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:
| HEALTH | FTE | GENERAL | FEDERAL | OTHER |
| 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:
| SOCIAL SERVICES | FTE | GENERAL | FEDERAL | OTHER |
| 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:
| HUMAN SERVICES | FTE | GENERAL | FEDERAL | OTHER |
| 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.
