Makenzie Huber/South Dakota Searchlight
Lawmakers expect South Dakota Gov. Kristi Noem to present a lean budget proposal Tuesday due to lower-than-expected revenues and an end to federal pandemic-era stimulus cash.
Several are keen to hear Noem’s plan to fund the proposed $825 million men’s prison south of Sioux Falls. The recently released guaranteed maximum price is $256 million more than what state lawmakers have set aside for the project over the past few years.
“We’ve thrown a lot of money at that project over the last two sessions I’ve been involved with,” said incoming Senate Majority Leader Jim Mehlhaff, a Republican from Pierre. “At some point, we should’ve thrown enough at it to get it done.”
The governor’s budget address kicks off the annual legislative budgeting process. Lawmakers will consider Noem’s budget proposals when they convene for the annual legislative session on Jan. 14.
Tuesday’s speech will also provide an opportunity for the governor to highlight her accomplishments during her last six years in office before she’s expected to resign in January. President-elect Donald Trump picked Noem as his Homeland Security cabinet secretary pick in November. She’ll hand the reins to Lt. Gov. Larry Rhoden during the legislative session if she’s confirmed by the U.S. Senate.
Noem will present the budget address at 1 p.m. CST from the House of Representatives at the Capitol in Pierre. South Dakota Public Broadcasting will carry the speech live.
Fiscal experts anticipate lower-than-projected state revenues for the current fiscal year, which started in July. South Dakota is on track to see negative sales tax revenue growth this fiscal year.
“That makes it difficult to do much new, and the hope is that there’s funding available to adequately fund the core priorities of the state,” said Sioux Falls Republican Rep. Tony Venhuizen, who serves as vice chair of the House Appropriations Committee. Those core priorities include education, Medicaid, state employee salaries and public safety.
Democratic Senate Majority Leader Liz Larson, of Sioux Falls, said she recognizes the lack of “wiggle room” to achieve priorities outside those responsibilities.
The prison project could be a dominant topic during the legislative session — not only the funding but also discussions about the location, which has been opposed by neighboring landowners and is the subject of a lawsuit. Incoming Senate President Pro Tempore Chris Karr, R-Sioux Falls, said unanswered questions and logistics “still up in the air” need to be addressed before the Legislature moves forward. Mehlhaff said he’s open to a bonding discussion if funds aren’t available.
Waiting any longer will increase project costs, said Will Mortenson, who was House majority leader during the last legislative session.
“Anybody who wants to bring an objection to this has to have an alternative site ready to present,” said Mortenson, a Republican from Fort Pierre. “This is a clear and present need for the state. We can’t sit around with indecision for too long.”
The new prison would largely replace the existing penitentiary in Sioux Falls, parts of which date to 1881.
A tight budget could also complicate discussions of potential state funding for local property tax relief, which some lawmakers campaigned on. Though the state and cities rely mostly on sales taxes, counties and school districts depend on property taxes.
“Only serious property tax proposals will include where the money comes from,” Mortenson said. “The state doesn’t spend a dime of property tax revenue and we’ll certainly not force a property tax cut on the backs of our schools and counties.”
Mehlhaff said he’d prefer to discuss and study revenue and government funding at all levels in the coming year to better understand the state’s tax structure and how to alleviate property tax burdens before passing legislation. If there’s one-time money available outside of Noem’s proposed budget, he’d like to give some relief to county governments.
“As this session goes on and we get a proper picture of what one-time money is available,” Mehlhaff said, “we might have some different ideas of where they can go to do the most good for South Dakotans.”