Rounds Budget Ignores $29 Million Funding Gap for Homestake

This week, reporter Bob Mercer declared that Governor Mike Rounds's effort to realize Bill Janklow's vision of converting the Homestake mine into a world-class research facility would be recognized as the greatest achievement of the Rounds administration. In a November 12 blog post, blogger Pat Powers pointed to the Sanford Underground Laboratory in Lead as "Mike Rounds' one crowning achievement."

The biggest jewel in Rounds's legacy crown may have just fallen out. Last week the National Science Board decided to ax a $29-million grant that the National Science Foundation it oversees had authorized for the Sanford Lab last year. The National Science Board had lots of good things to say about the lab when they visited in September, But now board member Mark Abbott says the Department of Energy, other agencies, and perhaps international sources should fund the project instead of NSF.

The Governor has spent "countless hours on the phone" with Washington trying to fix this funding flop. Losing those funds would be bad for the lab, even in the short-term. Governor Rounds says at the very least, the scientists at the lab need steady funding for job security. Ron Wheeler, director of the South Dakota Science and Technology Authority that runs the lab, told legislators last month "We’re not looking for the (South Dakota) taxpayers to cover any more expenses for the authority."

Comparison: Governor Rounds has asked for a $39 million reduction in state aid to K-12 education.

The Governor already had to cajole the Legislature to approve $5.4 million in additional funding last winter to keep the lab afloat until the NSF funding was anticipated to arrive in May 2011. The disappearance of that NSF funding could create an ugly political situation in a legislature already being asked to cut K-12 education 5%.

Significant as this decision is, it is thus surprising that Governor Rounds made no mention of it during is budget address on Tuesday. His budget proposal includes a $10.6M reduction in the Science and Tech Authority in anticipation of the NSF grant:

The total recommended FY2012 budget for the South Dakota Science and Technology Authority is $8,960,000 in other fund expenditure authority and 5.0 FTE. A decrease of $10,639,023 in other fund expenditure authority and 65.0 FTE is being recommended because the National Science Foundation (NSF) is expected to take over the Deep Underground Science and Engineering Laboratory (DUSEL) operations in the spring of 2011 [State of South Dakota Governor's Budget: Fiscal Year 2012, p. 47].

The National Science Board met December 1–2. Governor Rounds presented his budget December 7. It seems odd that the Governor would not address a significant budget setback for a project so important to South Dakota's educational and economic development, not to mention the Governor's "legacy."

I share the Governor's desire to see this project go forward. I sincerely hope that this governor's greatest legacy may be a facility for the eggheads and intellectuals who too often get short-shrift in South Dakota culture.

But if the Legislature and South Dakota taxpayers aren't going to be asked to cover the gap again, who's left? We could hit T. Denny Sanford up again... but I have a feeling we're going to enjoy the splendid irony of Republicans John Thune, Kristi Noem, Mike Rounds, and Dennis Daugaard working hard to win more money from Washington, D.C.

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possibly related:

While stopping all the tax hikes would be a good first step, this alone won’t eliminate the job-killing uncertainty hanging over our employers and entrepreneurs.

That’s why we need to focus on cutting spending and reducing the size of government. The American people want us to stop spending dollars we don’t have.

To do that, we need to start taking a long, hard look at the size and scope of government and find new ways to resist Washington’s urge to grow and to grow. Let’s do a better job of following the money and evaluating the effectiveness of government agencies [Kristi Noem, GOP radio address, 2010.12.11].

Update 2010.12.13 10:06 CST—Definitely related: Dr. Newquist's discussion of the Homestake Lab. He notes that the NSF may not have been authorized to make the $29-million "commitment" we thought we had for the lab.

Update 2010.12.14 11:30 CST—Mr. Kurtz was an interested party in the mine once.

Out-of-State Painter Gets Governor Portrait Contract

Detail, official portrait of South Dakota Governor M. Michael Rounds, by Richard R. Miller, 2010

After announcing his proposal to make South Dakota education even poorer, outgoing Governor M. Michael Rounds strolled down the hall of our august State Capitol to unveil his official portrait.

The press release on the portrait says the painter, Richard R. Miller "has a deep connection to South Dakota." He painted the portraits of Governors George S. Mickelson and Walter Dale Miller... and that's about it. Richard Miller was born in Canada. He emigrated to our side of the Great Lakes in 1957 and now maintains studios in Michigan and Tennessee. He has also lived in New York City.

No tax dollars were harmed in the creation of this painting... but the staff and friends who donated saw their South Dakota dollars leave the local economy.

We do get a nice painting in return. Artist Miller provided some sneak peaks of the portrait on his website back in June. It's very lifelike, and very blue. But did we have to include the little lapel pin?

Visit Miller's gallery, and you'll see the picture is an improvement over the Mickelson portrait, but you can't beat the portrait of good old Walter Dale, out north of the Capitol in his big white hat under that big blue Pierre sky. (Notice, speech students, that Governor Miller doesn't have his hands fig-leaf-clasped in front of himself and thus looks more forceful.) Now that's a South Dakota portrait. The artist must have drawn extra inspiration from the name.

Live-Blog! Governor Rounds's Last (Thank Goodness) Budget Address

Governor M. Michael Rounds is in the State Capitol and on SDPB right now telling us how he'd screw education if he were around for another term. Here's my live-blog (hit Refresh/Ctrl+R/F5 for updates!):

Actually, Dennis Daugaard gets to lead off. He expresses his thanks to his great friend, Mike Rounds, for being "a leader and a mentor, a negotiator, a strategist," but above all a friend. (And he says this, even having seen the budget report? That's loyalty.)

13:09 CST: Dennis and Mike shake hands, Gov. puts hand on Gov-Elect's shoulder... aw, no hug.

Oops! Ovation almost petered out... then someone decided it wouldn't be cool for the applause for the sitting governor to run shorter than the applause for the governor-elect.

