- Associated Press - Tuesday, December 6, 2016

PIERRE, S.D. (AP) - Gov. Dennis Daugaard offered a budget plan on Tuesday constrained by lower-than-expected tax collections, forcing officials to address a shortfall this year and tamp down spending increases for the next budget cycle.

The $1.62 billion general fund budget proposal, which the Republican governor outlined in his annual address to the Legislature, includes roughly $20 million in general state spending increases for the upcoming budget year, or growth of about 1.2 percent.

The money would go to fund increases including 1 percent for education, Medicaid providers and state workers. The GOP-held Legislature will reshape the current budget and approve the next one during the legislative session that begins in January.

Senate Minority Leader Billie Sutton said he’d like to see larger hikes for education, providers and state employees and more emphasis on economic development.

State revenues for the current fiscal year, which began July 1, aren’t meeting lawmakers’ projections. Nearly the entire decline during the first four months of the year is from dipping sales tax collections. Officials have attributed the decline to cautious consumer spending, low commodity prices and e-commerce transactions that avoid state sales tax, which is the state’s main revenue source.

The governor’s plan anticipates that revenue for the current budget year will be about $26.1 million lower than previously anticipated, a roughly 1.6 percent decline.

With current-year spending also coming in below projections, plus some new money, Daugaard proposed roughly $22.7 million in one-time spending for the current budget year.

The one-time spending includes roughly $2.4 million for the state’s budget reserves, $3.3 million for a fund for fighting wildfires and $5 million for a new animal disease laboratory, among other expenses.

The governor’s plan for next budget year calls for spending about $1.65 billion in federal funds, roughly $1.35 billion in other state money and about $1.62 billion in general funds, totaling at $4.6 billion.

“South Dakota is working. Working better than many other states,” Daugaard said. “We can proudly say that we balance our budget honestly every single year without gimmickry or overly borrowing.”

Incoming House Majority Leader Lee Qualm said it doesn’t look like budget cuts will be required.

But, Daugaard’s proposal doesn’t include millions of dollars of funding for a public campaign finance system established under a government ethics overhaul approved by voters last month. The roughly $5 million cost next budget year would eat up significant revenue growth for other areas, he said, taking a detour in the speech to address the ballot measure.

It’s not responsible to use taxpayer money to fund political campaigns at the expense of education, and voters wouldn’t want that, Daugaard said.

Democratic legislative leaders criticized Daugaard for his stance on the initiative. Sutton said not funding the public campaign finance provision just because the governor doesn’t like it is “a little bit dangerous.”

A group of Republican lawmakers and others filed a lawsuit last month in state court challenging the constitutionality of the ballot measure. Those bringing the lawsuit are set to argue in a court hearing Thursday that the law should be put on hold while the case proceeds.

Daugaard said he’d support rolling back the measure if it isn’t struck down in court. But the governor said he hopes to study the issues covered by the initiative this session and work to find solutions.

Right now, the measure voters enacted is “very unworkable,” Qualm said.

“We are not just going to throw it out and get rid of it,” he said. “We’re going to come back and change it and make it workable.”

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