January 7, 2025 A Tough Budget Year, by Rep. Will Mortenson (R-Fort Pierre) The 100th South Dakota Legislative Session kicks off next Tuesday, January 14. As usual, about 1/3 of the Legislature turned over as a result of term limits, retirement, or election results. The new faces and returners alike will face the toughest budget year our state has seen in over a decade. After several years of excess revenues resulting from federal COVID stimulus and a growing economy, our revenues grew at a more normal rate this year. Unfortunately, we overcommitted to Medicaid spending and are facing budget shortfalls. While revenue grew over $40M this year, required expenditures for Medicaid grew by more than $60M. Those additional Medicaid expenses came from Medicaid Expansion (passed on the ballot in 2020) and a reduction in the amount the federal government is paying for Medicaid services. It is also true that the Legislature used revenue increases in the last few years to increase wages for state employees, increase funding for schools, and to provide tax cuts. We didn’t just hoard the money – we used it for public benefits or turned it back over to the taxpayers. But, this year, we’ll be facing a tough budget year. Gov. Noem proposed increases of 1.25% for Medicaid providers, education, and state employees. That costs about $30M. In addition, the Governor (and some of my colleagues in the Legislature) are looking at creating a variety of new government programs. Given that we were already in a hole due to Medicaid, the proposed new spending and government programs means the proposed budget included tens of millions in budget cuts. I worked for Governor Dennis Daugaard in 2011, when he led the effort to eliminate a 10% deficit by reducing spending across-the-board. It was difficult. There were real impacts to the way schools educated kids, nursing homes cared for seniors, and state government served the public. The cuts made for a hard year for many South Dakotans. But, we survived. The sky did not fall. In some cases, administrators admitted that the cuts gave them leeway to eliminate a program that was no longer necessary or find items in their budget that could be reduced without harming their mission. Budget tightening is hard, but it can be healthy. I will approach this tough budget year prudently and conservatively. I will be hard on all new spending programs. We should stop spending before we start cutting. This is not the year for new government programs, and anyone who brings one needs to explain why we should be adding government when we’re cutting core obligations. I will seek perspective and listen to every constituent or group that is impacted from a budget cut. I will balance the interest of the taxpayers with that of the tax spenders. This may be our 100th legislative session, but it is not our first tough budget year. Our state has been prudent, conservative, and well-managed for decades. It will be our job to maintain those virtues and deliver another balanced budget in 2025.