SD budget would be balanced with one-time money

AP News
Posted: Dec 17, 2009 2:10 PM

The gap in South Dakota's current state budget can be fixed by taking $15.8 million from several funds that hold excess money, the governor's budget director said.

Using the money to balance the current budget will not hurt those funds' ability to cover their obligations, state budget director Jason Dilges said.

When Gov. Mike Rounds proposed his state budget for next year, he also said $15.8 million needs to be plugged into this year's budget to cover a shortfall caused by tax collections that are below expectations and spending that has exceeded projections. Most of that extra spending is in programs that help those who have lost jobs in the recession, such as the state-federal Medicaid program that pays health care costs for low-income people, he said.

In the Dec. 8 budget speech, Rounds asked the South Dakota Legislature to transfer $15.8 million from several funds on a one-time basis to balance the budget in the current year, which ends June 30.

Dilges said the governor's plan would transfer $9.6 million from an account that holds money for refunds to large agricultural and industrial construction projects. Those refunds are intended to encourage construction of such large projects.

The federal stimulus program prevents states from building their reserves, so some sales tax revenue was placed in the construction refund account at the end of the last budget year, Dilges said. The $9.6 million can now be used to balance the current budget without harming the fund's ability to pay any tax refunds, he said.

Dilges said $2 million would be taken from a fund that collects sales taxes voluntarily paid on Internet transactions involving South Dakota buyers and companies that have no physical presence in the state.

Another $2 million would be transferred from an account that holds taxes paid on aviation fuel. That money is used to match federal grants for city airports, and the $2 million can be used without jeopardizing the ability to match those grants, Dilges said.

Yet another $2 million would be taken from an account that holds fees certain state offices pay for using the state's accounting system, Dilges said.

The final $60,000 to be transferred is interest paid on state money loaned to Custer State Park's renovation projects.

Use of the transfers to balance this year's budget means the state's reserves would not have to be tapped until next year, when the governor has proposed using $31.8 million in reserves to help cover spending, the budget director said.

House Appropriations Chairman Larry Tidemann, R-Brookings, said he has not had time to study the governor's proposals closely, but he was not surprised that the governor wants to transfer money from some accounts. Lawmakers have discussed such transfers because a South Dakota Supreme Court ruling allowed those transfers as long as enough money is left to cover those accounts' obligations, he said.

After the legislative session opens Jan. 12, the Appropriations Committee will look at Rounds' proposals as it begins fixing the current budget and crafting the next budget, Tidemann said. Lawmakers will look at many options, including spending cuts and fund transfers, he said.

The good news is that South Dakota's budget is in much better shape than those in most other states, Tidemann said.

"Even though things don't look rosy in South Dakota, at least I think we have some workable solutions we can draw upon," Tidemann said.

However, using transfers this year and reserves next year would involve using one-time money to cover ongoing expenses that continue in future years, Tidemann said.

"We just have to use good due diligence before we go spending," Tidemann said.