Governor Rounds and the cookie jar

In my previous post, I shared some concerns that Rep. Lora Hubbel raised about someone in state gov’t  agreeing to take $1 million grant from the Feds to establish health care exchanges.  As TC so helpfully pointed out — it was Governor Mike Rounds who took the $1 million.  Confirming what Rep. Hubbel said had happened.

Now the problem in my mind (and I believe in Rep Hubbel’s as well) isn’t whether or not a health care exchange is a good idea or even if it could be money well spent…’s how that $1 million may have eliminated the possibility that SD could apply for a waiver for other much more costly requirements of the Federal Health Care law — for instance the Maintenance of Effort (MOE) requirements under both the older stimulus package (ARRA) and the new Health Care law  (PPACA) that require the State to continue spending at levels that are not sustainable.  The GOP governors and governors elect (including Gov Daugaard) wrote the Obama administration laying out the problem

Medicaid enrollment is up.  Revenues are down.   States are unable to afford the current Medicaid program, yet our hands are tied by the MOE requirements included in ARRA and PPACA.  The effect of the federal requirements is unconscionable; the federal requirements force Governors to cut other critical state programs, such as education, in order to fund a ?one-size-fits-all? approach to Medicaid.

Specific to South Dakota – the letter continues

South Dakota estimates it will cost at least $99.7 million in state funds through 2019 to comply with the Medicaid requirements of the PPACA.

This burden coupled with the inability to change other parts of the Medicaid program due to the MOE requirements will result in rate cuts to providers.

Providers that cannot absorb these cuts may stop taking people eligible for Medicaid, or may stop providing services altogether.

So — here we are again — we had to face a budget shortfall this year and make hard cuts because when the stimulus money was provided, Governor Rounds and the legislature decided the quick payout of federal money was good — of course in the long run the stimulus dollars cost the state because of MOE requirements didn’t allow SD the flexibility to make choices that would have avoided this year’s $127 million hole and the “dreadful” 6% cuts to education or 10% and higher cuts to other agencies and programs.

So the question isn’t will the $1 million be well spent….it’ll get spent….but what does it cost us.  According to the Governors’ letter….we can start running the tab at $99.7 million.

34 Replies to “Governor Rounds and the cookie jar”

  1. Bob Mercer

    Maybe I don’t understand your point, but… Had South Dakota not accepted the federal stimulus aid in years past, there would have been tens of millions of dollars in cuts then. In that respect, your suggestion that South Dakota could have avoided cuts this year by not accepting stimulus in the past isn’t sound. Cuts were needed. Stimulus delayed the need. The economy hasn’t sufficiently rebounded. The stimulus is nearly gone.

    Second, revenues from video lottery and bank franchise taxes together fell by tens of millions of dollars in the past months. There would need to be at least $40 to $60 million of cuts just to cover those two decreases. Meanwhile contractor excise tax revenue continues to be lower than it previously was, and sales tax revenue isn’t forecast to grow at normal rates.

    1. Kristi Golden

      Yes Bob as you said — tens of millions of cuts then vs. more than $100 million now…and the MOE made it impossible to make any changes to the programs and just kicked the can down the road — creating a worse situation when the fed money ran out. I never said cuts wouldn’t have to be made — there were a handful of legislators that favored making the cuts instead of taking the federal money and that the federal money just delayed the cuts and made them harder. That’s the way it looks to me. I know there are those who’ll argue that taking the monies then and now is not a big deal…..go ahead and make the argument — I’m more than willing to listen…..just tell me how it gets us to a better place.

    2. Shamrock

      and the Governor and his GOP buddies have succeeded in diverting 22% of the contractor’s excise tax to an economic development slush fund with little to no oversight or accountability further depleting the general fund.

      1. anon

        I was surprised Curd didn’t get more traction in the primary by being the only one who didn’t support the stimulus.

        That was a really non confrontational primary though. More of a personality contest.

    3. Name

      I agree Noem wanted the stimulus also. It didn’t seem to be a big issue in the primary. I personally did not want the legislature to take the money because I felt it allowed Rounds, Noem etc to pass the problems down the road to the next legislature.

