Gov. Noem says South Dakota needs to brace for slow economic growth

South Dakota News

SIOUX FALLS, S.D. (AP) — Gov. Kristi Noem on Tuesday offered her budget proposals for the next year while acknowledging that money is tight and instructing state agencies to reduce spending.

While delivering her budget address in Pierre, the Republican governor told legislators to brace for slower economic growth amid disaster recovery from storms, uncertainty amid the 2020 election and lower farm spending during a trade war with China.

In just a few weeks, legislators will be in session to take up her proposals and hear from state agencies as they craft a final budget for the fiscal year that starts in July.

Noem said that 2019 has been a “difficult year” with tornadoes, blizzards and floods hitting the state. She called them the “the largest natural disasters in our state’s history.”

State revenue is running nearly $6 million behind projections this fiscal year. The state will also lose about $20 million in revenue when an internet tax comes to an end next year.

The governor proposed reductions in spending for state agencies and withholding a pay increase that would match inflation for state employees.

Eric Ollila, the executive director of the South Dakota State Employees Organization, called the proposal “disappointing,” but welcomed some of the governor’s other proposals like fully funding health plans and enhancing the family leave policy for state employees.

Sen. Reynold Nesiba, a Democrat from Sioux Falls who sits on the Appropriations Committee, said he would be working to find money to give state employees the pay increase.

Noem also proposed loans to counties for disaster recovery so they would not have to wait for federal funding to be processed before rebuilding roads and other infrastructure. She said that some rural counties are especially cash-strapped.

While providing popcorn for legislators during her address, the governor said she remains optimistic about South Dakota’s prospects, telling them that the constraints “will drive us to do better with the resources that we have.”

Noem’s budget recommendations prioritize projects that she said are important for the long-term success of the state. The governor proposed three projects that would each cost about $5 million: funding initiatives for broadband internet across the state, a new School of Health Sciences at University of South Dakota and upgrading the state’s emergency response dispatch system. Noem also asked for $3.7 million to address increasing rates of meth addiction.

Sen. John Wiik, R-Big Stone City, is a co-chair of the Appropriations Committee, and said he was not surprised by the low revenue reports. He called the proposals “very responsible” considering the lean year the state had but said the legislator would continue to keep an eye on revenue reports before making cuts and passing a final budget.

“This is the governor’s presentation,” he said. “It is the legislature’s budget.”

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