13:12: Governor Rounds says we face "an unpredictable economic recovery." We have $107M in reserves available. These are rainy day funds that we didn't use during the actual rainy day, which still didn't rain that hard in South Dakota.

Important: some of the reserves-dipping that Rounds is finally proposing are to balance this year's budget, not just next year's.

13:13: Wow: $21M less from the Bank Franchise Tax, down from projected $24.9M to only $3.9M. Guess the banks aren't making money hand over fist any more on high interest rates. Governor Rounds embraces usury and blames federal credit card regulations. Contactors excise tax down $14M, but sales tax up $10M.

Rounds proposes using $14M in reserves to finish FY2011 on budget, then $36.9M in reserves to balance FY2012.

13:17: Sales tax is the biggest revenue source for the state, projected about $700M in FY2012. Second biggest chunk of state revenue: video lottery, over $150M.

Projected Revenue increase only $8M, projected expenses for FY2012 still up $32M. More spent on Medicaid since stimulus is running out (and I don't hear Rounds thanking Uncle Sam for the help over the last couple years). Expenditures on education and public safety are projected to go down.

FY2011 structural deficit: $108.4M. Even with the proposed cuts and reserve spending, Rounds says we'll still have a $74.8M structural deficit in FY 2012. (Tea partiers, bring your shouting home!) Governor's graph shows a structural deficit every year of his administration but FY2007. The recession exploded that deficit... even though that recession never caused our state economy to shrink. What gives? Why isn't our increasing wealth pouring some increasing fair share into the state coffers?

13:27: Bad, nasty, evil, ineffective federal stimulus dollars will cover $36.9M of next year's structural deficit.

The stimulus dollars granted previously forbade cuts to Medicaid and K-12 education for FY2009, 2010, and 2011. The new "Stimulus 3" funds prohibit cuts to K-12 and higher education (even though, Rounds whines, those stimulus dollars don't provide any higher ed support) and prohibit growing the reserves.

13:29: Rounds says stimuluses. Oh! Why couldn't he have said stimuli?

And now, I think Rounds is actually trying to tell us that the federal stimulus dollars caused the structural deficit. No, Mike: it's your and the Legislature's fiscal cowardice that has caused the deficit.

13:31: State revenues spent on general fund expenditures will be almost $1.2B, plus another $36.9M in stimulus dollars. Ah, but Stimulus 3 will require a $10.6M increase in Board of Regents spending, so it replaces much less than $36.9M in general fund spending.

13:35: Rounds says we still need to come up with another $39.2M in state funds to cover our general funds needs and make up for the end of the stimulus package.

SDPB gives us a quick view of House Minority Leader Mitch Fargen. He looks unimpressed.

Rounds talks about FMAP money being based on personal per capita income relative to the national average. Since our economy has outperformed the national economy—i.e., because we are increasing our income faster than the rest of the country—we have to cover more of the costs. And Rounds seems to think this is unfair. It seems Uncle Sam has the right idea: if your state is doing better than others, you should be able to cover your own costs. But you can't do that if you aren't taxing that increased income, if your tax system is still a regressive, property- and consumption-based system!

13:39: Rounds shows us $39.2 in new ongoing funding required to replace ending stimulus, $15.0M to increase our FMAP state share, and $11.7M in increased Medicaid demand. That's a total of $65.9M. Make $36.1 in cuts, and we still need $29.8M more to cover our needs.

13:44: The Governor's chart shows cuts in every state department. Governor's office takes a $236K cut; Legislature takes a $239K cut. 2010 research centers and Cultural Heritage Centers get big cuts. $23.5 million cut from state aid per student K-12. That's the $240 per student, about 5%. Also reducing technology in schools budget, consolidation incentives.

Net $15M reduction in education spending. Rounds emphasizes Medicaid providers are taking a 5% hit, while some state offices are taking 6, 7, 8, maybe 10% cuts.

Rounds: "I want to share a little bit..."—there's an inapt phrase.

Rounds cites $123.1M in school district general fund cash accounts back in June 2003. $183.9M in June 2009 in cash accounts. June 2010: $194.3M. Rounds is saying that the good people running the schools have very responsibly saved money recognizing that cuts could come. Translation: screw 'em. Force the local districts to burn up their reserves.

13:50: Board of Regents gets an FTE increase of 227.5. A lot of that is linked to federal and private grants. Ax is falling on FTE's everywhere else.

Note that the net education cuts, counting K-12, tech schools, and Regents, is only $11.45M. 'Taking Care of People" goes up $40.97M. Protecting the Public (cops and such) gets $4.2M more. The rest of state government gets cuts [oops! missed the number!].

13:54: Special appropriations for FY2012: Rounds cites seven presidential (blame Obama) disaster declarations in South Dakota this year, plus seven disasters from previous years still being tackled. State needs to authorize 10% match to federal disaster dollars, local governments are supposed to do 15%. Some locals, especially northeastern South Dakota, don't have that cash, so the state has kicked in extra funding to help repair roads. Rounds says we'll need $13.4M to cover this in the FY2011 budget. He requests only two small specials for FY2012 on tuiton and tax reimbursements for old folks, total not much more than $14M for the 2011 Legislature to approve.

13:58: I check my inbox and find new SD Dems chair Ben Nesselhuf calling Rounds's address a "Broken promise" and says the proposed change to the K-12 funding formula: "broken law marks new attack in GOP War on Education." (ben, did you Tweet that from the floor? ;-) )

The state will spend $1.194B in general funds. Federal funds will contribute another $1.876B. Other funds make up $1.004B. In total, South Dakota will spend over $4 billion in FY2012. And pay attention Tea Party friends: almost half of that is from Uncle Sam. So tell us what you're going to do about that, Senator Thune and Rep.-Elect Noem.

