Darrell Solberg, South Dakota House of Representatives, Minnehaha County

The nation's biggest banks have been roundly criticized for hoarding billions of dollars in stimulus money rather than finding ways to lend it to home buyers and businesses who need credit. How can the stimulus package work if we just sit on the money? To some degree, we risk making the same mistake in state government. We ended the regular run of the South Dakota State Legislature last Friday by:
* Leaving Medicaid dollars "on the table" rather than utilizing the federal government's greatly-increased match rate
* Hearing doubts from the Rounds administration about accepting $11 million in unemployment aid for laid-off workers
* Allowing low-paid state workers no pay increase
* Giving K-12 schools a 3% increase, while cautioning them to expect nothing in 2010

We did all this while allowing the state's budget reserves to build to more than $100 million, thanks largely to the generous infusion of stimulus dollars that arrived to offset health, education and transportation needs.

All these funding decisions were decided during a flurry of amendments offered to the general spending bill on the 38th and 39th days of the 40-day session.

Our 2010 budget is a study in caution. No one knows where the economy is headed, so the governor's budget staff and a majority of lawmakers decided to save as much as possible for 2011 and 2012. Also, they worry that whatever we add to the budget will grow the base for next year. We've had a structural deficit in state government for several years, so any increases for health, education and personnel does add to that problem.

The opposing argument is that South Dakotans need help today and the federal money is being given to states to stimulate the economy just as it was provided to banks. Stockpiling it will not help to create jobs or help families survive until the breadwinner finds work. And if the stimulus money does revive the economy, we may be able to "grow our way" out of the structural deficit with increasing tax revenues.

In conclusion, South Dakota's 2010 budget is a rousing success for the bureaucracy: there are no cuts in executive salaries, out-of-state travel, airplane fleets, lobbyist contracts and overall FTEs. We've maintained the status quo for most of state government. Meanwhile, businesses, health care providers, local governments and families are left to wonder what's in store for them in the remainder of 2009. They don't share the certainty that state government now enjoys.

I wanted to take a moment and give a behind the scenes look at one of our hard working individuals in the legislature. During my time in Pierre, I’ve had the opportunity to work with Katrina Jarding and have been impressed with the work ethic and dedication from this native South Dakotan. It’s great to see someone with so much talent and drive decide to stay in South Dakota to pursue her career after college graduation. I asked her to share a brief biography of herself and here is what she wrote:

I grew up on a farm near Alexandria, SD with strong Democratic roots. My parents have always been very active politically and in the community; fortunately my parents’ interests were passed on to their children.

I attended Dakota Wesleyan University and graduated last May with a degree in Public Service and Leadership, after graduation I jumped right into politics and started working on Sen. Tim Johnson's re-election campaign. I am now the Secretary for the House Democrats during the legislative session.

As the secretary I work closely with the interns to make sure they understand what they are doing, and help them with anything that I can. I take phone calls and messages, and I also compile the agenda for our caucus. I try to come up with any ideas or ways that can make everyone's day run smoothly.

I really enjoy the legislative process and the vibe in and around the capitol. It has been great to work under and with the great leadership that we have in the Democratic party, and I admire and respect the members of our caucus.

Last week we saw some stories in the news and I wanted to take a minute to share them in my recap of events. The first item has to do with some comments made by a Republican Representative directed at a Democratic Senator. Republican House Assistant Leader Kristi Noem launched an attack against Sen. Scott Heidepriem on February 25, 2009 while he testified for his bill aimed at stopping a major casino from being built across the state line in Iowa.

Noem started by asking if Heidepriem favored expansion of gaming in South Dakota. He responded saying he opposed it and that his bi-partisan bill was aimed at stopping a major world-class gaming destination from ruining the Sioux Falls market area. She asked if his firm or he personally was involved in an arrangement that would allow him to profit from gaming expansion. He said he knew of no arrangement and asked what she was implying.

Noem waited until Heidepriem was out of the room to declare Heidepreim’s law firm represented a gaming enterprise. Both during the questioning and after Heidepriem left the hearing, House Democratic Leader Bernie Hunhoff said Noem was out of line.

Here are some of the key facts from this exchange:
Heidepriem’s firm was recently hired to serve as instate counsel by an out-of-state law firm in a suit involving Flandreau Santee Sioux Tribe. Hiring instate law firms is routine and allows out-of-state firms that are not licensed here to do their work in South Dakota. Despite Noem’s phony allegations, there was no legal conflict of interest.

Noem violated official rules of conduct, including Joint Rule 1.6, the most basic rule enforced by legislative and committee leaders. It says “no question may reflect upon the character or conduct of any official” on the floor or in committee hearings. Trashing a legislator is not allowed in session.

Heidepriem asked what Noem was alleging and she didn’t answer until he had left the hearing.

Another event that happened had to do with Sen. Dave Knudson and open public records. When it was a bill offered by Democrats last year, Sen. Dave Knudson thought a “presumption of openness” law was pushing too much transparency in state government too fast. This year, the Republican Senate Leader sponsored the idea and it passed 34-0. Watch for Republican members to kill open government.

In the Senate discussion, Knudson indicated Gov. Mike Rounds may order the destruction of the open records bill if he can’t add loopholes to keep some of the information out of the public’s hands.

SALES TAX
The 84th Legislative Session is continuing to keep all of us legislators very busy out in Pierre. I have a few thoughts and observations that I want to share from my side of the desk.
A bill that I am opposed to is floating around to raise sales tax anywhere from 25-50% in South Dakota. This is supposedly sunsetted at the end of the year which would make it one time monies to fund ongoing government. We have been warned by the governor that one time money should not be used to fund ongoing government. Thus they think because it is short term, it will be more palatable to the legislature and public.

In my opinion, sales tax continues to be the most regressive tax there is which means much of the burden falls on the shoulders of the lowest income earners. According to the Institute on Taxation & Economic Policy, the lowest 20% of income earners in South Dakota are paying over 10% of their income towards taxes and this amount would increase if this law were enacted. I feel it is premature to be raising these taxes because of who it affects especially when we have money in the trust funds that could be a short term stop gap to balance the budget.
The lowest 40% of the population, those who earn less than $15,000 and between $15,000 and $25,000 pay 9.2-10% total taxes of their total earned income. While the top 20% pay from 2.3 to 6.1% of their total earned income.

In regards to economic growth for SD, I was pleased to learn that one of the most important criteria a company uses in their desire to relocate is an adequate and quality workforce. I feel this all begins with a strong educational program including K-12 and higher education. With quality education it increases the qualifications of our young people and if there are jobs available by companies relocating here it would improve our chances of keeping more of our youth in state. I am certainly going to battle to fight the proposed cuts in education as I believe those dollars are a true investment for the future.

The governor has proposed in his budget an increase in property taxes by not reducing the mil levy this year which would bring $6+ million in. This is a very big pill to swallow especially with on the cutting side his cuts to children, the less fortunate, education and the arts. There is no doubt we will be forced to make some cuts this year to balance the budget, however, I feel they should be equitably distributed so that no one sector suffers more than the other. I believe that many of the trust funds are set up to help us during these downturn periods and we should look closely at available money before imposing a lot of new taxes or fees.

As always, if you have any questions or comments on the above issues, feel free to contact me. You can find my contact information on the contact darrell page.