CURRENT ISSUE
APR. 3, 2017 - VOL. 52 No. 7

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Broad issues dominated the
2017 Legislative Session

Task forces to continue work in the summer months

In recent years, we've seen big sweeping issues that have somewhat defined the legislature for a given session. In 2015, we strongly supported a new funding bill for road and bridge infrastructure. Why? We know that commerce depends on an effective and efficient transportation infrastructure. Indeed, it is what gets raw materials into the state, products throughout and out of the state and even enables our workforce to travel safely. The highway and bridge funding bill dominated the 2015 session and it was successfully passed.

In 2016, we strongly supported a significant increase in funding for K-12 education for the purpose of significantly increasing teacher salaries. We believed that South Dakota's standing as last in the nation for teacher salaries was a strategic threat and needed to be addressed. Nothing is more important to our state and community than an outstanding K-12 system and its ability to help us attract and prepare our workforce and help kids achieve their potential. This topic dominated the 2016 session and was successfully passed.

In the near future, we will be analyzing the impact of both of these bills, but for now we are focused on a recap of the 2017 Legislative Session. So, what were the defining issues of the 2017 session?

A Retrospective

On the morning of Nov. 8, 2016 our Chamber was still convinced that Medicaid expansion and the state budget would be the biggest issues in the upcoming session. In fact, the Governor had been touring the state to pitch his Medicaid plan and was preparing the groundwork. We also had been watching revenues for the City of Sioux Falls and were convinced that shortfalls were on the way.

On the morning of Nov. 9, 2016 our Chamber was convinced that Medicaid expansion was likely off the table and the newly and surprisingly passed IM 22 would be a major focus of the upcoming session. We still believed budget issues would also be at the fore.

On Dec. 6, 2016 the Governor confirmed the revenue and budget challenges facing the state and on Dec. 8, 2016, Judge Mark Barnett stayed the implementation of IM 22. That was not the last word on budget, however, as the revenue numbers continued to fall behind the revised estimates and the hole in both the current fiscal year and the next fiscal year grew. The stage was set.

IM 22 Fallout

As a Chamber, we joined a number of organizations opposing IM 22 at the ballot box in November. Unfortunately it passed with 51.6% of the vote. Even though it passed, we continued to believe many of its provisions were unconstitutional and others were completely unworkable. That opinion was supported by a circuit judge ruling staying the law and supporting the constitutional objections. This caused the introduction of HB 1069 which served as a complete repeal of IM 22 and included some new campaign finance rules. We supported HB 1069 and it passed mainly on party lines. With IM 22 repealed a number of measures were introduced to address components of the law. A few of them survived the process:

  • HB 1073 rewrote the lobbyist gift provisions of IM 22 into a workable and acceptable form. We never opposed restrictions, but we opposed the original language for its unintended draconian consequences.
  • HB 1076 created a state government accountability board comprised of four retired judges.
  • SB 27 defines what constitutes a public official, what a criminal conflict of interest is, and outlines the sentence for a convicted offender.
  • SB 54, in its final form, amended HB 1069 and established new provisions for campaign finance reform.
  • SB 151 created a complaint procedure to resolve allegations of misconduct by public officials.
  • SB 171 created a government accountability task force to study government, campaign finance, lobbyist restrictions and ethics.

The Chamber will actively follow the work of the task force created by SB 171.

Initiative and Referendum Processes

On the heels of a long and messy Nov. 8 ballot that included 10 initiated and referred measures, many believed some level of reform to our process was needed. Everyone defended the ability for the people to put measures on the ballot, but many questioned the ease of doing so, the information provided to the voter and the impact of out-of-state interests and money on state policy in South Dakota. As a Chamber, we are interested in these topics as well.

There were bills introduced to change signature requirements, to change the process for constitutional amendments, to require enhanced ballot measure funding disclosures and to limit out-of-state money on ballot measures. By session end, three bills survived and we supported all three of them.

  • HB 1141 creates a task force to consider legislation to revise the initiative and referendum processes in South Dakota.
  • SB 59 changes the effective date on an initiated measure, constitutional amendment or referred law to July 1 following the general election.
  • SB 77 requires a fiscal note for an initiated measure or constitutional amendment so voters know the impact on state costs or revenues.

Much like the task force on accountability in SB 171, the Chamber will actively follow and monitor the work of the task force created by HB 1141.

State General Fund Budget

As reported above and throughout session, every new revenue estimate the Legislature received demonstrated that the hole was getting bigger. Our legislature's first and most important job each session is to pass a balanced budget and they take that responsibility seriously. It would take pages and pages to detail all the changes that were made to balance the budget, so we will only hit upon a few items as final outcomes.

The announcement that Amazon would begin collecting and remitting sales tax revenues for sales delivered to South Dakotans was welcome news. However, it was difficult to estimate the impact to the budget for FY 18. In the end, estimates were baked into the budget numbers, but a lack of historic information challenges the assumptions in the numbers. That is not a criticism at all, but simply a fact.

Next, many continue to lament the fortunes of our agriculture industry in South Dakota for the foreseeable future. We kept hearing a number of legislators identify 2020 as the projected year for commodity and livestock prices to reflect renewed strength in our state's revenues. That remains to be seen.

As the process was winding down, the Legislature did a few positive things in the budget. First, they agreed to a .3 percent increase in funding for healthcare provider inflation and for K-12 funding. The Governor had originally recommended one percent, but that was pulled from the table when revenues continued to decline. It was at zero percent most of the session. In addition, a small amount was included for state employee health insurance cost increase offset. State employees will not receive a raise this year, but this move was intended to keep them whole.

This is a very simple summary of a very complex financial situation and our thanks to our Appropriators who worked on the budget from day one through the last day.

Conclusion

It bears restating, but the above mentioned issues certainly were not the only important issues our Legislature dealt with this year. In particular, we applaud our leaders for SB 65 to create a new state-level Board of Technical Education. We believe this will have long-term positive impacts on this important workforce development asset in our state. We also thank those who helped us defeat a couple of measures that were discriminatory in nature and not reflective of the values and diversity of our community.

All in all, we believe the Legislature did a good job of stewardship with respect to our resources and, in general, did a good job on substantive policy related issues. We thank them for their work and soon we will be considering what issues will face the 2018 Legislature. It always comes around very quickly.


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