South Dakota Governor Rounds to outline state budget today

PIERRE, SD — With South Dakota’s unemployment rate of 5 percent at its most painful since 1985, Gov. Mike Rounds said Monday the only significant spending increase he will recommend for state government’s next budget will be in Medicaid assistance to the rising number of economically needy people throughout the state.

The governor, who is finishing his seventh year in office with one more to go, delivers his 2011 budget recommendations this afternoon to a joint assembly of the Legislature at the state Capitol. The speech is scheduled to start at 1 p.m. in the House of Representatives chamber.

Rounds said the Medicaid changes will cost an estimated $52.2 million.

Approximately $24.5 million results from growing demand for Medicaid services, while another $20.2 million would replace federal stimulus aid being used to partially fund Medicaid currently, he said.

The other $7.5 million of additional Medicaid funding reflects the federal government increasing the percentage, which South Dakota must pay in the joint federal-state program. That percentage is going up because South Dakota has been doing better economically than many other states in the current recession.

Rounds said the rest of his proposals for the $1.2 billion of state government operations funded by general tax revenue will result in a net decrease of about $900,000.

Those figures suggested the governor doesn’t plan to recommend a 1.2 percent inflationary increase in the amount, which public K-12 schools receive per pupil in state aid. School districts are due the increase unless the Legislature changes existing law.

Rounds declined to answer a specific question about the K-12 funding. He said that matter would be covered in his speech today.

The overall zero-growth approach for non-Medicaid programs indicates no plans for widespread layoffs of state government employees, but also no salary increases for them and no pay boost to providers of health care and support services to the needy.

The governor, in a briefing for reporters, elaborated somewhat on the $900,000 reduction. “It’s not evenly spread across all departments, because you can’t make that work,” he said. Specific details will be released this afternoon, he said.

One other chart Rounds showed to reporters said state government won’t need to tap any of the $107 million in two reserves in order to get through the current 2010 budget year, which began July 1 and ends June 30, 2010.

That indicates that economic conditions show signs of improvement, after sharp declines in sales tax revenues and other major sources of general fund revenue during July through September.

The no-reserves approach also suggests that the $170 million-plus shortfall Rounds repeatedly spoke about publicly in recent months now appears to be vastly overstated.

Currently, there are more than 22,200 people out of work and receiving unemployment benefits in South Dakota, while there are more than 110,000 on the Medicaid roll.

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