March 2009

DEMOCRATS SAVED ROUNDS FROM BUDGET COLLAPSE

Panicky was how Gov. Mike Rounds reacted when he realized as late as January that the nation was caught in a severe recession. Rounds set himself up as the first governor in state history to shut down the State Fair and the State School for the Deaf, and to become the only governor without a Birth to 3 Program, a state archeology program or a State Arts Council, all of which would fall victim to Rounds’ budget cuts. He also suggested that property taxes should go up.

Republican legislators, quaking over Rounds’ radical cuts and the widespread shock and anger of parents and grandparents and local governments, gripped the panic lever and introduced 25 percent and 50 percent increases to the state sales tax as their solution.

Democrats in Pierre reacted with a list of responsible cuts and funding sources from budget slush funds to avoid the worst cuts and to keep education and health care from failing South Dakota’s people. The last thing Democrats wanted was to increase taxes.

But it was the Democrats in Washington along with three Republican U.S. Senators and President Barack Obama who delivered relief for this legislative session and the 2010 legislative session with the American Recovery and Reinvestment Act. South Dakota’s $88.1 million share restored money for education, Birth to 3, health care programs and other needs. It took the State Fair and the School for the Deaf, both more than a century old, off the chopping block. A special compromise tourism tax increase kept the S. D. Arts Council in the black. And the stimulus money promises to put South Dakotans back to work on highway and other construction projects.

Even with the massive infusion of federal stimulus money added into the $3.9 billion state budget at the last minute of the 2009 session, Republicans still wanted to create some victims to their poor management skills. Democrats tried in the Senate and the House to use available funds to provide for inflationary increases for nursing homes, hospitals and other facilities that provide health care to low income people under Medicaid. Republicans killed the funding in favor of restoring the state’s budget reserve (slush) funds. Slush funds won out over low income family health care services.  

STATE FINALLY ENACTS OPEN GOVERNMENT LAW

The words are stunning when set against the history of the Gov. Mike Rounds administration: “The public clearly has a right to know what government is doing and to participate in the process. That is the foundation of democracy.”

Amazing. The quote is his statement as he signed the so called presumption of openness bill, a piece of legislation he said last year he strongly opposed and saw no need for. The bill’s primary sponsor, Republican Sen. Dave Knudson, was in Rounds’ camp last year when the bill was introduced in the Democratic legislators’ agenda for the 2008 session. Like Rounds, Knudson recently changed his tune when he discovered that he, at long last, looked like he was protecting secrecy in South Dakota’s government by saying there was no need for presumption of openness law. It was a position Knudson maintained despite months of hearings and deliberations on reforming South Dakota’s laws and the state media and legal lenders all called for South Dakota to join in the rest of the nation by enacting a presumption of openness law.

Rounds’ and Knudson’s efforts to clamp down on government information that should be public earned then the distinction by the Better Government Association (BGA) which ranked their policies as “dead last in integrity.” Wallowing at the bottom of the nation in open government laws and integrity were Vermont, Alabama, Tennessee and Montana. Believe it or not, New Jersey was the top ranked state.

Since the BGA announcement, the Round administration has been hit by a barrage of embarrassments including new that the Governor’s brother-in-law worked for a lobbyist firm called Powertech Uranium Corporation, attempts to prevent Republican Sen. Gene Abdallah from learning the number of state airplanes, scandals of no-bid contracts and more.

Look for years of amendments to remove loopholes inserted in the new law to prevent public disclosure of government actions, as well as attempts to erode the law.

March 12, 2009

The House Taxation Committee took some really significant action on March 12, 2009 which could save the arts programs by finding some funding in expanding the special tourism taxes to include May and October. As one lobbyist against raising taxes put it: "If you're going to have to swallow a frog, it's better to do it early in the morning." We also voted down several proposed sales taxes, like those on advertising and on libraries.

