Governor M. Michael Rounds is in the State Capitol and on SDPB right now telling us how he'd screw education if he were around for another term. Here's my live-blog (hit Refresh/Ctrl+R/F5 for updates!):
Actually, Dennis Daugaard gets to lead off. He expresses his thanks to his great friend, Mike Rounds, for being "a leader and a mentor, a negotiator, a strategist," but above all a friend. (And he says this, even having seen the budget report? That's loyalty.)
13:09 CST: Dennis and Mike shake hands, Gov. puts hand on Gov-Elect's shoulder... aw, no hug.
Oops! Ovation almost petered out... then someone decided it wouldn't be cool for the applause for the sitting governor to run shorter than the applause for the governor-elect.
13:12: Governor Rounds says we face "an unpredictable economic recovery." We have $107M in reserves available. These are rainy day funds that we didn't use during the actual rainy day, which still didn't rain that hard in South Dakota.
Important: some of the reserves-dipping that Rounds is finally proposing are to balance this year's budget, not just next year's.
13:13: Wow: $21M less from the Bank Franchise Tax, down from projected $24.9M to only $3.9M. Guess the banks aren't making money hand over fist any more on high interest rates. Governor Rounds embraces usury and blames federal credit card regulations. Contactors excise tax down $14M, but sales tax up $10M.
Rounds proposes using $14M in reserves to finish FY2011 on budget, then $36.9M in reserves to balance FY2012.
13:17: Sales tax is the biggest revenue source for the state, projected about $700M in FY2012. Second biggest chunk of state revenue: video lottery, over $150M.
Projected Revenue increase only $8M, projected expenses for FY2012 still up $32M. More spent on Medicaid since stimulus is running out (and I don't hear Rounds thanking Uncle Sam for the help over the last couple years). Expenditures on education and public safety are projected to go down.
FY2011 structural deficit: $108.4M. Even with the proposed cuts and reserve spending, Rounds says we'll still have a $74.8M structural deficit in FY 2012. (Tea partiers, bring your shouting home!) Governor's graph shows a structural deficit every year of his administration but FY2007. The recession exploded that deficit... even though that recession never caused our state economy to shrink. What gives? Why isn't our increasing wealth pouring some increasing fair share into the state coffers?
13:27: Bad, nasty, evil, ineffective federal stimulus dollars will cover $36.9M of next year's structural deficit.
The stimulus dollars granted previously forbade cuts to Medicaid and K-12 education for FY2009, 2010, and 2011. The new "Stimulus 3" funds prohibit cuts to K-12 and higher education (even though, Rounds whines, those stimulus dollars don't provide any higher ed support) and prohibit growing the reserves.
13:29: Rounds says stimuluses. Oh! Why couldn't he have said stimuli?
And now, I think Rounds is actually trying to tell us that the federal stimulus dollars caused the structural deficit. No, Mike: it's your and the Legislature's fiscal cowardice that has caused the deficit.
13:31: State revenues spent on general fund expenditures will be almost $1.2B, plus another $36.9M in stimulus dollars. Ah, but Stimulus 3 will require a $10.6M increase in Board of Regents spending, so it replaces much less than $36.9M in general fund spending.
13:35: Rounds says we still need to come up with another $39.2M in state funds to cover our general funds needs and make up for the end of the stimulus package.
SDPB gives us a quick view of House Minority Leader Mitch Fargen. He looks unimpressed.
Rounds talks about FMAP money being based on personal per capita income relative to the national average. Since our economy has outperformed the national economy—i.e., because we are increasing our income faster than the rest of the country—we have to cover more of the costs. And Rounds seems to think this is unfair. It seems Uncle Sam has the right idea: if your state is doing better than others, you should be able to cover your own costs. But you can't do that if you aren't taxing that increased income, if your tax system is still a regressive, property- and consumption-based system!
13:39: Rounds shows us $39.2 in new ongoing funding required to replace ending stimulus, $15.0M to increase our FMAP state share, and $11.7M in increased Medicaid demand. That's a total of $65.9M. Make $36.1 in cuts, and we still need $29.8M more to cover our needs.
13:44: The Governor's chart shows cuts in every state department. Governor's office takes a $236K cut; Legislature takes a $239K cut. 2010 research centers and Cultural Heritage Centers get big cuts. $23.5 million cut from state aid per student K-12. That's the $240 per student, about 5%. Also reducing technology in schools budget, consolidation incentives.
