We finished legislative day 17. There are 20 legislative days remaining in the 98th Legislative Session. So far there have been 241 house bills and 196 Senate bills drafted and assigned to committees. Legislative day 27 is crossover day whereby the house of origin is required to pass bills to the other chamber.
Most of my time is spent in Joint Appropriations. We are nearing the end of testimony from all budget units. As always, the testimony we hear in the budget hearings with agencies is somewhat different than what we heard in the governor’s budget. In the committee setting, department secretaries answer honestly the questions of committee members and will respond to all proponent and opponent testimony whereby giving legislators a much clearer understanding of their needs. At the conclusion of testimony and committee vetting, the budget unit’s budget is set, and the general bill road map is updated. This process will continue until all budget units testify in the appropriations committee. This is an interesting and proven process.
This is my 3rd term and my 5th year as a legislator. From my perspective, this year has been and continues to be very productive. I give credit to our leadership in setting the stage of respecting the opinions of fellow legislators and encouraging open dialog. At this point in the legislative session, I am focusing on bills that have a fiscal impact.
Inflation bears watching as we structure a balanced budget for FY2024. Inflation can be defined as the rate of increase in prices over a given period. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country, however we attempt to break it down further as we address the needs of health care, construction (roads, buildings) and other sectors which in a lot of cases have a substantially higher inflation rate than the broad measure. An example of inflation history. During the period from 1960 to 2021, the average inflation rate was 3.8% per year and the overall price increase was 829.57%. Putting that in perspective, an item that cost 100 dollars in 1960 now costs 929.57 dollars at the beginning of 2022. For December 2022, the year-over-year inflation rate was 6.5%.
Why is it important to understand inflation? Most studies show that the economic multiplier for spending at the local level generates 1.3 to 1.5 times every dollar spent, with the assumption that the money is spent on investments that generate a return, like education, infrastructure, parks and recreation, and public health. There is risk when we use federal funds to cut taxes instead of spending it. Even though federal legislation prohibits state governments from using the cash to offset new taxes, money is basically fungible.
Getting the full economic benefit from the new spending will depend on whether most state and local officials spend it wisely and coordinate with each other.
What are we seeing?
The cost of doing the state’s business has increased dramatically due most to inflation. To date there are 7 bills for $3.5 million for new construction, 3 bills for $11 million for increased healthcare costs, $50 million for jail and juvenile facilities, $5 million for continued programing, $16 million for economic development, $15 million for education, $6.6 million for veterans, $40.9 million for workforce, $95 million for IT and $148 million for construction inflation.
The state’s financial road map is being updated daily as bills make their way through committees. We are seeing many needs and its likely we will not be able to fund all of them along with cutting taxes.
There are currently 69 bills that we will be scheduling a hearing in Joint Appropriations all having an impact on FY2024 budget. We will work through them as time allows all the while keeping a close eye on balancing the budget.
If you have interest in a particular bill or issue, log into http://www.sdlegislature.gov where you will find the information you need. Thank you for the privilege of serving as your District 20 Representative.