the state. In the last few years it's come in in record numbers. Republican Gov. Kristi Noem cautioned collections are returning to normal.
Duba said other forms of revenue have bolstered the budget in recent years, but that won’t last.
“Contractors excise tax has been very lucrative for us because of all the federal money that came into the state and will continue to flow through, through 2026, but that spigot is going to get cut off. That can’t flow," Duba said. "Our major source of income, our revenue, is sales tax. So, next year—that initiative passes—there’s going to be serious discussions in room 362.”