Net $15M reduction in education spending. Rounds emphasizes Medicaid providers are taking a 5% hit, while some state offices are taking 6, 7, 8, maybe 10% cuts.
Rounds: "I want to share a little bit..."—there's an inapt phrase.
Rounds cites $123.1M in school district general fund cash accounts back in June 2003. $183.9M in June 2009 in cash accounts. June 2010: $194.3M. Rounds is saying that the good people running the schools have very responsibly saved money recognizing that cuts could come. Translation: screw 'em. Force the local districts to burn up their reserves.
13:50: Board of Regents gets an FTE increase of 227.5. A lot of that is linked to federal and private grants. Ax is falling on FTE's everywhere else.
Note that the net education cuts, counting K-12, tech schools, and Regents, is only $11.45M. 'Taking Care of People" goes up $40.97M. Protecting the Public (cops and such) gets $4.2M more. The rest of state government gets cuts [oops! missed the number!].
13:54: Special appropriations for FY2012: Rounds cites seven presidential (blame Obama) disaster declarations in South Dakota this year, plus seven disasters from previous years still being tackled. State needs to authorize 10% match to federal disaster dollars, local governments are supposed to do 15%. Some locals, especially northeastern South Dakota, don't have that cash, so the state has kicked in extra funding to help repair roads. Rounds says we'll need $13.4M to cover this in the FY2011 budget. He requests only two small specials for FY2012 on tuiton and tax reimbursements for old folks, total not much more than $14M for the 2011 Legislature to approve.
13:58: I check my inbox and find new SD Dems chair Ben Nesselhuf calling Rounds's address a "Broken promise" and says the proposed change to the K-12 funding formula: "broken law marks new attack in GOP War on Education." (ben, did you Tweet that from the floor? ;-) )
The state will spend $1.194B in general funds. Federal funds will contribute another $1.876B. Other funds make up $1.004B. In total, South Dakota will spend over $4 billion in FY2012. And pay attention Tea Party friends: almost half of that is from Uncle Sam. So tell us what you're going to do about that, Senator Thune and Rep.-Elect Noem.
Rounds breaks out the goofy dollar graphic, notes that his budget would spend 49 cents out of every dollar on K-12, higher ed, tech schools, and the Department of Education. He answers exactly the question I was thinking about and shows that back in 2004, education made up 55% of the state budget. "Taking Care of People" ate up 30% then, eats up 37% now. There's the big flip. Rounds also notes that the share of spending on state government has gone from 5% of the budget in 2004 to 4% in his proposed budget.
In this entire speech, I think I have heard Governor Rounds mention "increased taxes" once, and he barely finished that last consonant before hurrying to the next sentence. Now he is speaking of spending South Dakotans' tax dollars wisely, as if that money is a fixed sum, as if the idea of increasing that revenue is inconceivable.
Mike Rounds says South Dakotans have the highest average credit rating in the nation. He says we don't buy what we can't afford. He says the legislators have to answer to those taxpayers who aren't in the Legislature, who are back home working. he says they have to be willing to say no to all those great programs people want. Again, no mention of the idea that some good, honest South Dakotans might be willing to pay more to keep those great programs.
14:10: But hey! We're still working hard to make South Dakota an even better place to raise a family. Rounds says 27,000 more people have jobs now than in September 2002. He mentions saving Ellsworth AFB from closure (again, he offers no thanks to Uncle Sam for all those dollars). He brags again about not touching the reserves until now. He says K-12 is getting $109M more each year now than in 2003.
Boy, for heartfelt words of thanks to state employees, the Governor is sure looking at his script a lot. Where's the teleprompter patrol that yells at President Obama for things like this?
Another inapt reference: Rounds mentions that today is Pearl Harbor Day.
14:14: Governor Rounds is now distracting us from the budget discussion by wrapping himself in patriotism, talking about what wonderful soldiers we have in the National Guard and the regular service... yet another great source of federal income for South Dakotans.
Rounds talks about being elected to make South Dakota a better place. And he ends his term with a budget plan that would make K-12 education worse. How tone deaf is this governor?
...and SDPB ends with a great picture of some guy's shoulder in the gallery.
Now I suppose we could spend a lot of time picking this budget apart. But I am really, really hoping that this slideshow is going right to the trashbin, and that we can eagerly anticipate the first big number-crunch from the Daugaard administration that might have a little more vision behind it.
***Carolyn Ann Johnson 1938-2016 - In October 2016, an old friend, James A. Johnson, died after being in a nursing home and hospital for some time. I intended to send a memorial and contacte...
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