More and more we are seeing bi-partisan efforts to find ways of balancing the budget without hurting people. A general sales tax increase of 25% was defeated, but in the Transportation Committee, they did agree to increase license fees which haven't changed for some ten years. Out-of-state "RVers" still get quite a break from what they would pay in other states. I questioned why we should be a "tax haven" for the wealthy retired folks who live most of the year elsewhere.

At the arts celebration Tuesday evening, it was my good fortune to meet and visit with Dale Lamphere, the creator of the four statues in the Capitol Rotunda: Vision, Courage, Wisdom, and Integrity. It's why I see this placed as the "People's Cathedral." What we do here truly has moral and ethical implications as we struggle to advance the common good. Coincidentally, at our table, the artist who designed "Termespheres" fascinated us with his insights and good humor. We are so gifted to have so many creative people in our state who are willing and eager to share their talents.

March 6, 2009

LEGISLATORS SHARPENING THEIR PENCILS

Just one week remains in the 2009 legislative session, and all 105 legislators are sharpening their pencils because our final days will be all about the $3.6 billion budget.

General funds (your tax dollars) represent about one-third of the budget. We’re awaiting final projections on revenues for the coming year, but everyone expects them to be flat at best and possibly even lower than the last fiscal year.

However, the Obama Stimulus Package is a savior for states. South Dakota is now projected to receive $656 million to balance our budget over the next two years, plus we have an opportunity to compete for other monies as well.

The goal of the stimulus package is to revive the national economy so we have a responsibility to put the money to good use in the South Dakota economy. We shouldn’t hoard it away; we should be sure that it is spent wisely on South Dakota infrastructure and services so that it helps to invigorate our economy.

Many of the important education and health programs cut by the governor earlier this session are likely to be restored when we finish with the budget next week.

Of course, our challenge will be to figure out how to wean ourselves from the stimulus money in two years when we spent it for ongoing needs. Hopefully our state economy will be on the rebound by then; if not, we’ll face some very difficult decisions on how to provide essential services in South Dakota. But every year has new challenges.

HELPING THE UNEMPLOYED IN SOUTH DAKOTA

More South Dakotans are losing jobs every day. Our unemployment rate jumped .7 percent in just one month to 4.4%. We’re still below the national average, but that’s little consolation for unlucky families trying to buy groceries and make rent or house payments.

Many of us in the legislature want to use the federal dollars to maximize assistance for those South Dakotans who have lost jobs in the recession.

If state government is too slow to implement the federal guidelines, we could leave as many as 1,000 unemployed workers without benefits. That would be a mistake; we should fast track the unemployment modernization program and get assistance to people who are hurting financially. That’s the purpose of the stimulus package.

We’ll be debating the state’s unemployment benefits in the final days of the session. The best move for businesses and for unemployed workers is to include as many in the program as possible and maximize the federal assistance dollars.

HOW TO TAX AG LAND

Taxation of farm and ranch land in South Dakota has historically been a thorny issue, and it has become more difficult in recent years because land sales often have little to do with actual agricultural potential. Buyers are often more interested in hunting rights, development potential and other issues.

Consequently, it has become very difficult to value the land. Valuations sometimes vary greatly between neighboring counties with similar crop yields.

Several years ago, the legislature began a multi-year process to switch from valuations based on recent sales to a system based on actual agricultural value. Opponents call it a form of an income tax but proponents say it will provide stability to ag land valuations.

The new system will maintain the existing balance of taxation between our three classes of property — owner occupied housing, commercial and agricultural. However, everybody agrees that ag land valuations may grow more slowly, and that could eventually create a minor shift to the other two classes.

There were several attempts to derail the new system in this year’s legislature but they were defeated so state officials will continue to work toward implementation.

LEGISLATURE NO LONGER A WINTER PASSTIME

Our part-time citizen legislature was designed in horse and buggy days. Farmers wanted to hurry out to Pierre after the holidays, do the public’s business and return home well before the ground thawed so they were ready to plant spring crops.

We still meet for 40 days in late winter, but now the work continues all year long through various task forces and joint committees.

We’ll be choosing several subjects as summer study topics before we adjourn this week.

