Chamber Advocate: Dec. 8, 2023
The Governor’s Budget Address
The kickoff for South Dakota’s 99th Legislative Session is approaching quickly. On Tuesday, Dec. 5, Governor Kristi Noem delivered her Fiscal Year 2025 budget address. Several aspects of the Governor’s proposed budget stood out to the Chamber, as we believe the following proposals will have the interest of the business community during the 2024 legislative session.
For context, the state budget typically focuses on ongoing initiatives and “one-time” projects. Ongoing initiatives you will typically see are inflationary increases or a specific initiative that the state plans to fund each year moving forward. An example of this would be an increase or decrease in state employee wages. “One-time” funds refer to revenue that has come into the state over their adopted budget for the fiscal year. These excess dollars are then available for use by the administration and legislature to address one-time expenditures that the state may have. An example of this may be funding a project such as repairing a dam.
The Governor’s total proposed budget amounts to $7.28 billion and includes an increase of $115.6 million in ongoing revenue, and $208 million in one-time revenue available.
The Big Three
The Governor has proposed a 4% inflationary increase for each of “The Big Three.” This includes funding for K-12 education, Medicaid providers, and state employee wages. Of note, the Governor mentioned that she will work with Education Secretary Joe Graves to explore how this funding can be specifically targeted to raise teacher compensation.
$6 million in one-time funding is proposed to go towards quantum computing projects and programming at Dakota State University, University of South Dakota, South Dakota School of Mines and Technology and South Dakota State University. Additionally, the Governor proposed $4.8 million in one-time funding to go towards equipment needs for the state’s technical colleges.
ARPA and Infrastructure Funding
South Dakota still has approximately $105 million in remaining federal ARPA dollars from the American Rescue Plan Act, alongside $25 million in cost savings from the Bureau of Finance and Management, and a return of $1 million from the Department of Labor, totaling $130.6 million. $10 million of those dollars would go to revenue replacement, and the remaining $120.6 million would be invested into various infrastructure efforts, with just over $95 million being allocated to the Department of Agriculture and Natural Resources under Noem’s proposal.
The Governor also proposed setting aside $260 million to complete construction on both the proposed men’s and current women’s projects by placing dollars into the Incarceration Construction Fund. To accomplish this, the Governor is proposing to withdraw $95.7 million from the State’s reserves and utilize $132.4 million from the General Fund to cover the remaining construction costs for the men’s prison in Lincoln County. Additionally, due to rising construction costs, another $21 million in one-time funding is being proposed for the women’s prison currently under construction in Rapid City.
You can find all of the information and details regarding Governor Noem’s proposed budget on the state’s website. As a reminder, this is the governor’s proposed budget and it is not final. The legislative body will spend the next few months reviewing and debating the proposed budget and will likely have fiscal priorities of their own.