Gov. Daugaard delivers FY2020 budget address

Gov. Dennis Daugaard presented his final budget address to the South Dakota Legislature on Dec 4. The governor attributed South Dakota’s financial position to the state’s budgeting discipline and stated that the budget process should start by analyzing revenue and only spending what the state receives, unlike other states’ methodology where budgets are created by building expenses and then matching revenue to cover costs.

The fiscal year (FY) 2020 budget recommendations will fund necessary state government services and special appropriations for the fiscal period beginning July 1, 2019, and ending June 30, 2020. Gov. Daugaard has been working on his budget with Governor-Elect Kristi Noem, who will be creating her own budget to be discussed during the 2019 legislative session.

The governor’s budget address portrayed a rough estimate of the “new” sales tax from e-commerce, but true to form the anticipated revenue was not built into the budget recommendations for FY2020. The estimated initial analysis suggests South Dakota could collect $23 million from remote sellers.

High level key takeaways include:

  • Total recommended ongoing receipts for FY2020 are $1,694.6M, or $53.1M higher than the adopted FY2019 level.  The governor’s plan anticipates increased expense recommendations of $52,934,275, which leaves $187,292 on the bottom line of the recommended FY2020 budget.
  • The budget proposal put forth by Gov. Daugaard will include 2.3 percent inflationary increases for the three key areas of Medicaid providers, education and state employees.
  • Emergency special appropriations funds for FY2019 of $18.6 million will help fund critical programs such as the Rural Recruitment Assistance for Healthcare Workforce at $979,849.
  • The state Federal Medical Assistance Percentage (FMAP) decreases for a $6.2 million savings to the General Fund.

The governor reviewed the commitment to sound budget practices, including making structural balances the norm; limiting growth of state government; realizing seven straight years of year-end surplus; maintaining strong reserves to address emergencies; and South Dakota’s path to AAA rating.

The written summary of the Governor’s budget adjustments for the Departments of Health, Human and Social Services can be viewed here.

Quick reference for the major changes in the Department of Health:

Rural Residency Track $27,331 $46,669
Opioid Crisis Grant $1,748,900
Informational Boards $475,000 $212,256
Child & Family Services Authority $107,710 $(107,710)
Health Program Specialist 1.0 $65,183
Correctional Healthcare 4.0 $832,864
TOTAL 5.0 $27,331 $2,443,462 $937,410

Quick reference for the major changes in the Department of Social Services:

Discretionary Inflation $5,530,066 $5,941,418 $14,153
Mandatory Inflation $3,694,519 $4,648,555
Criminal Justice Initiative Treatment Services $2,199,418
Child Protection Adoptions, Guardianships & Placements $1,773,192 $2,930,639
Child Protection FTE 15.0   $647,212   $114,213
Human Services Center   $668,960  ($690,451)
Substance Use Disorder Services   $561,067   $131,085
Medicaid Eligibles, Utilizations & Cost Changes   $292,222 $2,359,232
Suicide Prevention   $222,038 ($701,000)
Mental Health Courts   $138,500
Child Support Fee    $68,810
Care Coordination Savings ($547,050)   $547,050
Healthcare Solutions Coalition Initiatives  $547,050   $736,804
Federal Medical Assistance Percentage (FMAP) ($2,716,799) $2,716,799
Opioid Response Grant $4,000,000
Informational Budgets $9,301
TOTAL 15.0 $13,079,205 $22,734,344 $23,454

Quick reference for the major changes in the Department of Human Services:

Discretionary Inflation $3,791,101 $4,778,222 $125,600
Mandatory Inflation     $34,187
Long Term Services & Supports $2,213,204 $6,980,891
Developmental Disabilities $1,497,764 $2,017,289
South Dakota Development Center    $57,523    $77,475
Division of Rehabilitation Services    $44,848    $60,406
Federal Medical Assistance Percentage (FMAP) ($3,367,742) $3,498,465 ($130,723)
TOTAL 0.0 $4,270,885 $17,412,748 ($5,123)

Gov. Daugaard’s FY2020 budget recommendation slides can be found here.