March 1, 2009

DO OLD CARS DESERVE A DISCOUNT?

Lawmakers are reluctant to pass any fee or tax increase, but some are surviving. If it’s necessary, we still want to make the tax as fair as possible. For many years, we’ve given a 30% break on vehicle license plates to cars five years or older. There’s been an effort to eliminate the discount altogether, or to only give it on cars 10 years or older.

State Rep. Paul Dennert amended the license plate bill to preserve the discount on five year old cars and older. He argues that old cars should cost less because they’re usually driven fewer miles, and often they are spare vehicles for families or small businesses.

EDUCATION UNDER ASSAULT

Republicans in the House slashed education funding that was put in place just two years ago by voters in a statewide vote. In the 2006 election, South Dakotans committed about $9 million to special programs known as ESAs, T-CAPs, and CTEs that provide cooperative education programs, teacher development and tech training in districts across the state.

In a late-night vote, House Republicans eliminated the dedicated dollars for schools and redirected the money to the state’s general funds where they can be used for any purpose.

Fortunately, President Obama’s stimulus package will require South Dakota to maintain its current educational spending if we want to access the federal monies. Otherwise, I’d be very worried about funding for our schools in the current political climate in Pierre. Just about every one of the 105 legislators campaigned on the need to support our schools, but somehow those campaign promises seem to get lost between home and Pierre.

SCHOLARSHIP PROGRAM IS BRIGHT NOTE FOR NEXT WEEK

Nearly 9,000 college and tech students in South Dakota qualify for need-based scholarships – but unfortunately we are the only state in the nation that has no such program.

That may change thanks to a proposal offered on the House Floor to a bill that would create the West River Higher Education campus by Rep. Kevin Killer of Pine Ridge.

Rep. Killer’s bill would create LEAP scholarships for students at South Dakota’s public, private, tribal, and technical schools. Although we probably won’t be able to provide funds for all who qualify, the proposal will provide help for the hardest-pressed students. We proposed $100,000 of general funds that would be matched dollar-for-dollar by the U.S. Department of Education.

The program is especially important in 2009 because the recession is sending many South Dakotans back to school to learn new job skills.

EDUCATE OR INCARCERATE

South Dakota has a lower crime rate and a higher prison rate incarceration rate than our neighboring states. Our incarceration rate is 426 per 100,000 citizens. Other states have rates of 181 (Minnesota), 296 (Iowa), 356 (Montana), and 221 (North Dakota).

Other states are finding alternative ways to deal with non-violent offenders are less expensive for taxpayers and more effective at rehabilitation.
Democrats want to expand drug courts in South Dakota and look for other solutions in conjunction with the Unified Judicial System, local communities and the Department of Corrections. We tried to pass a measure addressing the issue but it was killed on a party-line vote by Republicans.

This week we authorized funding for a new prison in Rapid City. When we build prisons we always fill them. Every dollar invested in corrections is a dollar we can’t spend on education, tax relief and health care.

UNEMPLOYED IN SOUTH DAKOTA NEED HELP

We received word this week that as many as 70 South Dakotans are losing their jobs. Of course, many others are facing cutbacks in hours and wages. The recession is hitting our friends and neighbors. Our employment rate is well below most other states, but if you’re the man or woman without a job that is little consolation.

Hopefully this legislature will fast-forward the employment assistance provided by the Obama administration. The program will benefit both workers and employers and could also save us from having to increase unemployment taxes on businesses.

Unfortunately, Gov. Rounds and some Republican legislators have indicated that they may not be interested in accessing the maximum amount of unemployment assistance for South Dakotans. He said it might cost businesses extra money in the future, but other assessments indicate that the Federal Unemployment Insurance Modernization Act (UIMA) that calls for minor changes in our laws will provide $17 million and cover the changes for 12 years or more. That will keep the fund above $11 million in South Dakota and prevent higher taxes for employers while still helping workers.  

February 20, 2009

IMPORTANT PROGRAMS WILL BE SAVED

We could almost hear huge sighs of relief this week, as the legislature began to reverse many of Governor Rounds’ ill-advised budget ideas.

