No clear path in budget battles

South Dakota lawmakers receive the final revenue report of the 2010 legislative session Monday morning.

Then they start swinging the ax.

That forecast serves as a marker for how much the Legislature will cut from next year’s budget. The session ends Friday, and all sides predict a frenzied, brutal week. A list of $52 million in potential cuts released last week by leaders of the majority Republican Party drew hard lines among lawmakers.

Gov. Mike Rounds - who has the power to veto the whole thing - indicated he’s got issues with the balancing plan.

Groups on the list of cuts are sure to descend upon Pierre to make their case.

And Saturday, the House Appropriations Committee chairman cast doubt on the numbers, saying he hasn’t signed off on the proposal, even though his name was on the document released to the public.

Republican leaders in the House and Senate say the pain is necessary because the budget will be balanced without using reserves, which they vowed at the start of the session. They insist those reserve funds must be preserved to deal with what they anticipate will be an even more challenging budget shortfall next year.

The list unveiled Thursday includes $43.1 million in cuts to next year’s budget, which starts July 1. Another $9.5 million in cuts goes into effect in the following year’s budget. Some of those spending decreases might not be necessary, but they’re lined up just in case.

The Republican budget proposal has touched off plenty of criticism, portending a tough week ahead.

Rounds, also a Republican, wanted the Legislature to tap reserve funds to ease this year’s budget crunch. He predicted that the cuts won’t go unnoticed.

“Once they put their details down in more complete form, and we’ve got to give them a chance to do that, I think you’ll find the halls here in Pierre start to fill up with individuals that may very well see impacts that they don’t believe are appropriate,” he said. “And that’s a part of the process. That’s a healthy part of the process.”

‘I didn’t sign on’

House Appropriations Chairman Larry Tidemann said Saturday that there are cuts he’ll vote for, but others he might not support.

Tidemann, a Brookings Republican, did not attend the news conference announcing the GOP plan Thursday.

His name was one of four that appeared on the list and the accompanying news release. But Tidemann said he didn’t sign off on the proposal.

“I didn’t sign on the sheet, but they put my name on it,” he said.

He didn’t attend the news conference for a few reasons.

First, he thought they should wait until after the revenue forecast, what he called “a critical part of the whole puzzle” to next year’s budget.

Second, he felt lawmakers should have consulted with other elected officials, the governor’s office and the judicial system before making the proposal. Also, the budget analysts who work for the Legislative Research Council should have reviewed the list before it was made public.

Those critical parts of the process didn’t happen, he said.

The fact that lawmakers didn’t consult with other officials means that some of the numbers are suspect, or wrong. For example, the list includes a $300,000 cut to the judicial system’s drug courts, but there isn’t that much money in the program, Tidemann said.

“Anybody that puts something on paper, you are quickly criticized,” he said. “I’m not going to compromise my principles and say, ‘Here they are, folks.’ ”

Senate Majority Leader Dave Knudson said Saturday he doesn’t doubt there are tweaks that need to be made, but it was important to get the plan out to the public.

“What a majority felt like was to provide them to the public so people could react over the weekend and constituents could voice their concerns,” he said.

Knudson said he assumed that House Majority Leader Bob Faehn had gotten Tidemann to sign off on the release.

Faehn, of Watertown, could not be reached for comment Saturday evening.
Limited bipartisanship

GOP lawmakers probably will get help from Democrats on at least some proposed cuts. That’s because Democrats suggested some of them at the start of the session.

Senate Minority Leader Scott Heidepriem said he expects members of his party to support a 2 percent across-the-board cut as well as cuts for so-called “phantom FTEs,” legislative and executive travel and the elimination of some tax refunds.

“We’re going to help pass the ones that we’ve been talking about for five months,” said Heidepriem, who is running for governor. But other cuts won’t get much Democratic support, he predicted.

“I can’t understand what the Republicans are thinking of when they’re looking at programs like meth, drug courts and tobacco cessation,” he said.

The process starts Monday, when members of the Joint Appropriations Committee will get a look at the latest revenue forecasts based on February’s tax receipts. There could be some good news. Rounds indicated last week that revenues appear to be on target with initial projections made in December. If so, it means the state might have rebounded from a dismal December in which major storms were blamed for suppressing consumer spending and the lifeblood of state government - sales taxes.

After Monday’s briefing, lawmakers on appropriations will take up the general budget bill, either Tuesday or Wednesday, Knudson said. Each budget cut proposed by Republicans will be introduced as a separate amendment, and it’s expected to take at least one long day, and perhaps more, before the bill leaves the committee and heads to the House and Senate.

The committee hearing will be the setting where groups can testify for or against the cuts, said Knudson, who also is running for governor.

“I think there will be an opportunity for groups impacted by these cuts to be heard,” he said.

Rounds’ prediction that Pierre will “fill up” next week with people opposed to various cuts probably will be fulfilled. Groups already were mobilizing before the cuts were announced.

Those cuts include $2.3 million to the state’s tobacco control fund. Voters approved a tax increase on tobacco products in 2006. It generates about $35 million a year, most of which goes to property tax relief and education. But about $5 million goes to the tobacco control program, which pays for services to help people quit smoking and for school-based education programs.

Darrin Smith, senior director for the Midwest affiliate of the American Heart Association and a member of the coalition that led the 2006 ballot measure, said the group would “aggressively oppose” the Legislature’s attempt to raid the tobacco control fund. Voters approved the tax increase with the understanding that some of it would be used for prevention efforts.

“In an election year, and in an environment where the public is not enamored of incumbents in either party at every level, I don’t think it’s a smart move to cut a program that the public overwhelmingly supported at the ballot box just four years ago,” Smith said. “I think it’s a slap in the face of the public.”

Governor holds the cards

The governor could prove to be the strongest voice in the debate. On Friday, he said legislative Republicans are going to have to explain their cuts, “because some of them don’t add up.”

Republicans are counting on $11.5 million by eliminating tax refunds on large construction projects. Rounds insists they’re overestimating that amount.

He also was critical of a 2 percent across-the-board cut to all of government excluding K-12 education and Medicaid. He said he’s willing to talk about cuts to particular programs, but across-the-board cuts require the state to provide the same level of services and programs with less money.

“I can’t continue to do the programs without the appropriate money,” he said.

He declined to issue a veto threat, however, because the Republican plan “is just a concept” at this stage.

Corey Landeen, executive director of the South Dakota State Employees Organization, joined Rounds in criticizing the across-the-board cuts.

“The uncertainty created from this specific type of proposal places an increasing amount of stress on an already demoralized state work force who is facing a second consecutive year without a basic salary adjustment,” Landeen said in a prepared statement. “This proposal leaves the budget reserves untouched for a second year in a row while employees and other crucial state services go without, and in some cases are eliminated.”

One thing is certain. When the budget finally passes, regardless of what it looks like, the majority Republicans will own it. Heidepriem points out they’ve owned all of the budgets in the past eight years, and seven of them contained structural deficits.

“Now they’re acting like born-again cost cutters,” he said. “I don’t think the people of South Dakota are buying it.”

Jonathan Ellis, Argusleader
March 7, 2010

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