2021 S.D. Legislature: COVID dollars inflates SD economy
Following last week’s Special Sessions, I joined in on a conference call with the interim committee serving as the COVID Relief Liaison Committee. Over the past year and a half the State of South Dakota has received $12.27 BILLION in federal payments. Some of this money has gone directly to cities, counties, and schools. Bear in mind that our annual state budget is about $5 billion and in a regular fiscal year the state receives about $3 billion of that budget in federal funds. The state generates only $2 billion of our own budget each year. So, the $12.27 is over FOUR TIMES as much as we would receive in a regular year.
That flood of COVID money has not all been consumed but is allocated. Clearly, the state’s economy continues to be artificially inflated due to the availability of these extra dollars. The combination of high inflation as well as the low interest rates perpetuate increasing total purchases which seems to feed upon itself. When we recognize the inflated prices of land and personal property as well as consumer items, we can see that revenues (tax on higher prices) are growing and therefore government expenditures will grow. However, when real estate prices are inflated then our real estate taxes are on the rise and no one is putting the brakes on that issue.
There is a compounding effect associated with those increases in both costs and taxes and we need to be proactive but instead this is going unnoticed. In the midst of changing economic times it is important for us to realize that being restrained in our state expenditures and being proactive in retaining funds for future needs is the only wise approach to controlling our future budget.
We were also advised in another meeting this past week of the current use of the $75 million of funding for ‘broadband expansion’ which was of such urgency during the regular session this year. At this point in time, we are told that only $200,000 of that $75 million (one-fourth of 1 percent) has been used and that was used for ‘administrative’ expenses. At the time of the Appropriations meetings several of us questioned the ability of the Broadband companies to actually access either the needed cable or the trained crews who could install the cable. That has apparently proven to be the problem.
What this demonstrates is that there are often ‘urgent’ needs and legislation that passes each year as though it’s a crisis only to find that the money sits in accounts held by the state and then is sometimes shifted during the next fiscal year when the budget undergoes review and revision.
These are not wise or strategic investments of time or money. To me, that is the result of far too much lobbying pressure and what the average consumer would see as “impulse buying.” Good state policy needs to be well thought-out and reflect a plan that the vast majority can agree upon. These expenditures should not be passing with narrow vote margins, but they are.
In the meantime, the Government Operations and Audit Committee and the Government Accountability Board will continue to gather information to address issues that have come before them in the past few weeks.
As always, feel free to contact me (steven.haugaard@sdlegislature.gov) with questions or comments. You can also go to www.sdlegislature.gov to listen in on the meetings or to see what else is happening in state government.
