We finished legislative day 21. The Joint Committee on Appropriations continues with budget hearings and will conclude that process next week after which we will set budgets for all 37 agencies. Revenue setting for fiscal year 2025 will take place on Tuesday and Wednesday and on March 6 we will complete and propose the FY25 General Appropriations bill to the House, then the Senate and finally the Governor.

Revenue setting is a fascinating process. The Bureau of Finance Management (BFM) will forecast for each revenue line item and our Legislative Research Council (LRC) fiscal staff will do the same, each using a different methodology. The revenue setting committee will than discuss, debate and vote on each revenue line item, the result being FY 2025 forecasted revenue. That will be our top number from which every State Agency will have a piece. Our State’s Constitution mandates that expenditures cannot exceed projected revenues.

This week in Joint Committee on Appropriations, we heard budget testimony from Ag & Natural Resources, Transportation, Department of Health, Bureau of Human Resources and Bureau of Administration. Permit me to dive a little deeper into the Department of Transportation (DOT), a department that our motorized society depends on daily.

The (DOT) under Secretary Joel Jundt does an excellent job. We are a bit spoiled, I believe, as our roads are in good repair and in the winter, free of snow and ice. How does that happen?
South Dakota has 82,501 miles of roadway, 7,794 miles are state highways maintained by the Department of Transportation and even though it’s only 9.4% of the total mileage, the state highway system carries approximately 68% of all vehicle miles traveled.

To take care of our roadways the DOT has:
• 5,390 pieces of equipment valued at $198.5M.
• 398 buildings, 87 shops / labs, 11 offices, 36 cold storage buildings, 81 storage sheds, 24 Rest Areas and Port of Entries
• 999 full time benefited employees, 5 part time benefited employees, 105 seasonal non-benefited employees for a total of 1,109 employees.

They take seriously their responsibility of inspecting all state highways annually, rating them by excellent, good, fair and poor from which they project and budget far into the future road and bridge repair and or replacement.

How is this all paid for? For fiscal year 2025 the funding sources are as follows:
• General funds $692 thousand
• Federal funds $851 million
• Other funds $392 million

General funds come from the taxes we all pay, most of which is sales tax. This is a line item in our general budget.

Federal funds come from the Federal Government which unfortunately come with many strings attached.

Other funds come from our State’s motor fuel tax of 28 cents per gallon. We all pay that at the pump when buying gas. This revenue source in 2018 was $173 million and in 2023 $178 million, not keeping up with inflation. The probable cause of this is better fuel efficiency, fewer miles driven and electric vehicles.

The DOT as well as the Joint Committee on Appropriation expressed concern that our State’s road tax is not keeping up with inflation and the likelihood of federal money flowing to South Dakota may decline due to increased federal funding mandates which now include carbon reduction, buy America, national electric vehicle infrastructure, contracting requirements and greenhouse gas performance rules.

In addition, to maintaining our State’s roads, the DOT is responsible for Public Transit, Airports / Aeronautics and State-owned rail roads all of which require a dedicated staff to manage those budgets.

Thank you for the opportunity to serve as your District 20 Representative.
Representative Lance Koth