Greetings from Pierre. We are entering the final week of the legislative session. So far, government accountability has dominated this session. This November, the voters of South Dakota voiced their distrust of government with the passage of IM-22. But are we really listening?   Last week’s activities suggest we still have a lot of work to do.

On Wednesday, Senate State Affairs heard testimony on SCR 15. This resolution addressed our country’s policy on refugees. The sponsors of this resolution criticizes the refugee program and declared that our refugees in the United States and their children have links to ISIS and other terrorist organizations. If the sponsors had spent a little time researching the refugee process, they would know that this is a grueling 18 month process resulting in very few applicants being accepted. Less than 23% of all applicants are accepted into the refugee program. Many of these refugees applied multiple times and wait years to be accepted. The committee heard testimony for more than 2 hours, then recessed for legislators to vote on bills in their respective chambers. After session, State Affairs reconvened and continued action on SCR 15. The resolution was then gutted and new language inserted to thank President Donald Trump for keeping us safe from radical Islamic terrorism. The resolution was passed out of committee. It was a slap in the face of every refugee that came to Pierre that day.

HB 1150 was heard in Senate Appropriations on Thursday. This bill would allow non-resident military veterans get hunting licenses at the resident rate. The premise of service members getting a preferable hunting rate could be applied to numerous categories. Keeping non-resident at one rate and resident at another is the simplest and most appropriate way for Game Fish and Parks to offer licenses. The proponents submitted a lot of testimony. A military veteran of the Korean War even testified. The insult came when the chair deferred action on the bill. All the proponents left the room and the committee moved on to other bills. At the end of the committee hearing, the chair brought the bill back and the committee tabled the bill. They didn’t have the courage to vote on this bill while the proponents were in the room.

HB 1149 is a tax reduction to the TRS fee on your telephone bill. It has passed both houses and is on the governor’s desk. This tax provides telecommunication services for people with disabilities. For the past decade, the revenues from this tax have exceeded the expenses by 40%. The reduction will align the revenues with the actual need. Because the fund balances in this account continue to grow, it has become fund that is routinely swept and the money used for other purposes. The governor and legislature have used this money to balance the budget and fund projects like the Sanford Underground Research Facility at the Old Homestake Mine. Good tax policy dictates that revenues should reflect expenses. When I heard that the legislature planned to sweep this fund again, I wrote this bill to highlight this practice and promote fiscal transparency. Currently, the legislature still plans to sweep $800,000 to balance the state’s budget. We have a reserve fund for this purpose. If the legislature sweeps this fund, they are basically stealing from people with disabilities.

Finally, the legislature does not intend to honor its commitment to education with half cent sales tax increase from last year. By statute, we are obligated to increase funding to education by 3 tenths of a percent for FY 2018. This equates to $2.4 million dollars to be used primarily for teacher salaries. The real rub came when we had a bill to extend the date for schools to spend down their reserves. This bill would have extended the date to 2020. The issue of large reserves was, in part, created by the legislature. For more than a decade, the legislature has given additional dollars to education as one-time funding. Each time the legislature told schools that this was one-time funding and not to expect it next year. This creates a budgeting problem for schools, because it limits the way money can be spent. For example, you cannot fund salary increases on one-time monies. Legislators stated we had a deal with the passage of the half cent sales tax increase that schools would spend down reserves. The legislature expects the schools to keep their end of the bargain, but they don’t intend meet their obligations.

The legislature needs to conduct itself in a more respectful manner. In the shadow of IM-22, the legislature has learned very little about showing more respect or listening to voters. Legislators continue to think people are not watching their actions. Please don’t let them dismiss you as a constituent. Contact your local legislators and tell them to honor their commitment to education and conduct themselves in a more professional manner.

Thank you for your continued support and thoughtful comments. If you have any questions, please email me at dan.ahlers@sdlegislature.gov or call 940-3071.

Greetings from Pierre. Its crunch time at the capitol. We had cross-over, Appropriations sub-committees reviewed department budgets and I will give an update on some of the more interesting bills.

Cross-over was Thursday. This day is when all bills must be out of the house of origin. House bills out of the House and vice versa. Legislators are like high school students that wait until Sunday to finish homework due on Monday. Consequently, the House worked until 9:20 p.m. and the Senate until 6:30 p.m. on Thursday to get its work done.

