Gov. Kristi Noem wants to make temporary tax cuts permanent while fully funding a proposed men’s prison facility outside of Sioux Falls.
While the Republican governor cautions that revenues are down, she wants to establish a funding program for private and alternative schooling.
Noem wants to put $4 million ongoing into a program called education savings accounts to give students about $3,000 each to pay for education other than public schools. Noem said the state will not cut any dollars from public education, but critics call it a voucher program.
“Because this is a starting point, and a limited initial investment, we must first provide for the South Dakota students who have the greatest need, but our goal is to expand the program. My hope is that these ESAs will ultimately be available to every single student in South Dakota," Noem said. "Now let me be clear, we will not be cutting any dollars to public schools.”
While popular among some Republicans, the move is not universally supported within the governor’s own party. That includes Brookings Rep. Mellissa Heermann, who had questions about the proposal.
“As someone who really cares about public education, that’s something that’s concerning for me. We talk a lot about in South Dakota we value low taxes, and because of that we have a smaller pot of money to play with," Heermann said. "So, the question that stems from that is – do taxpayers want their tax dollars being spent toward private or alternative schools? That’s something we’re going to need to work through.”
In turn, incoming Senate Democratic minority leader Liz Larson said it’s an item that her party took note of.
“It’s a slippery slope, and different people like to contextualize ‘education savings account’ in different ways. We would need to see the business case behind how that funding will affect public schools,” Larson said.
The governor also proposed additional dollars to boost the state's efforts to return to a phonics-based reading curriculum.
Noem's budget also laid out funds to pay for a budget shortfall on a new state men's prison after construction cost estimates for the project rose.
Last month, the appropriations committee determined a final price for the new facility planned to be built south of Sioux Falls at $825 million dollars. The state previously set aside $567 million dollars in the Incarceration Construction Fund to pay for it.
The governor's budget proposed paying for that gap by using $76 million in expected interest from the existing fund and another $182 million in one-time dollars from the general fund.
"Paying cash for this facility will save the taxpayers of South Dakota $600 million dollars in interest, fees, and annual debt service payments," Noem said. "It is amazing to me what this legislature has done and what we will continue to do to save the money ahead of time for a project of this size. To make sure we are not putting a burden on the future taxpayers of South Dakota. It’s the right thing to do.”
Noem said the current men’s prison in Sioux Falls is older than the state itself. The new facility is set to be built on land south of the city.
The governor also wants to make a temporary .3 percent sales tax reduction permanent. That cut amounts to roughly $115 million annually.
Chris Karr is a state lawmaker from Sioux Falls. He was the primary backer of the .3 percent sales tax cut.
“If you don’t make it permanent, here’s what happens—this is kind of classic government too—if money’s there it’s going to get spent,” Karr said. “What the governor did today was I think what a lot of us have to do at home, to go, ‘What are our priorities?’ We’re going to cut some areas. Just because times are a little lean doesn’t mean we’re going to go out and raise taxes.”
Noem also proposes giving 1.25 percent inflationary increases to what’s known as the Big Three — which is state employee salaries, education and Medicaid providers.
SDPB employees are state employees and subject to the salary increase.
Noem is also proposing $72 million in budget reductions. That includes cutting SDPB’s budget by about 65 percent.