Rounds breaks out the goofy dollar graphic, notes that his budget would spend 49 cents out of every dollar on K-12, higher ed, tech schools, and the Department of Education. He answers exactly the question I was thinking about and shows that back in 2004, education made up 55% of the state budget. "Taking Care of People" ate up 30% then, eats up 37% now. There's the big flip. Rounds also notes that the share of spending on state government has gone from 5% of the budget in 2004 to 4% in his proposed budget.

In this entire speech, I think I have heard Governor Rounds mention "increased taxes" once, and he barely finished that last consonant before hurrying to the next sentence. Now he is speaking of spending South Dakotans' tax dollars wisely, as if that money is a fixed sum, as if the idea of increasing that revenue is inconceivable.

Mike Rounds says South Dakotans have the highest average credit rating in the nation. He says we don't buy what we can't afford. He says the legislators have to answer to those taxpayers who aren't in the Legislature, who are back home working. he says they have to be willing to say no to all those great programs people want. Again, no mention of the idea that some good, honest South Dakotans might be willing to pay more to keep those great programs.

14:10: But hey! We're still working hard to make South Dakota an even better place to raise a family. Rounds says 27,000 more people have jobs now than in September 2002. He mentions saving Ellsworth AFB from closure (again, he offers no thanks to Uncle Sam for all those dollars). He brags again about not touching the reserves until now. He says K-12 is getting $109M more each year now than in 2003.

Boy, for heartfelt words of thanks to state employees, the Governor is sure looking at his script a lot. Where's the teleprompter patrol that yells at President Obama for things like this?

Another inapt reference: Rounds mentions that today is Pearl Harbor Day.

14:14: Governor Rounds is now distracting us from the budget discussion by wrapping himself in patriotism, talking about what wonderful soldiers we have in the National Guard and the regular service... yet another great source of federal income for South Dakotans.

Rounds talks about being elected to make South Dakota a better place. And he ends his term with a budget plan that would make K-12 education worse. How tone deaf is this governor?

...and SDPB ends with a great picture of some guy's shoulder in the gallery.

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Now I suppose we could spend a lot of time picking this budget apart. But I am really, really hoping that this slideshow is going right to the trashbin, and that we can eagerly anticipate the first big number-crunch from the Daugaard administration that might have a little more vision behind it.

Rounds Says Ax K-12 Education 5%: I Say Invest in Students

Yesterday the Associated School Boards of South Dakota called on the Legislature to follow the law and increase K-12 education funding by 1.3%. That's a pretty modest request, given that ASBSD's position for the past few years has been to call for an overhaul of the funding formula that would direct much more money toward K-12 education.

Hours later, outgoing Governor M. Michael Rounds called on the Legislature to change the law and cut K-12 education funding by 5%. That follows the Legislature's move last session to rewrite statute and yank a promised 1.2% increase out from under our schools.

This K-12 cut saves $23 million total. The governor's proposed budget, which he'll lay out in Pierre this afternoon (covered live on SDPB), still leaves a $37 million deficit.

There's Mike Rounds's legacy: years of structural deficits that neither he nor the Republican Legislature had the guts to fix. Rounds's limp fiscal policy doesn't even qualify him as a caretaker governor. Today's budget address promises to be one more wimp-out.

So let's talk guts: is it really less painful to nickel-and-dime our teachers and kids than it is to cowboy up and raise our taxes? We have about 100,000 students [2010.12.09: whoops! update that: 123,629 students!]... which leaves about 700,000 of us South Dakotans to pay taxes. Governor Rounds says short each kid $240. I say charge each taxpayer an extra $33 to keep education funded at its already paltry level.

Thing is, you and I are going to end up making up the difference anyway. Odds are your school district and mine will not take a 5% cut. If Governor-Elect Daugaard and Majority Leader Russell Olson pass this plan, you will see opt-outs spring up almost everywhere, as local districts try to fill the gap. Taxes will go up for many South Dakota taxpayers anyway; Governor Rounds just doesn't have the guts to be the one to ask for it.

The odd thing is that we have the wealth to withstand a tax increase. South Dakota technically never joined the recession: our economy has grown each year. Our GDP went up 2.2% in 2009, and I don't see data suggesting less growth this year (though I'm open to counter-evidence). The new South Dakota Budget & Policy Project (oh my: this website looks really cool!) says sales tax revenues are looking up.

Our tax system is clearly not tapping the wealth our state is creating. In other words, we aren't paying the full price of civil society, the cost of maintaining the schools our kids need and that make our wealth-creation possible.

Maybe we shouldn't get all hot. Maybe this mad-axeman budget is just Governor Rounds's parting gift to his lieutenant, who come January can ride in and save the day with improved revenue projections and a noble compromise that changes the funding formula to only freeze K-12 funding again rather than cutting it 5%.

In the understatement of the week, Mr. Crissman at DWC calls 5% "noticeable." I call Rounds's farewell proposal irresponsible. It's a non-starter: no guts, no vision, no sense of basic social obligation. Governor Rounds leaves affirming the South Dakota Republican belief that education is an expense, not an investment.

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Bonus Timing: Governor Rounds's official portrait will be unveiled for public viewing following the budget address. Expect tepid applause... and maybe some Post-It note mustaches.

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Update 07:45 CST: At least we're not California. But Marc Albert's comment on the California situation has relevance here in South Dakota:

Hyperbole or not, much of the chaos could be avoided by finally convincing state taxpayers that you can’t get something for nothing forever. There may be waste and fraud in the public sector, but not $25 billion worth. Complain about lousy teachers, public pensions and long lines at the DMV all you want — it isn’t going to change the figures on the ledger [Marc Albert, "California's Public Schools in Downward Spiral," Understanding Government, 2010.12.07].