In both House and Senate committees, bi-partisan efforts were made to save the Birth-to-Three program, the arts council and other important programs that affect health and education services in South Dakota.

Rather than eliminating essential programs, Democrats have advocated an across-the-board cut that would force every department to find efficiencies in government that people expect. Democrats have also urged cuts in travel, state FTEs, private contracts and other areas of government that have grown in recent years.

SALES TAX REVENUES

Legislators are watching sales figures in South Dakota almost as breathlessly as the retailers and other businesses who report them. The figures are an indicator of the health of our economy, and they reveal how much money we have to work with as we prepare the 2010 budget.

Although there is much “doom and gloom” talk, it should be noted that overall tax revenues are slightly ahead of figures from one year ago. The revenues are lagging behind projected revenues but they are above actual revenues.

General fund receipts totaled $689 million through January 2009 for Fiscal Year 2009. That compares to $685 million for FY 2008. However, revenue projections called for $713 million so we currently have a $24 million deficit in the FY 2009 budget.

OBAMA STIMULUS PACKAGE

Lawmakers are also poring through the long and complicated stimulus package signed this week by President Barack Obama. It fixes many of our immediate budget problems on the state level — providing $182 million in highway funding, $39 million in water infrastructure projects, $180 million in educating and training funds and millions more in energy assistance, weatherization, Indian Health Services, nutrition programs, Head Start and law enforcement. The package has some strings attached, but it is well designed for states and fits our most pressing needs in transportation, education and health care.

NO MORE ‘BUSINESS AS USUAL’

The Obama stimulus package will help to balance our state and school budgets for the next two years. However, the federal monies cannot and should not be counted on beyond 2012, so we must start to prepare today for paying our own way.

That means we must not go back to “business as usual” in Pierre. We have to find some way to control the future growth of government and to demand more efficiencies in every department. Democrats have advocated a Zero Based Budgeting concept in which every function of every department is analyzed and justified on a periodic basis. State government has been growing much faster than inflation for many years. State employee numbers have swelled by 2,000 in just the last decade.

NATIVE AMERICAN ISSUES SHUNTED ASIDE

Many legislators were disappointed when the House State Affairs Committee killed Rep. Ed Iron Cloud’s proposal to create a task force to study issues from Indian Country. Roger Campbell, the governor’s director of Tribal Government Relations, testified in favor of the bill but it was killed by Republicans on the committee.

Iron Cloud said more dialogue would lead to better communications, and that would result in benefits for all South Dakotans regardless of race.

February 15, 2009

REVENUES IDENTIFIED FOR FUNDING BIRTH TO THREE AND OTHER IMPORTANT PROGRAMS.

Democratic legislators on Friday identified a $7 million plan to restore funding for these essential programs:

• Birth to Three children with disabilities - $1.8 million
• Medicaid Dental program - $1.4 million
• Office of the Arts restoration - $650,000
• Archeological Research Center - $310,000
• Medicaid Provider Reimbursement - $650,000
• Nursing home client costs - $430,000
• National Board Certiified Teaches - $100,000
• Child & Adult Nutrition, etc. - $75,000
• Autism Grant Program - $125,000
• HPV Vaccinations Program - $60,000

By finding general fund dollars for these programs, Democrats say the state will also save $4 million in federal funds for essential education and health care programs that would otherwise be shifted to local governments and families who have children with a disability.

THE FUNDING SOURCE

Rep. Bernie Hunhoff and Sen. Scott Heidepriem, the Democrat’s legislative leaders, say the programs could be funded by revising the state’s revenues from the Deadwood gambling industry.

The gambling industry has outgrown the state’s existing tax mechanism. The governor also has a proposal in the 2009 session to revise the tax. However, the governor’s proposal raises only $4 million and would hit the smallest casinos too hard — taxing all machines equally. It could actually result in a decrease in machine numbers, and falling revenues.

