The main portion of the 2018 Legislative Session finished up on Friday, March 9th, and while it included many positives, people should be alerted to the dramatic expansion in government spending that is occurring each year and the increasing tax burden placed on the shoulders of our citizens.
South Dakotans take pride in the fact that their State Government, by comparison, is one of the more financially sound states in the nation. Our state retirement is fully funded, so we can keep our commitments to our teachers and state employees. We have a AAA bond credit rating, enabling us to construct buildings at low interest rates. Our state Constitution, approved by the voters, requires a structurally balanced budget, so we can’t spend more money than we take in.
But while we are not on the brink of insolvency like some other states, I don’t believe that’s enough to say that we are doing well at managing our responsibility to you, the citizens and taxpayers. If you’re like me, you expect that we will find ways each year to spend your dollars more effectively, and you expect our programs to help people toward personal responsibility, not create more dependency.
In 2017 the State spent $4.148 billion. In 2019, the budget is set to spend $4.688 billion. That’s an increase of $540 million or 13% in just two years. That’s $5417 for every man, woman and child and an increase of about $623 per person in 2 years. Personally, my income hasn’t increased 13% in two years so it’s hard to justify that the government should increase it’s spending by that same mark. We’ve also added 612 full time employees (FTE) in two years.
One substantial portion of the increased budget this year was due to the Federal Government changing the rules to comply with their responsibility to fund healthcare for our Native American population. They directed Indian Health Services to pay for 100% of the medical costs for their enrolled members who are eligible for Medicaid. This resulted in substantial savings to the state, which could have been used to reduce the tax burden on our South Dakota families, spent to ensure there are enough high quality workers caring for disabled citizens, or used to fund the education increases we passed so that you wouldn’t see your property taxes go up.
Instead, the proposal was to increase Medicaid reimbursement rates, expand Medicaid services, and expand the number of people eligible to bill Medicaid for their services. Some targeted reimbursement rate increases are necessary to ensure we have the staff to help care for the truly disabled. But much of the benefit of this expansion goes to the big 3 hospital systems in our state, who put a lot of pressure on legislators to go along with the “grand bargain” and not to change it. Once these expansions are authorized, there is no discretion by the State. We simply have to pay the bills.
Some of us determined that it was not necessary or prudent to expand Medicaid services at this time, and fought to stop Medicaid expansion in the state budget. We have seen Medicaid expansion plans really sink state budgets in other states. It seemed wiser to wait until the next Governor takes office before saddling them with an expansion that could really get out of control. We got 17 legislators to oppose the budget presented, but were unsuccessful in stopping the expansion.
It will be important to watch carefully what happens with this in the session next year. Will the numbers come in as predicted, or will it be another bait and switch that promises savings, but really ends up growing government? The important thing is to remember history and stay watchful. If we do so, we can keep the government accountable to the promises made so that your taxes are being spent as wisely as possible and that your family budget is the one that grows, instead of the State’s.