Appropriations sub-committees started meeting this past week with departments to evaluate budgets. So far, we have adopted sub-committee recommendations for the governor’s office, lieutenant governor, office of economic development, state auditor, state treasurer and the PUC. Many of these departments have small budgets, so the reviews do not take much time. Appropriations must find $25 million in the 2017 and nearly $30 million in the 2018 in order to balance the budget. Most of 2017 will be accomplished with one time savings like the closure of STAR Academy. The savings from the closure will be approximately $2 million. Some of the savings will come from department suggestions and a reduction in current spending for the remainder of the fiscal year. Any deficit left will most likely come from reserves. For 2018, Appropriations and its sub-committees are eliminating most of the department’s program expansions. Education will get its mandatory increase of .3%. Our service providers will receive no increase. This approach will eliminate most of the deficit. Any remaining deficit will most likely mean program cuts.

Here is an update on some bills of interest. HB 1076, the government accountability board, passed the House by a vote of 64 to 3. Email your Senators and ask for their support. This is an excellent bill and has the support of the Attorney General and Secretary of State. SB 54 from the Secretary of State’s office addresses campaign finance was amended and passed the Senate by a vote of 19 to 16. Unfortunately, this bill does very little to limit campaign donations like IM-22. Attempts to amend the bill failed. We will try to amend again in the House. It is important that the limits in this bill reflect those in IM-22. Legislators should respect the will of the voters. Finally, SB 55 known as the “Science Bill” would have allowed teachers to teach non-scientific theory in place of actual science. This bill failed in House Education and was deferred to the 41^st legislative day 11 to 4.

Thank you for the email and calls this past week. Your input is important and appreciated. If you have questions or concerns, please email dan.ahlers@sdlegislature.gov or call 940-3071.

Greetings from Pierre. This week I would like to explain the revenue process as it relates to the budget. I will also give an update on bills concerning ethics and campaign finance reform.

Appropriations, as part of the budget process, adopts revenue estimates for each fiscal year. As a member of the revenues sub-committee, my job is to analyze revenue estimates from our legislative and the governor’s financial staff. First, we review the revenues for fiscal year 2017 which began on July 1^st, 2016. Based on revenues for the previous 6 months, we determined that this year’s revenues will come in $25 million below the adopted budget.

Three main factors contribute to the down turn in revenues. The Ag economy is down and commodity prices are low. Farmers purchase less equipment and sales and use tax revenues goes down. There is a price deflation in consumer goods that also impacts revenues. When you go to McDonalds and purchase a McPick 2, the cost is $2. Normally, the cost is $5. Currently, the sales tax collected is 15 cents instead of the 33 cents at regular price. If you compound this price deflation over thousands of transactions every day, there is a significant decrease in sales tax revenue. Finally, the uncollected sales tax from internet sales continues to have a negative impact on revenues.

The second part of revenue projections is estimating the revenues for fiscal year 2018. Essentially, we are making an educated guess on a year’s worth of revenues 6 months before that fiscal year begins. We make those estimates based on current fiscal year data as well as economic forecasting on the state and national level. Both the governor’s financial and the legislature’s financial staff present statistical and economic trend data. We also consider outside forecasts from economists. Using all this data, the revenue projections sub-committee adopts a revenue estimate. The revenue estimates for fiscal year 2018 are $38 million less than the governor projected in his December budget address.

While this information sounds bad, I suggest now is the time to take a breath and gain perspective. This week, the governor’s departments we come to appropriations with areas where money can be saved. Our sub-committees will look at department expansions and determine if it is necessary. We can make many changes without cuts to programs. We also have $136 million in reserve funds. If we need $10 to $15 million to balance the state budget, it would be an appropriate use of funds. The worse thing we can do in a single down year is make unnecessary cuts. In 2011, we had a significant structural deficit. The knee jerk reaction was a 10% across the board cut. Those cuts had a negative impact on many state programs, schools and service providers across the state. Later, we learned that the deficit was not as bad as anticipated. The depth of the cut was unnecessary, but many of those dollars were not restored. It took our service providers and schools four years to get back to the funding levels pre 2011. It would be fiscally prudent to take a year and ride out the economic rollercoaster.

Here is an update on current ethics and campaign finance reform bills. HB 1073 which establishes limits on gifts from lobbyists passed the House this week by a vote of 66 to 0. It will be heard next in Senate State Affairs. HB 1076, the government accountability board will be heard in House State Affairs on Wednesday. Email your legislators and ask for their support. This is an excellent bill and has the support of the Attorney General and Secretary of State. Finally, SB 54 from the Secretary of State’s office has been amended and action was deferred until this week. This bill contains a lot of language updates and definitions of what constitutes a donor, entity and political organization. Unfortunately, the bill does very little to limit campaign donations like IM-22. I’m sure there will be further attempts to amend. I will keep you updated.

Thank you for the email and calls this past week. Your input is important and appreciated. If you have questions or concerns, please email dan.ahlers@sdlegislature.gov or call 940-3071.