The Democrats’ plan would install a progressive tax for the state on machine revenues — lowering the tax for machines that earn less than $14,000 a year and progressively raising the fee on those that earn more.

When the Deadwood gaming industry was created in 1990, the casino taxes represented about 23% of gross revenues. However, that percentage has gradually diminished because taxes are largely based on per machine fees rather than revenues. The Democrat proposal will simply restore the tax revenue to about 23% of gross revenues, assist the small and independent casino operators, and provide a plan that will grow revenues gradually as the industry expands.

WIND ENERGY ANNOUCEMENT

News of a 12,000 MW “Green Power Express” wind energy transmission line was the buzz in the capitol on Thursday. Legislators are considering a number of bills focused on this exciting new prospect for South Dakota.

There are also rumors of a major new wind farm in the works for central South Dakota — perhaps the biggest wind farm in the world to date.

Democrats are encouraged by these developments, and are focusing their efforts on ensuring that landowners’ interests and rights are protected. We also want to find ways to maximize the benefits to South Dakota communities.

‘PAY TO PLAY’ PROPOSAL KILLED BY GOP

Republican senators killed a Democrat proposal to implement a “pay to play” bill modeled after the Illinois statute that entangled Governor Blagojevich, who was impeached last week.

South Dakota has no laws on “pay to play.” Sen. Scott Heidepriem said Senate Bill 168 is not an effort to point fingers at past conduct, but intended to create a “bright line” for both gubernatorial candidates and contributors who do business with the state of South Dakota.

There are 1,800 “no-bid” contracts currently filed in the State Auditor’s Office. Those who benefit from the contracts can and do write large campaign contributors to candidates for governor. “It is not enough to avoid impropriety, we must also avoid the appearance of impropriety,” he said.

Democrats will continue to seek to implement “better government” programs that create transparency in political campaigns and avoid the potential for abuses.

Money obviously greases the wheels of politics, but it should not also grease the machinery of state government. As the laws now stand, that potential clearly exists.

January 2009

The gavel has sounded to start South Dakota’s 84th legislative session. Our state is 119 years old but for many years the legislature only met every two years, so this is just our 84th gathering.

Your legislators all run for office and then leave their homes and workplaces because they want to tackle South Dakotans’ problems. And as you know, we have plenty to work on in 2009.

We traditionally begin each legislative session by welcoming the governor to address the legislature and deliver his State of the State Address. We listened on January 13th, the first day of session, and some lawmakers seemed surprised at Gov. Rounds’ overly-rosy report. It sounded more like a rousing, cheerleading report by a Chamber of Commerce president than a realistic review of South Dakota.

Little or nothing was said about the layoffs that are occurring around the state, or about the problem that many who are working are getting some of the lowest wages in the nation. Nothing was said about the fact that some of the nation’s poorest counties lie within our borders. That should be tackled in every State of the State and every legislative session.

Nothing was said about the thousands of South Dakotans who have no health insurance, or who can’t afford the coverage they have.

Nothing was said about how we are going to resolve the challenges we face in applying property taxes in a fair way on our farmers and ranchers. It’s a complicated issue that demands leadership.

The governor did report on the advances with ethanol and wind energy, but he didn’t talk about ways to take these important initiative another step – or how to ensure, in the case of wind energy, that landowners are protected and that communities reap the maximum benefits.

The governor brought up our transportation needs but there were no solutions offered. Good roads are critical to our agricultural community, the tourism community and all who make long commutes to work.

These issues will be brought up by lawmakers, and I trust that we can find bi-partisan solutions. Of course, the over-riding issue will be to find a way to balance the budget without causing further pain and hardships on the people who pay and who collect our states for us. Whenever government revenues are down, you can be sure that people on Main Street and in the country are hurting. We’re all in this together; we don’t want to solve government’s problems by adding to yours.

I look forward to serving you in the 2009 session. Please call, write or email – or catch me when I’m home on weekends. Our best ideas come from friends and neighbors back home. Thanks for trusting me to represent you in Pierre. I will work hard with others to find solutions and made headway on these and other issues.

Darrell