Governor signs $3.9 billion state budget

Gov. Mike Rounds said Wednesday he has signed the $3.9 billion state budget the Legislature passed last week.

The main increase in spending for the year beginning July 1 involves about $300 million in federal stimulus funds to pay for road construction, water projects, education programs and a wide range of other projects.

The budget also uses an additional $88 million in federal stimulus money to balance the portion of next year's budget supported by state general funds. Another measure signed by Rounds lets the state use $71 million in federal money to balance this year's state budget.

The governor also signed measures that continue extra state aid to school districts that cover large areas but have few students.

Earlier this week, Rounds said the Legislature handled the stimulus money properly by using it to restore some programs he had recommended cutting.

The governor said the extra federal money, in combination with a slowing of the growth in spending from state general funds, will give the state a chance to balance its budget with just state funds once the federal stimulus money is gone in a couple of years.

The budget bill, HB1300, spends about $1.13 billion from state general funds, such as the sales tax. It authorizes spending another $1.85 billion in federal funds and nearly $939,000 in other funds that are dedicated to specific purposes, such as the gas tax for road construction.

The budget process was complicated by the recession and the federal stimulus package. After the governor proposed a budget in December, he trimmed his spending proposal in January to cope with swiftly falling revenues. The stimulus money was approved later by Congress.

The final version of the budget gives state employees no pay increase in the year beginning July 1 and does not give any inflationary increase to nursing homes, hospitals and others who provide medical service under the state-federal Medicaid program.

School districts will get a 3 percent increase in state aid next year under a law that boosts that aid each year by the rate of inflation or 3 percent, whichever is less. But officials have said schools probably will get little or no increase a year from now because inflation is likely to be near zero.

The budget also at least partially funds some programs Rounds had called for eliminating earlier in the budget process. Those continued programs include extra aid to school districts with significant increases and decreases in enrollment, a modified Birth to Three program for children with delayed development, the state Division of Arts, the state archaeology office, the School for the Deaf and the South Dakota State Fair.

SB50 cuts spending from state general funds by $71 million for the current budget year, which ends June 30, and authorizes the use of federal money to replace the state money.

A law authorizing extra state aid that goes to large school districts with few students was due to expire at the end of this budget year, but SB88 extends that sparsity aid indefinitely. SB106 provides $1.7 million to fund that sparsity aid next year, a reduced funding level from previous years.