Thanks! Shorter Sentences, No Earthquakes, Generous Democrats

Some dressing for your turkey:

• Thankful cons: Governor M. Michael Rounds has brought 270 state prison inmates a few months closer to saying goodbye to creamed turkey on toast. The governor issued a batch of sentence reductions yesterday. Lake County's only winner: our own Stephanie Schumacher, who gets 90 days off her sentence. These commutations weren't free passes; inmates had to do 320 hours of community service, earn GEDs or firefighter certifications, or assist with special projects.
• Thankful for solid ground: We don't have much in the way of earthquakes in South Dakota. With the Keystone pipeline running underneath us and Keystone XL maybe joining it, Plains Justice reminds us we'd better hope it stays that way. Let's not go fault-finding....
• Thankful for Democrats: the new Congressional Republicans eager to activate their government health insurance face some calls to reject their own federal health coverage before they repeal Obamacare. A Public Policy Polling survey finds 53% of Americans think incoming freshpeople like Rep.-Elect Kristi Noem who campaigned against health care reform ought to reject their Congressional health coverage. 33% think they should take the Congressional benefit. Republicans and Independents are much harder on their freshpeople; Dems make the Reject! call by only a 40–46 margin. (I'm not so generous, Kristi: as insurance agents, you and Bryon can surely come up with a better policy on your own, right?)

Governor Rounds Gives Felons a Break

According to the conservative bloggasariat, my moral compass is irretrievably broken for voting for Clark Schmidtke, a man with a felony theft conviction, instead of Russell Olson, a man with a longer yet less grave criminal record.

So how big of a jerk is Governor M. Michael Rounds for granting executive clemency to ten individuals the day after the election? Grand theft, assualt, DUI... all excused by Governor Rounds. Criminals all told by Governor Rounds, "Let's put your record behind you. Go on with your lives. Serve the common good. And don't screw up again."

Note that the governor doesn't excuse all lawbreakers. He picks and chooses, just like the Board of Pardons and Paroles. He listens to their stories, assesses their apologies, their character, and their sincerity. He grants it to some and not to others.

But of course, he's a Republican governor, not a Democratic blogger, so he's entitled to make such moral judgment calls... right?

Katus Questions Cabin; Governor Says No Fat Cats, Just Mice

State Tresurer candidate Tom Katus is raising questions about favoritism in the use of the state-owned "Valhalla," Peter Norbeck's old Black Hills hideaway. Katus tells KELO he's concerned that Governor Rounds has been, shall we say, arbitrary in deciding which taxpayers get to use this public property and which ones don't. Governor Rounds fires right back:

"My strong suspicions [sic] is the big Republican heavy hitters have been in there either at no cost or subsidized by someone else or some big corporation is paying for, you know, some of their buddies to be in there," Katus said.

"If Mr. Katus can name the big wigs that are supposedly staying there, then we will respond accordingly. We're not having big wigs stay at Valhalla," Rounds said [Austin Hoffman, "Governor's Cabin Questions," KELOLand.com, 2010.10.07].

Governor Rounds, via Game Fish & Parks, has generally declined to give us a list of Valhalla guests. But in the KELO interview, Rounds slips and reveals the identity of some regular guests:

"It's still a cabin. It still has mice in it. But it's got beautiful scenery around. It's rustic. It's not designed to be something that you take and you put people in like a motel," Rounds said [Hoffman, 2010].

Ah ha! Mice!

But wait a minute: we spent over $200,000 renovating the cabin, and it still has mice?! Now there's some state spending that needs to be reviewed.

Rounds Replaces State Ed Money with Stimulus; Where's Noem?

Would someone please untie the knot of Republican contradictions for me?

Governor M. Michael Rounds has accepted $26.3 million in federal stimulus dollars to fund South Dakota's K-12 schools. The insult and injury of Republican politics on this issue is a double whammy: not only is Governor Rounds happily bellying us up to the bar of the very federal spending that Republicans tell us is a reason to vote against our incumbent Democratic Congresswoman, but the governor is technically increasing our narcotic-like addiction to federal money by using the money to replace, not supplement, state education dollars.

Just curious, Governor Rounds: are you deliberately trying to sabotage the stimulus? The idea of this federal aid is to create more jobs and put more money in workers' pockets to spend. You could take this $26 million and give each of our 10,000 K-12 teachers a $2600 bonus and sustaining the committed funding levels for everything else. Even if you can't sustain that pay level next year, I don't think anyone, from the teachers on down to the merchants on Main Street, will mind teachers having $26 million to pump right back into our local economy.

I would love to learn (as would the Herseth Sandlin campaign) where GOP House candidate Kristi Noem stands on this issue. Republicans keep wanting to forget that Kristi Noem voted for depending on Uncle Sam's stimulus dollars to save South Dakota from fiscal disaster (i.e., from having to raise taxes on rich corporations to pay our own way).

Kristi Noem wants you to forget that Congress and Stephanie Herseth Sandlin have saved South Dakota's fiscal butt time and time again. Any Republican who thinks a vote for Noem is a vote for more principled fiscal conservatism is blowing smoke. Noem would go to Congress and vote for just as many earmarks for Ellsworth and highways and other popular prairie pork as our current delegation. Noem offers nothing different, just a slightly louder No never to be realized in actual policy. South Dakota depends on federal money. Federal money does good for our state. Noem's talking points on the stimulus and other federal money doesn't match our economic reality.

South Dakota Picks Profit over People on Health Coverage

South Dakota is suing to nullify the federal health insurance law passed this year. However, as Bob Mercer points out, South Dakota is still willing to participate in this supposed unconstitutional monstrosity by administering the high-risk pool.

Check this line from Mercer:

South Dakota already operates a risk-pool program for people who had insurance but lost it through no fault of their own. Rounds, who runs an insurance business, started the state risk pool to reduce financial responsibility of insurance companies which were pulling out of the health-coverage market in South Dakota [Bob Mercer, "State Picks and Choose on Federal Health Coverage Law," Pure Pierre Politics, 2010.07.01].

Mercer doesn't reach this conclusion, but I do: Governor Rounds and fellow defenders of the free market don't want the free market to handle all of health coverage... only the really profitable portions. They thus are happy to saddle the government with the elderly, the poor, and the sick folks who need health insurance the most. The insurance companies thus limit themselves to the young, rich, and healthy whose minimal use of health services guarantee that the house always wins in the private insurance casino.

