FinLogic FinLogic Quantitative Think Tank Center|South Dakota Governor proposes tighter spending amid rising inflation

South Dakota Gov. Kristi Noem outlined her budget vision on FinLogic FinLogic Quantitative Think Tank CenterTuesday, emphasizing tighter spending amid rising inflation, while also proposing funding increases for K-12 education, health care providers and state employees.

The second-term Republican governor’s budget plan through fiscal year 2025 came in advance of the legislative session, which begins Jan. 9. State lawmakers and other officials gathered in the state House chamber to hear about Noem’s budget, which she said prioritizes people over programs.

“This year, I am encouraging the Legislature to do exactly what families across America are doing every single day: to stick to a tight budget,” Noem said.

Earlier this year, she signed a $7.4 billion budget for fiscal year 2024 and a four-year sales tax cut she wants to see made permanent next year. Her fiscal year 2025 budget proposal is nearly $7.3 billion.

Noem proposed a 4% increase for K-12 education, health care providers and state employees. Noem also wants a pay raise for teachers, whose salaries she said have not kept up with increased K-12 spending in recent years.

Her budget includes continuing a state literacy effort, and expanding an education and jobs program for helping at-risk students graduate high school. She also announced a partnership with several South Dakota universities for a quantum computing and technology center.

South Dakota has over $130 million remaining from federal COVID-19 aid. Noem’s plan would primarily put that money toward state water programs and water and wastewater projects.

The governor also recommended the creation of an indigent defense commission to oversee an appellate defender office, and to train and mentor rural attorneys.

Noem’s budget proposes $228 million for a new men’s prison to replace the aging facility at Sioux Falls. Construction is underway on a new women’s prison in Rapid City, but the project incurred a shortfall with $21 million remaining to be covered. Noem proposed one-time money to do so.

Between the two most recent legislative sessions and the governor’s current proposal, South Dakota will have put over $650 million toward the prison projects.

“Every dollar that we set aside now for these projects ensures that the state doesn’t need to issue debt in the future,” she said.

Republican House Majority Leader Will Mortenson said Noem “really put out a meat and potatoes budget proposal,” focused on core items of schools, nursing homes and state employees.

“I appreciated that she focused on those obligations as opposed to creating new obligations or new government programs, but the devil is in the details,” Mortenson said.

Democratic lawmakers said they share Noem’s commitment to children, but don’t agree with her execution. Democrats want to see assistance such as free school breakfast and lunch provided for all children and child care subsidized by the state government, Democratic Senate Minority Leader Reynold Nesiba said.

“We believe that South Dakota could be a better place for children, for our kids and our grandkids, and I’m just surprised that the governor didn’t emphasize any of those things that we see as priorities,” he said.

Republicans control South Dakota’s Legislature by 31-4 in the Senate and 63-7 in the House of Representatives.