- Associated Press - Wednesday, January 23, 2019

PIERRE, S.D. (AP) - Gov. Kristi Noem used her first budget address Wednesday to propose slightly higher spending for education, state employees and Medicaid providers than former Gov. Dennis Daugaard suggested in his final budget address last year.

Noem, the new Republican governor, proposed a nearly $1.7 billion general fund budget for the 2020 budget year that starts July 1. She is proposing roughly $54 million in new ongoing spending, including 2.5 percent increases for education, Medicaid providers and state workers; Daugaard had recommended 2.3 percent hikes in his December budget address.

“The budget I proposed today is structurally balanced,” Noem said. “It provides for a prudent plan to confront the issues that we face in our state … and it doesn’t needlessly grow government.”

Noem’s budget proposal funds priorities from her State of the State address earlier in January, including mental health, fighting meth addiction and connecting more people to high-speed internet. She is calling for one-time spending including $3.8 million for Medicaid providers, $5 million for nursing home grants and $5 million for expanding rural broadband.

She’s also proposing $4.6 million to fight the methamphetamine epidemic, including more than $1 million for a meth media campaign.

“We will use this funding to reach out to every South Dakotan through various media platforms to ensure that they understand the horrible truths about what this epidemic in our state is and how we can overcome it,” said Noem, whose public safety plan also includes ongoing spending of about $730,000 for school-based meth education, $2.1 million for treatment and about $140,000 for a new mental health court in Minnehaha County.

House Majority Leader Lee Qualm said he’s excited about Noem’s plan for fighting meth abuse, particularly prevention efforts. He said also that the state needs to do something about nursing homes or South Dakota will see closures, calling for additional money in the long-term care system.

South Dakota’s nursing home Medicaid rate is about $146 per day, short of the roughly $181 daily cost of care, resulting in a $42 million annual shortfall, according to the South Dakota Association of Healthcare Organizations. The group says a nursing home in Tripp closed last year and two more in Madison and Mobridge are scheduled to shut down by the end of the month.

CEOs across the state, whether they’re at hospitals or nursing homes, are thankful for the “positive movement in today’s budget,” said Deb Peters, the association’s vice president of communications and member relations. Noem said her budget proposal includes a rate hike for nursing homes and $5 million for innovation grants to “seek bigger picture solutions to the challenges that we face.”

“Many nursing homes in this state are struggling,” Noem said. “Nursing home closures are very hard. Real people - our parents, our grandparents - they’re all impacted.”

Noem’s also proposing emergency appropriations of more than $28 million for the current state budget year, matching some of Daugaard’s priorities such as $7.4 million to expand the Jameson Annex at the South Dakota State Penitentiary and roughly $3.9 million for a National Guard Readiness Center.

But Noem is shelving a proposal from Daugaard to require state workers to pay premiums for the South Dakota State Employee Health Plan. Eric Ollila, executive director of the South Dakota State Employees Organization, said it would have been a “radical change” from anything state employees have seen.

“It would’ve really caused some severe damage at the lower end of the scale, where we have a lot of employees,” he said.

Lawmakers will reshape the current budget and approve the next one during the 2019 session. Noem’s plan for next budget year calls for spending about $1.75 billion in federal funds, more than $1.4 billion in other state money and about $1.7 billion in general funds, totaling over $4.8 billion.

Noem said her budget proposal doesn’t include any new projected revenues after a U.S. Supreme Court ruling in South Dakota’s favor opened the door for consumers to see sales tax on more online purchases from out-of-state companies. The state on Nov. 1 started requiring many internet retailers outside South Dakota to collect the taxes.

“We shouldn’t plan for and budget dollars that aren’t in the door yet,” Noem said. “It’s just not fiscally sound.”

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