The high-risk pool is really a safety valve for private profit. Until the ban on exclusions for pre-existing conditions kicks in in 2014, private insurers can continue to kick sick people off their plans without any prick to their conscience: "Those people won't suffer. They can just join the government high-risk pool! Besides, we're here to serve our shareholders, not the common good."

I wonder how long we'll watch this patchwork system hobble along, bankrupting and killing Americans all for the sake of protecting profit and a failing worldview, before we realize it would be a whole lot simpler for us to create one big risk pool.

Noem and Rounds on Stimulus: Someone's Off Message

The state Dems find the following contrast amusing. So do I.

GOP candidate for U.S. House Rep. Kristi Noem tells KXLG Radio the stimulus package is a failure: "We’ve lost over 8,000 jobs…It absolutely has not done what they said it would do.."

Why should I undermine her campaign-slogan argument... when I can let good Republican Governor M. Michael Rounds do it for me?

Each one of those [stimulus] projects creates job opportunities, so there are people that are working in South Dakota that would not have had a job if it wouldn't have been for that stimulus package [Gov. M. Michael Rounds, quoted by Shawn Neistadt, "Report Shows 7000 SD Jobs Saved, Created," KELOLand.com, 2010.04.19].

Rep. Noem, Gov. Rounds, GOP Message Management on line 1....

Rounds Vetoes Unfunded Higher Ed Grants, Christmas Firecrackers

Governor Rounds vetoed two bills yesterday, HB 1240 and HB 1241. Both vetoes sound reasonable.

HB 1240 sought to create a new need-based grant fund to help students pay for university or tech school. Governor Rounds vetoed the bill because he felt the Legislature was creating a "false promise" by not funding the grants and hoping they could find private donors to float the program. The governor took exception as well to the Legislature's creation of this new program at the same time that they are considering cutting the existing Opportunity Scholarship. I agree: let's pay for what we have first. Then if we think a new program is worth creating, let's find the funds to make it happen.

HB 1241 would have allowed South Dakotans to shoot off fireworks from December 23 to January 2. Governor Rounds said he's cool with explosives on New Year's but not on Christmas. The governor's fellow Catholic Republican Pat Powers goes out with a whimper on this veto. But Powers can sometimes be more Roman candle than Roman Catholic sometimes. then fireworks have always been a hot-button issue for Powers. The atheist in the room understands and respects the governor's decision: explosives don't seem to fit with "Silent Night, Holy Night."

Rounds Joins Census Conspiracy; Still No Gun Questions

Governor M. Michael Rounds has apparently joined the vast ACORN-led conspiracy masquearding as the United States Census. He exhorts us all to fill out our Census forms.

Of course, part of being a good American is being a wise guy. PPP's Bob Mercer notes that the Census makes an undue call for clairvoyance and declines to submit until April Fools' Day. I had my daughter help complete her first Census response Monday. We even filled out the racial information, something I often skip. 'What color are you?" I asked the young 'un.

"Pink," she said, ignoring the purple jelly on her fingers.

P-I-N-K, I entered in the boxes.

I considered entering how many guns we have, but the Census isn't asking about guns. The Census isn't asking about much else: Governor Rounds points out that this is one of the shortest Census forms in history.

Rounds Drinks Kool-Aid, Accepts Obama Appointment

Socialist/Globalist Flags in Pierre Due Shortly

Governor M. Michael Rounds has succumbed to the seduction of the Marxist cabal currently occupying the White House, accepting President Barack Obama's appointment to the ominously named Council of Governors. This newly formed star chamber of state leaders carries a shadowy portfolio, including the "synchronization and integration of State and Federal military activities."

The mandated bipartisan nature of the committee—five governors from each party— demonstrates the clever charade of national unity the White House usurper will use to tear the nation apart. The geographical distribution of the appointees, with appointees from Arizona and Vermont, Washington State and North Carolina, reveals the sinister plot for coordinated nationwide suppression of political resistance. Selection of governors of Maryland and Virginia proves the President's intent to tighten his iron grip on the nation's capital and the Eastern seaboard. The inclusion of the Puerto Rican governor unmasks Obama's plans to internationalize his executive coup and expand the de jure authority of the enslaving Federal Reserve.

Sorry—just had to throw the Illuminati off my scent. We now return you to our regularly scheduled blogging.

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Update 2010.07.11: I was kidding... but Constitution Party candidate for Secretary of State Lori Stacey isn't. She says pretty much what I say above about the Council of Governors... and believes every word.

HB 1050: Rounds Requests Zero Budget Increase for K-12 Education

Hot off the press: House Bill 1050 proposes two tiny changes to SDCL 13-13-10.1, the definitions for the state education funding formula:

(4) "Per student allocation," for school fiscal year 2009 2011 is $4,664.66 $4,804.60. Each school fiscal year thereafter, the per student allocation is the previous fiscal year's per student allocation increased by the index factor;

Only five digits change. But those five digits are how Governor Rounds intends to get around the state law that requires an increase in state aid to K-12 education of 3% or (roughly*) the inflation rate, whichever is less. Governor Rounds isn't asking to change that index factor; he's asking to change the baseline.

$4,804.60 is exactly the per student allocation for the current fiscal year. HB 1050 sets the same allocation for next year.

I hear Republicans (who have already forgotten the Reagan and Bush deficits) say deficit spending is bad. We're not supposed to borrow money from our kids to balance our budget.

Deficit spending supposedly takes money from our kids when they are old enough to work and pay taxes. Governor Rounds wants to take money away from our kids now, while they are still kids, in school.

Does anyone else see the disconnect here?

-------------Footnote for econ nerds only!-----------------

*SDCL 13-13-10.1 defines the index factor as "the annual percentage change in the consumer price index for urban wage earners and clerical workers as computed by the Bureau of Labor Statistics of the United States Department of Labor for the year before the year immediately preceding the year of adjustment or three percent, whichever is less". Urban wage earners and clerical workers—does anyone know why a rural state like South Dakota chooses urban wages as the benchmark for education funding increases?

