SOUTH DAKOTA STRAIGHT TALK

On Tuesday Governor Rounds will deliver his annual Budget Address and present his 2009 Budget.

Money is always the most important issue during the Legislative Session. This year will be no different but this year the Money Chase will be far more intense than usual.

The Governor will propose a balanced budget and we shall see if reserves will again be used to fund any structural deficit.

State Revenues will grow but because of the slowdown in the National economy at perhaps a slower rate than in the recent past. Our farm and ranch economy in South Dakota is excellent. 2007 has been an excellent year for ag income. However the outlook for other sectors is not as bright. Weakened consumer confidence, the weak dollar and energy prices all contribute to a slower economic growth rate.

The battle lines will be drawn over who gets any new money. The Money Struggle will be marked by an intense competition between K-12 and Higher Ed for any new money.

The recent news coming from the Board of Regents is that they need $115 million for increased infrastructure improvements and additions. Each year the K-12 community claims they are not getting enough State money (despite the fact that the State’s share (%) of School funding continues to rise even with decreased enrollments.) Many School Districts currently are suing the State for more money claiming they are constitutionally entitled.

The Governor who has made Higher Education, Research, and investing in Human Capital one of the Hallmarks of his governance and he can reasonably be expected to side with Higher Ed in getting any fresh dollars.

Democrat Legislators in the last session wanted to tap reserves by over $100 million to dramatically increase K-12 funding while Republicans have had the more prudent approach of increasing K-12 aid over the mandated 3% or the rate of inflation whichever is lower with new money as it becomes available. The Republican Legislature de facto is committed to using new money as available for K-12.

It is reasonable to assume that if the Governor comes forth with new revenues that the GOP Legislators may have promised themselves into the box of siding with K-12.

Sidebar - The Regents who are claiming that infrastructure is now substandard and otherwise inadequate have been the custodians of these same facilities. It is on their watch the facilities declined. Perhaps past Higher Ed revenues were put into new projects while repair and maintenance items were deferred.

The Governor’s proposed Budget will be the first indication how this Money Battle Royal shapes up politically. Consider 2008 is an election year (meaning not a year that you want to raise taxes), the 35 day, 83rd Legislative in 2008 will be more interesting than usual.