Prior to to the 2011 Legislative session the following “THINKABOUTIT” was sent. Attached is a March 5, 2011 Aberdeen American News article by Bob Mercer which provides an update and more information relative to the Structural Deficit and Spending Issues the 2011 Legislature is facing now and in the future.
As Mercer points out: “It’s probably also overdue that a governor, his Cabinet secretaries for education, social services and human services, the K-12 education community and the health-care sector come together around tables to start charting different ways for the learning and care to be accomplished.” Such a process would also be worthwhile for Higher Education and local government at all levels.
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South Dakota legislators cannot dodge budget reality
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BY BOB MERCER
American News Correspondent
March 5 2011, 12:00 AM CST
As the Legislature enters its final week of the 2011 session, the issue hanging
unresolved is state government’s 2012 budget, which begins July 1, and the
governor’s recommended 10 percent cuts.
The complete article can be viewed at:
http://www.aberdeennews.com/news/aan-south-dakota-legislators-cannot-dodge-budget-reality-20110304,0,3506237.story
THINKABOUTIT–IT’S THE SPENDING
Free Enterprise Works–SD #1 Economic Freedom
The era of Structural Deficit Denial in South Dakota has finally ended, but the period of Structural Deficit reduction has not started. That Structural Deficit from FY 2004-2010 has accumulated over the years to plus/minus $120 million and with the over $80 million for FY 2012 the new Governor and Legislature are facing over $200 million of structural deficit spending.
This is at a time when revenues (sales tax, video lottery, contractors tax, bank franchise tax, insurance tax) will continue to lag the economic (hopefully) recovery. With an estimated revenue growth of only 3% in FY11and going forward, the Budget Structural Deficit will not recover until FY 2014.
Also, unemployment continues at 4.5%, which is 61% higher than 2007; pension fund income has decreased; state employees have not had a salary increase for two years; the low-hanging “special other funds” fruit has been harvested and now the State faces $150 million funding shortfall for the Homestake project. The saying is: “Yes, that is a very important program, but we cannot afford it.”
This is not new news to the incoming Governor and Legislature. Short-term they must cut spending to eliminate the $14 million to balance the FY 2011 budget, not spend the reserve funds and cut the structural deficit. Long-term they must reduce the accumulated structural deficit, balance the budget and continue to reduce spending to compensate for lagging revenue. This will ensure a strong and attractive economic climate for future growth.
The state budget would benefit from the outside perspective of a Temporary Group to set a long-term spending goal for state government. The Group would not only get government spending back in the box, but would also determine how much of the South Dakota economy should be allocated to state government and its fiscal future.
Also, have a permanent Economic Council to give state government a perspective from the world of business and finance when shaping the state’s fiscal plan. This would insure that the budget is honestly balanced, protects reserve funds, and only spends the taxpayers money on programs that demonstrate quantifiable results; just like every successful business in South Dakota.
The American people are looking for individuals that resemble who they are. A fresh approach will let the citizens in South Dakota know that their state government is under control and that their voice has been heard in Pierre.
THINKABOUTIT