Interesting: the Bureau of Labor Statistics says the CPI-W (that's the one we're using) represents 32% of the U.S. population. The CPI-U represents 87% of the population. Furthermore:

There can be small differences in movement of the two indexes over short periods of time because differences in the spending habits of the two population groups result in slightly different weighting. The long-term movements in the indexes are similar. CPI-U and CPI-W indexes are calculated using measurement of price changes for goods and services with the same specifications and from the same retail outlets. The CPI-W is used for escalation primarily in blue-collar cost-of-living adjustments (COLA's). Because the CPI-U population coverage is more comprehensive, it is used in most other escalation agreements [emphasis mine; Bureau of Labor Statistics, "How to Use the Consumer Price Index for Escalation," 2001.10.16].

So, the CPI-W is less comprehensive, is used mostly for blue-collar employment agreements... and we use it to determine funding for K-12 education. I'm sure there was some logic to this choice; can anyone explain it?

Rounds Budget: Living in the Now

Let's take a spin at the latest Madville Times poll. The question: "Do you approve of Gov. Rounds's proposed state budget?" Your answers:

• Yes: 5 (8%)
• No, spend more: 30 (54%)
• No, spend less: 21 (38%)

Choose your interpretation:

1. The anti-Rounds line: More than 90% of South Dakotans think Governor Rounds has failed to submit a budget that meets the needs of South Dakota.
2. The pro-Rounds line: When nobody's satisfied, you've obviously found the perfect compromise.
3. The Tea Party line: Nearly a majority of South Dakotans agree that we shouldn't have bigger government! We're on the way to victory!

My line: If I were Dennis or Scott or Scott, I'd be torqued. Governor Rounds is living in the now and kicking the can down the road to whatever real statesman (or kamikaze pilot) takes the reins in Pierre in 2011.

Now maybe I should go easy on the Governor. I appreciate the point Governor Rounds made in his budget address that his proposed budget gets us through another year of recession with our budget reserves intact.

The problem is, that's about the only gift he's leaving the next governor and the 2011 Legislature. The proposed budget is an act of abdication, not leadership. Governor Rounds offers no new ideas or significant changes in how the state does business that might lay the groundwork for a lasting local solution to the big budget shortfall we face after we've spent all the federal stimulus dollars. (Boy, for all his erstwhile grandstanding, Governor Rounds sure seems glad to have Uncle Sam bailing out two budgets in a row.) His plan is all increasing one big tax (freeze the levy instead of the usual reduction that offsets increased valuation), hoping the recession will end and sales tax revenues rebound, and shifting the hard work of raising education dollars to more local boards who will have to opt out to keep pace with costs.

Even his pay freezes for state employees put the 2011 Governor and Legislature in a tighter bind. Sure, freezing pay makes some business sense, but another year of no raises makes it that much harder for the next administration to go to that trough for more budget savings.

The responsible thing to do would be to put a budget fix in place now that doesn't just get us through the recession but gives the following administration more options for meeting everyone's needs. Unfortunately, the Rounds administration appears content to dodge the bullet and let someone else make the hard choices.

Governor Rounds Pardons Pot Possessor; Newland Next?

I notice Governor Rounds issued another batch of pardons last week. Among the latest convictions erased from the record is Philip Schmitt's 2001 conviction for possession of marijuana in a motor vehicle.

Hmmm... do you figure there's any chance the governor might extend a similar courtesy to Schmitt's former fellow felon Bob Newland, who currently labors under an unusual if not unconstitutional restriction of his First Amendment rights as part of his sentence for pot possession? Come on, Gov—Newland's been behaving, making a decent living snapping photos... pot photos, sure, but for the good of public health and positive customer experiences. Newland has also been improving customer experiences for our tourists.

The Gov. lets off thieves and forgers and even a gal who beat someone up—what's a guy got to do to swing a break in this state? Pardon Bob Newland!

Update 22:13 CST: Guess who else thinks pardoning Bob Newland is a good idea? Hint: he's running for Congress....

Poll! Vote Now on Rounds Budget Proposal

Hey, subscribers! If you're reading in Google Reader or other convenient windows, take a moment to drop by the Madville Times home site and vote in the latest poll (see left sidebar). Tell us what you think about the South Dakota state budget proposed by Governor M. Michael Rounds last week. Does it spend too much? Too little? Just the right amount? The poll is open until breakfast tomorrow, so vote soon! We'll discuss the results this week.

Rounds Budget: Boost Physical Plant Pay by Cutting Chicoine's and Knowlton's?

Governor M. Michael Rounds pitched his state budget proposal yesterday for fiscal year 2011, the last such proposal of his administration (well, last, assuming he doesn't need a do-over budget as he did last time around). The new Madville Times poll (see the left sidebar!) asks what you think of it: does it spend too much, too little, or is it about right? Vote now!

I know those three poll options oversimplify the issue: there are at least as many different takes on what's good about the budget and what needs amending as there are legislators. Rep. Quinten L. Burg (D-22/Wessington Springs) floated one possible amendment yesterday on the post-game show on South Dakota Public Broadcasting. He disagrees with the governor's proposal to deny all state employees pay increases for the second year in a row. Sure, inflation has actually been negative this year (though I haven't seen Raisin Bran getting any cheaper), but if the economy recovers (the way Governor Rounds is counting on in his optimistic revenue projections for next year), isn't inflation bound to bounce back? (These forecasters think so.)

Rep. Burg's prescription for hard times: some in-house redistribution. Raise the salaries of state employees making under $75K (he might have given a lower number; check around!). Pay for those increases with 2% cuts for employees making $75K to $100K and 5% cuts for the state employees making more than $100K. Burg would help the janitors and groundskeepers—and most of the professors—at DSU weather the recession by asking President Douglas Knowlton and the deans to bite a tougher bullet. The university does already provide the president with a house; might he be able to take a pay cut for the general welfare?

