By Dana Hess, For the S.D. Newspaper Association
PIERRE — South Dakota’s response to the COVID-19 pandemic has put it on a sounder financial footing than many other states. That was part of the message Tuesday from Gov. Kristi Noem as she presented her annual budget address to a joint session of the Legislature.
Rather than issuing orders for lockdowns and mask mandates, Noem has emphasized personal responsibility, often criticized for her approach to the coronavirus. At the start of her address, she contrasted the state of South Dakota’s finances with other states that will be raising taxes or seeking federal assistance.
“South Dakota is entering 2021 in one of the strongest financial positions in the country,” Noem said. “South Dakota won’t be raising taxes on our citizens or our businesses. We will not be borrowing billions of dollars to cover our budget shortfall. And we won’t be looking to Congress to send us stimulus money.”
Noem noted that the state closed the 2020 budget year in June with a $19 million surplus and general fund revenues are up 19.4% compared with the same time last year.
For the fiscal year 2022, Noem offered her suggestions for the state’s $5 billion budget. It will be funded by $1.7 billion in general funds, $1.8 billion in federal funds and $1.4 billion in other funds. She broke the state’s budget needs into three categories: paying off debt from 2010, retiring and reinvigorating the state’s infrastructure and strengthening communities.
Highlights of the budget included:
- Dedicating $21 million to pay off two technical college bonds resulting in $1.7 million in ongoing debt service savings.
“Unburdening the tech schools from this debt will allow them to refocus their attention,” Noem told legislators. “Their dollars can instead be used to further improve the caliber of their programs.”
- Investing $100 million over the next few years to fully connect the state to broadband internet. Federal, state and industry funds have already invested $89 million in South Dakota, Noem said.
Noem estimates the cost of connecting all South Dakotans to broadband at $200 million. She said the state’s $100 million investment should be enough to leverage more federal and private investments to pay for the project.
- Proposing $12 million to help replace the State Fair Livestock Complex that was destroyed by fire in October. With a $3 million insurance payment and $4 million from fundraising, Noem said the new 200,000 square foot facility should be open in time for the State Fair in 2022.
“Like an old-fashioned barn raising, it will take all of us to get this project done, but I know it’s worth it,” Noem said.
- Recommending $10 million for the Bureau of Information Technology to fight cyber crime.
South Dakota state government computers had 14 billion attacks from 165 countries in July, according to Noem. The funding would be used for system upgrades to protect state and employee data from cyber attacks.
“This will also allow us to develop a comprehensive plan to replace many of our oldest and most critical applications,” Noem said.
- Spending $3.2 million on upgrades for the State Radio system, particularly in Rockerville, Keystone, Hill City, Hot Springs and Reliance. Upgrading the system in the Black Hills is important for better communication between responders during wildfires, Noem said.
- Investing $3.4 million for equipment upgrades at the state’s four technical colleges. That funding would be matched by $1.6 million from the tech colleges for a $5 million investment.
“It will include programs identified as both high-need and high-demand, ensuring that we are investing in the careers we need most in the coming years,” Noem said.
- Starting a grant program with $5 million in one-time funds for processors to upgrade their facilities and increase capacity.
- Allocating $5 million for dam maintenance including $4 million for repairs to the Elk Lake Dam in Brown County.
- Using $5 million to purchase a new state airplane and selling two other state planes.
- Providing 2.4% inflationary increases for medical providers, K-12 education, technical colleges and state employee salaries.
In addition to the inflationary increase for K-12 education, Noem’s budget offers a one-time investment of $11 million to offset funds schools would lose because of lower enrollments due to the effects of COVID-19.
“Our hope is this will help provide a final bridge for schools past the pandemic,” Noem said.
- Using $1 million to expand the Access Critical Nursing Facility Program to facilities in Platte, Sisseton and Madison.
- Recommending $8.3 million to establish small-scale, private, adult intermediate care facilities in Rapid City and Sioux Falls for residents with intellectual and developmental disabilities.
- Investing $3.2 million for the creation, in partnership with the Department of Defense and Pennington County, of a $12.7 million recreation center near Ellsworth Air Force Base.
Noem is also recommending an extra 2% on top of the usual 10% budget reserves as well as $50 million for a trust fund to protect the state from future economic hardships.
The governor predicted states would have a tough time under the Biden administration. She said she expects Biden to try to raise taxes, eliminate fossil fuels and “drown us in new regulation.”
In the new administration, “I expect federal agencies will see South Dakota not as a partner but as a subordinate,” Noem said.