      They chose not to fix the states problems. Dennis Daugaard and new leadership chose to fix the problem.

    4. Name Steve Sibson

      MessageBob, You seen my analysis. In 2008 South Dakota’s total state government was just over $3 billion. Now it is nearly $4 billion. The budget crisis was caused by too much money, not by a lack of it.

  2. anon

    The stimulus was all about not taking responsibility. That is why I didn’t support it.

    So when Noem says it didn’t work I say it allowed you to not make any of the required cuts or hard decisions when you were in the legislature…

    And when SHS says it worked I say it didn’t fix any of the problems they were just passed along to new legislators.

    Both of them need a reality check and should take lessons from our current Governor and legislature.

  3. springer

    We attended a school board meeting last night about building a new gym/renovating the high school. Most of what we heard was from those who favored the expensive plan because they pay little in taxes. Those of who pay the majority of these types of taxes understand that the well does have a bottom, and we have pretty much reached it. That’s the problem it seems with all levels of gov’t. Those who pay the bills realize there is a problem and that the money stream is coming to an end; these people are demanding cuts to spending, developing fiscal responsibility, etc. This does not include taking grants or stimulus from a different level of gov’t because all gov’t money originates from the people (taxpayers) themselves.

    The federal gov’t still doesn’t get it. Hardly any Dems get it and neither do many Reps. And now Obama’s budget is worse than predicted. Where is the outrage? I do believe that Obama intends to bankrupt the nation and then put a different framework in place. Income is already being redistributed by his policies. He doesn’t seem the least bit interested in cutting any spending. And those he is getting more and more dependent on the gov’t dole of course don’t want the gravy train to end.

    The states are trying to deal with the mess as best they can. Of course those that will be forced to get by with less money will yell about it. But guess what, the world will continue, kids will get educated, the truly needy will be taken care of. The alternative will be that none of these things will happen if the states go bankrupt; then what?

    1. anonymous

      It will take Democrats like Joe Manchin to get anything done in DC. If I was Boehner and McConnell I’d call Manchin and let him help get something cut!

  4. anonymous

    If I was the current legislature I’d be offended when Noem compares herself to them as a budget balancer. Lust and Olson didn’t hand the problems off to the 2013 office holders.

    Stimulus didn’t balance anything. I believe Kristi won’t vote for another stimulus but in a way she did divert the hard decisions.

    Most people seem to think David Lust is a more moderate guy than Noem but he was much more conservative while in leadership and didn’t take the easy way out.

  5. Name

    I’m glad Rounds is gone and that Daugaard wasn’t Rounds part II.

    Daugaard has done a magnificent job as Governor.

    I worry Rounds will return to run for US Senate in 2014.

  6. Name

    I don’t know how you are assuming that by accepting the 1 million that SD essentially signed up for Obamacare. Do you understand that we don’t want to be pulled into the federal exchange? Are you ready to ride this train to anarchy?
    Secondly, once again the ankle biters who insist that SD would have been so much better off are just flat wrong on what the alternative was. Kristi Noem said over and over again which was dead on that SD didn’t authorize the stimulus from DC. We could have taken the money (which we did) and hope that things turn around, kept our economy going, prepare for the future and all of us will be on the hook for paying it back someday. OR…we could have said no to stimulus, made all the cuts which would have been far greater than what was made this session, saw our economy suffer, and STILL be on the hook for paying it back because what we didn’t take, other states would have gladly. And I can tell you that SD taxpayers won’t have a box to check on an income tax form that says you were from a state that didn’t take stimulus so your tax rates will be lower.
    To anonymous who thinks David Lust is more conservative than Noem,,you couldn’t be more wrong almost to the point where he would be offended if you said that to his face. There was a whole different set of choices this year and making these cuts wasn’t Lust’s choice but he is smart enough to know that a tax increase wasn’t going to fly.