This plan might be an even better fit for SDSU. President David Chicoine could probably get by with a 100% cut to his $300K salary from the Board of Regents, since he can supplement his income with the $400K in benefits he gets from serving on the corporate board of Monsanto.

Does Burg have a winner here? Do state employees at the bottom of the totem pole need a pay boost? Should we ask the state's upper management to take a cut for the team?

By the way, as a graduate assistant at DSU, I'm one of the state employees in the pay category Rep. Burg is looking to help. However, I'm done with my program in summer 2010, so any such pay boost won't affect me in my current position.

Live-Blogging Governor Rounds FY2010 Budget Address

Live notes (in case you don't have SDPB handy) on the governor's budget address! Hit Refresh for updates!

[Update 2009.12.13: Go straight to the horse's mouth: see the budget proposal in its full glory on the state website!)

Governor Mike Rounds calls it a "basic-needs budget" with an "emphasis on taking care of people."

FY2009 required stimulus to balance, allowing us to avoid touching one penny of our reserves so far. $105 million in stimulus used.

FY2010, right now, expenses total $1.2335 billion, 0.1% growth over FY 2009 expense levels. $1.1163B + $104M stimulus... still a shortfall of $15.8 million for the rest of FY2010: Rounds proposes using one-time cash instead of reserves, allowing us to finish FY2010 without touching reserves.

Revenues have declined by 3.2%, or $37.1 million, compared to 2009, while expenses have remained level.

FY2011: Rounds proposes expenses $1.2529B, a 1.6% increase over FY2010. Balanced with $70.5 million in stimulus, $31.8 million shortfall. Revenues expected to increase $3.1 million over FY 2010.

Looking ahead to FY2012, for the folks who get elected, the Rounds proposal leaves the state facing a FY2012 shortfall of $107 million. That assumes zero federal stimulus and zero increases in expenditures, zero inflationary increases. Rounds says "that has to drive what we do this year."

Rounds is assuming economic recovery taking hold and bringing increases in sales and use tax, excise tax, insurance tax, and trust fund returns. He does see lower video lottery returns meaning less money for the property tax reduction fund.

The big expense increase for FY2011 is in medical assistance. Rounds is actually proposing modest cuts in state government.

In FY2010, the state has reduced budgeted expenditures by $1.9 million to offset a little of this year's shortfall, but the $17.6M reduction in revenues means we need one-time cash transfers from the Large Project Refund Account, the Tax Relief fund, the Aeronautics fund, the budgetary accounting fund, and a Custer State Park obligation to pay back some interest (that is about $60K more). The Property Tax Reduction Funds and Budget Reserve Balance funds—the "rainy day" funds—remain untouched. Rounds emphasizes that we are riding out the recession and leaving our reserves intact.

FY2010: the top five revenue sources have all dropped more than forecast back in March, including $11.7 million less from sales taxes. We have seen $5.8 million more than forecast from interest earnings, plus $2.1 million more from the Department of Corrections for a cancelled check on a land purchase in Rapid City that we didn't make.

Rounds projects general fund revenues will increase in FY2011, including $20.7 million more in sales tax. The trust fund transfers are projected to add another $17.7 million. Interest earnings and video lottery receipts are still projected to go down. Rounds proposes that we can recoup another $3.5 million by changing the Large Project Refund program. He also proposes repealing a refund on cigarette stamps. Both actions require legislative approval.

Unemployment has essentially doubled since the national recession began in December 2007, from 11,000 to 22,000. 5% unemployment is the highest SD rate since 1985. Over the same time period, the number of folks eligible for Medicaid, folks who have applied and been accepted, has grown from 102K to 110K (including 500-some folks added just last month). This growth over the last ten months outpaces the growth of the previous four years. 68% of the folks on Medicaid are kids, 11% are disabled adults, folks who "have no place else to go for their health care needs."

Rounds notes these two figures put us in a double bind: fewer people working, less money available to spend, less revenue to support state programs just when we see increased state expenses. This is not an easy problem to solve.

[13:28 CST] Rounds emphasizes that the deficit is not caused "by our spending being out of control." He emphasizes that expenditures from FY2009 to FY2011 are going up less than 1% a year. It's the recession, the decreases in revenues, and the increases in folks needing assistance that are responsible for the structural deficit. Since 2008, revenue has gone up just $2.2M, while expenses for taking care of people have gone up $64M. Add education, and costs have increased $103.1 million. (I didn't catch whether he made eye contact with Dave Knudson or Scott Heidepriem on those lines.)

[13:31] Rounds now turns to spending increases throughout his administration: "taking care of people" has increased by 193M; education by $131 for education; $43M for "protecting people"; the other increases (bureaucracy, gov's office, etc.) up just $10 million over the eight-year period.

Rounds notes that $56.3 million of the increases in the FY2011 budget are mandatory: more people receiving government medical services alone is $24.5 million of the increases. There's another $20.2 million of expiring stimulus funding for the last couple quarters of the fiscal year that we need to pick up. Increases in South Dakota income that have outpaced national rates mean South Dakota has to pay another $7.5 million for its "FMAP state share," funding that supports Medicare (if I heard that right). We also must appropriate $2 million more to support Opportunity Scholarship funds for 3294 eligible students (and Rounds says paying that money is a good thing).

Governor Rounds is asking for a $1 million budget increase to establish South Dakota's first Ph.D in physics, a shared program among SDSU, USD, and Mines. With the Homestake lab getting going, Rounds says we can't be sending our physics grad students elsewhere when we have a great opportunity like this coming our way. Rounds sees this Ph.D. program as "a long term investment in our future" that will have a lasting effect on our economy.

Among big cuts, Rounds proposed freezing State Aid levies to save $4.1 million, instead of offering property tax payers another cut in their rates. Overall, we're cutting under $5 million.

