Thank you for choosing me to represent you in Pierre. Each week during session, I will give updates on issues in Pierre. This week I will cover the impact of Federal Tax Reform, Medicaid, and the state budget.
The passage of the federal tax reform will impact several aspects of state government. Fortunately, the version that passed preserves the tax credit for bonding. Had this provision been removed, the cost for publicly bonded facilities, like schools, would have increased significantly. There is a 15% reduction in the Federal Low Income Housing Tax Program. This program provides tax credits for low income and affordable housing. These tax credits are tied to the corporate tax rate. The corporate tax rate was cut from 35% to 21%. This cut certainly benefits South Dakota corporations, but will compound the affordable housing shortage and the recruitment of much need workers in South Dakota.
The State will be proposing changes to the Medicaid program. The Governor is working with IHS (Indian Health Services) to get full federal reimbursement for tribal members even if the services are provided by a non-IHS facility. Currently, state Medicaid pays more than 96 million dollars for native health care services. The state has also filed an 1115 Medicaid waiver. A section 1115 waiver provides states an opportunity to test existing or pilot new ways to deliver and pay for health care. The State is proposing a two year pilot program in Minnehaha and Pennington counties that would impact approximately 1,300 Medicaid recipients. Participants would be automatically enrolled in an intensive employment and training services within the Department of Labor.
In Appropriations, we began state agency budget hearings. Thus far, we have reviewed the budget and funding requests for thirteen agencies. These budgets include the Governor’s Office, Legislature, Secretary of State and the Governor’s Office of Economic Development. The Governor has recommended no inflationary increase to education, most Medicaid providers and state employees. We continue to struggle recruiting teachers, health care professionals in Medicaid supported facilities (like nursing homes) and in state government. Many of our surrounding states pay more and offer better benefits. We have a workforce shortage in South Dakota. Comparable pay is a real workforce development challenge. I am concerned that if we do not find money to provide some increase to these areas, it will further compound our existing problems. One of the more interesting items from our budget hearings came from the Public Utilities Commission (PUC). Due to the corporate tax cuts at the federal level, the PUC is requiring the utility providers to return these savings to rate payers. This may take two years to fully realize results, but South Dakota taxpayers should see some kind of rate reduction or rebate from their utility providers.
It will be important to hear from you during session. I would appreciate your input on any issue or concerns. You may email me at email@example.com.