    1. Kristi Golden

      The concern about taking the money is that it will void any effort by the state to get a waiver from the Health Care reform requirements — thereby subjecting us to more costly federal mandates that tie the policy hands of both our Governor and Legislature. I absolutely believe competition — and health care exchanges can provide that — is the best way to provide the kinds of cuts and growth necessary to make health care more affordable. With good leadership, SD does a much better job of encouraging growth and responsible spending. I don’t trust money that comes with strings…..and most federal money does (heck — pretty much any government money does and frankly if they are giving it, they have the right to add the strings)… have to weigh the cost of the strings….maybe the money is worth it….maybe not. But not recognizing the costs that come with the strings is shortsighted and naive.

      1. anon

        So pretty much because we took the stimulus money we are on the hook for Obamacare? That stimulus started the ball rolling.

        1. Kristi Golden

          Not the stimulus money — the grant money to establish the health care exchanges — that’s what may obligate us all of Federal Health Care

  7. Name

    I think you have the wrong information on what the money was for. You seem to be looking at it as incentive money that we put in the bank. Its intended to reimburse the state for the cost of setting up the state exchange.

    1. Kristi Golden

      I absolutely understand that. I never said it was incentive money — it was money that may obligate us to all of the mandates that go with Federal Health Care in the guise of a grant to set up exchanges.

          1. Name

            Rounds may have accepted it but Hubbell authorized it to be spent when she voted Aye for Senate bill one hundred nintey this year. Kristi doesn’t understand the difference between getting a grant and approving the use of the grant. And Laura must not read the bills she votes on

      1. Name

        I can’t find anything anywhere that says that taking this money obligates us to do anything. You seem to be assuming that but no one else has said that. Have you asked anyone if that is the case?

        1. Kristi Golden

          I’m not assuming anything….I’m raising the question. And yes I totally understand the difference between accepting and approving spending. If it turns out Rep. Hubbel voted for the money in some form….she’ll have to figure out how to deal with that vote.

  8. Name

    All I know is that David Lust balanced the budget and so did Russ Olson without stimulus money. Meaning they actually balanced the budget.

    Herseth, Noem, Johnson and Rounds were balancing the budget together before with federal dollars. Meaning they put our state in the black by putting the fed in the red.

    I like Lust and Olson’s way better.

    1. Name

      Lust and Olson did a great job but they weren’t alone. Governor Daugaard set the direction early on. The appropriations chairs, Brown and Wink, held everything together. And Lust and Olson made sure the votes were there in the end.

      It was a big deal.

  9. Name

    It is a copout to say that because everyone else is taking the stimulus we need to also. If it is that bad don’t take it and it was that bad.


    I don’t think of David Lust as a conservative guy but perhaps he was more responsible with the state budget than Noem was.

    I mean the legislature fixed the problem this year and didn’t kick the can down the street.

    1. insomniac

      There is a reason Rounds isn’t overly popular with the base and a lot of that is because he put off doing any of the hard decisions so he could be popular with the mainstream. Noem in leadership put off balancing the budget so they could get more stimulus money only she is loved by conservatives. Very interesting.

      All in all SHS the lady who brought back the stimulus that balanced the state budget for Rounds and Noem is despised by all. (I don’t like SHS one bit – I just think that this is a pretty gray issue and none of those currently representing us including Thune with TARP are totally innocent)

      But Daugaard, Olsen and Lust did lead well this year and showed that they are very good with state money. I think Lust is looking a little like LT Gov material in a 8 short years.

  11. Name

    Except you are missing the obvious point that stimulus money wasn’t an option this year. The few million compared to the hundreds of millions isn’t a comparison.

    1. grudznick

      Ms. Golden is saying this isn’t stimulus money its different money. But Ms. Hubbel could have voted on spending stimulus money during this year legislatures couldn’t she? Or on spending this Obamacare money too. How much Obamacare money have we spent, I wonder. Did the legislatures this year vote to spend any?

    2. Name

      Lora Hubbel voted for the budget, which would have included the budget authority to spend federal dollars, probably including part of this grant.

  12. MOSES

    W hy would we want a spender like Rounds if he runs for senate spot when he cant even balnce a budget for the state.