No increase for state aid to education, no raises for state employees (second year in a row—time for me to go into building wind turbines!), no increases for health care providers receiving state payments.

[13:45] Summary of major spending changes:

• Education: down $3.4 million
• "TCoP": up $58.4 million
• Protecting people: up $542K (and Rounds praises the chief justice for volunteering to go back and cut his budget request further)
  
• Rest of gov't: down $573K

More details on education funding:

• tech schools are getting $2.7M more, due to increased enrollment
• consolidation and sparsity are causing a $2.6 increase
• health insurance goes up 6.3%, $729K
• state aid to K-12 goes down $3.8 M
• state aid to special ed goes down $4.1M (now compare this to the $1 million increase to create the physics Ph.D. I like the Ph.D. Rounds is right that it's an investment... but can we justifiably reduce our investment in earlier ed at the same time? Rounds will emphasize that "reduce" is relative: the negative sign on the budget line comes from not increasing the state aid)

We are saving $520K thanks to declining natural gas rates and thus lower utility bills for heating our state facilities. Utility reductions across the board are reeducing FY2010 expenditures by $1.6M.

[13:55] Rounds notes that the bureaucracy consumes only 4 cents of every tax dollar, down from 5 cents on the dollar last year. Rounds is recommending a reduction of 102 full-time equivalents, the second consecutive year of recommended FTE reductions. Rounds notes that most of the cuts over the past year have been done through attrition. So the boss isn't coming with the ax, but he's also not taking apps for new workers.

[13:58] Birth to 3 is safe for now: Rounds says we're keeping it alive with stimulus funds. There's something else he's leaving for his successor to figure out in 2012.

[14:01] Gov. Rounds turns to the Sanford Lab. He mentions the $35 million the Legislature allocated for the Sanford Lab back in 2004 and 2005. The National Science Foundation has pumped $21M into the Sanford lab over the last three years; another $250M is anticipated. More workers and more experiments are coming. Rounds says we are going to be out of money for the lab next December; NSF funding won't kick in until May 2011; Rounds is asking the Legislature to set aside $5 million in one-time funds to bridge that gap and sustain the work of pumping out the water and keeping the lab open. He notes that the Legislature had the foresight to invest in the most lucrative "hole in the ground" in the state a few years ago and urges them to keep the project going with this one-time investment.

[14:07] The big numbers:

• General Fund: $1.182B
• Federal Funds: $1.9B
• [whoops! missed a line!]
  
• Total Budget: $4B

(Hey! There's Russ Olson, sitting in the back!)

Rounds says that 49% of the budget goes to education, 36% for TCoP, 11% for protecting the public, and 4% for all the rest, including the bureaucracy. If you want more cuts, those are the parameters within which you must operate.

Rounds wraps up: no increased tax rates, he says. Then Rounds starts handing out the candy, ending with appeal to patriotism, noting the men and women of the armed services who are fighting for our freedom, calling on vets to stand and take some applause, then Dilges and his budget office (hm... that applause didn't sound nearly as rousing)... and then off we go to keep making South Dakota even better.

Governor Rounds on Big Stone II and Transmission for Wind: What, No Sales Pitch?

I sometimes criticize local and state politicians for putting a happy face on setbacks or ignoring real problems. Of course, mayors and governors have their agendae, their own need to keep the positive spin coming, to put the best face forward to keep investors interested and promote economic development.

So why, if he is really committed to promoting alternative energy, would Governor Mike Rounds (through spokesman Joe Kafka) so vocally bemoan the demise of Big Stone II?

"The governor feels it's a setback to development of the wind-energy sector in the state, because enhanced transmission capacity was tied to the project," Kafka wrote. "Without the ability to move larger amounts of wind energy to markets in large cities to the east, plans for future wind-energy projects may be sidetracked" [Ross Dolan, "End of Big Stone II Could Be Trouble for South Dakota Wind," Mitchell Daily Republic via Rapid City Journal, 2009.11.18].

Now I know the governor has obligations to his lieutenant and the Dakota Dunes donor base. I know it's oh so satisfying for the conservative commentariat to say President Obama and climate change legislation and we liberal bloggers killed Big Stone II and wind power all in one shot. We have to keep reminding the other side of the aisle that BSII backers themselves were saying all along that climate change legislation was actually making the plant a better deal.

But my question this evening is why would the governor insist on shedding his usual boosterism and being such a wet blanket about wind power? He dispatches his spokesman to tell alternative energy investors, essentially, gee, it's going to be awfully hard to justify building wind farms here in South Dakota. Golly, you investors, I don't know why you'd even think of spending your money here after a big setback like this. Does that sound like a sales pitch to you?

Governor Rounds sounds a lot more like the crabbing conservative bloggers who are big on blame but short on innovative thinking and solutions. They keep forgetting that Otter Tail bailed out of Big Stone II even while adding 180 megawatts of wind power over the last three years. The Western Area Power Administration is working on another 200 megawatts of wind power.

Instead of moping and fueling bogus anti-Obama, anti-environmentalist rhetoric, maybe the state's cheerleader-in-chief could show some leadership and salesmanship. He could make it his mission to sell utilities on the business case for building transmission lines to cash in on the Saudi Arabia of wind.

Or he could one-up his Republican counterpart in California, Governor Schwarzenegger, and sign an executive order requiring South Dakota utilities to get 33% of their energy from renewable sources by 2020. Maybe the governor could exhort the Legislature to pass real renewable quotas, not the fluff-ball paperwork charade that Senator Russell Olson likes to tout as progress. Utilities like Pacific Gas and Electric have responded to that mandate with all sorts of great energy initiatives (including poo-power!).

Of course, this argument assumes Governor Rounds really wants wind energy to thrive. It assumes Governor Rounds really wants to see alternatives rise to compete with the fossil fuel industry. If that's what I were selling, that's what I'd be saying.

But Governor Rounds isn't saying that, is he? Hmmm... I'm feeling contrapositive....