Gov. Kristi Noem asks for a $7.27 billion state budget in FY2025

PIERRE — Gov. Kristi Noem is asking lawmakers to budget $7.27 billion for fiscal year 2025 for state funding obligations and existing water and prison projects among other things.

That’s a small increase from the proposed $7.25 billion Noem asked for the 2024 fiscal year, and it comes after Noem warned lawmakers the 2025 budget would be a return to normal as federal funding from the COVID-19 pandemic dries up.

More: Noem, lawmakers say 2023 South Dakota budget expected to be a return to 'normal'

“I am not proposing conservative spending because our economy is weak,” Noem said. “I am proposing conservative spending because we are strong, and I want South Dakotans to continue to thrive for generations to come.”

State lawmakers set the 2024 fiscal year budget at $7.4 billion, something which drew the ire of Noem during her 30-minute speech.

“Before we talk about how we’re going to invest dollars, I want us to have a quick family discussion,” she said. “Last year, the legislature spent tens of millions of dollars that wasn’t in my budget recommendation. Clearly, I signed that budget, but this year will be different. I am committed to budgeting conservatively, spending within our means, returning money to the taxpayers, and focusing on our priorities. I hope that you will agree with me on that approach.”

Big Three funding

Noem also proposed 4% funding increases for the Big Three: state employees, healthcare providers and education.

Within education, Noem is also asking the Legislature to fund phonic education and programs for high schoolers that better prepare them for the workforce.

Noem also asked for an additional $18.3 million for funding the state’s Medicaid enrollment program.

More: Read Gov. Kristi Noem's 2023 budget address

House Majority Leader Will Mortenson, R-Pierre, called the governor’s proposed budget a “meat and potatoes budget.”

“The needs that our state faces are that our schools be properly funded, our state workers be paid and that our health care providers be taken care of,” Mortenson said. “I saw a good priority placed on those needs.”

Focusing on families

Noem requested the Legislature continue to fund her Bright Start program, which supports mothers before and up to two years after their pregnancy. Noem suggested utilizing federal dollars.

Additionally, she requested the Legislature consider supporting adoption and guardianship programs for families as well as more specialized foster care programs for foster children.

Prison funding

As for continuing infrastructure projects, Noem is looking toward bolstering the state’s impending prison projects in Rapid City and Lincoln County.

A Twitter List by Shelly_Conlon

The women’s prison in Rapid City is facing a $27 million shortfall after construction began this past fall, Noem said. The proposed men’s prison that will replace the South Dakota State Penitentiary in Sioux Falls, in use since 1881, is also expected to run into additional expenses leading the Governor to recommend $132.4 million in one-time funds.

The state has already been putting money away for the prisons in the incarceration construction fund as construction costs continue to grow.

More: DOC’s lack of transparency about new SD prison could have long-term consequences, expert says

Rep. Karla Lems, R-Canton, said she anticipates the men’s prison may also face a similar shortfall like the women’s prison in the future.

A future for existing water projects

The state has a little less than $105 million in American Rescue Plan Act dollars from the federal government. With cost savings Noem credited to the Bureau of Finance and Management, the state can spend up to $130 million on infrastructure projects.

The remaining ARPA dollars must be obligated by the state by the end of 2024.

More: $50 million water legislation falls two votes short on final day

Noem recommended $10 million of that go to revenue replacement while the other $120 million go into various existing water projects across the state, including the Department of Agriculture and Natural Resources water program and state water and wastewater projects.

She also suggested funding to improve dam infrastructure across the state.

Sen. Helene Duhamel, R-Rapid City, who has championed using the remaining ARPA dollars for new water projects on the western side of the state, was heartbroken the governor was looking at existing projects.

“Why not fund that Missouri River pipeline?” she said. “The engineering project is all we ask.”

Duhamel expects to bring a bill focusing on the West River water project when the Legislature reconvenes next month for the 99th Legislative session in Pierre.

South Dakota Democrats critical about lack of tribal inclusion

Senate Minority Leader Reynold Nesiba said while Noem hit on education, foster care and prison funding in her speech, she didn’t acknowledge the role of South Dakota’s nine tribes in that conversation.

“I just don't think we're going to be able to address all of those without including tribal people, tribal leadership in this,” he said.

Rep. Linda Duba, D-Sioux Falls, mentioned the governor failed to mention how the state could better support tribes in South Dakota.

“I didn't hear one word about our Native American population, and how we're going to lift them up and bring them into the equation, so I mean, that's important to me,” she said.

Sales tax cut lingers in the air

The South Dakota Legislature approved a four-year temporary overall sales tax cut as the legislative session ended in March.

Noem told lawmakers Tuesday it should be a priority for that cut to become permanent since revenue estimates continue to be higher than estimated.

“It is still meaningful tax relief for the people, and I am hopeful that you will consider making it permanent,” she said.

It’s no secret that the South Dakota Senate has been lukewarm on the idea of a permanent sales tax cut. Sen. Casey Crabtree, R-Madison, said Senate Republicans were proud to have passed the tax cut but more discussion needs to be had during the upcoming session.

“If we keep this sunset in place, does that get us maybe a more meaningful tax cut down the road? Does that give us an opportunity to be serious about property tax cuts, which many of us are hearing in our home districts,” the Senate Majority Leader said. “We won't apologize for being very conservative and careful with the taxpayers dollars.”

The 99th Session of the South Dakota Legislature begins Jan. 9, with Gov. Noem's State of the State address.

This article originally appeared on Sioux Falls Argus Leader: What Gov. Kristi Noem wants in her proposed $7.27 billion budget