2024 Budget Address
By: Gov. Kristi Noem
December 3, 2024
Remarks as-prepared for delivery
Intro
Good afternoon, Lieutenant Governor Rhoden, Mr. Speaker, members of the House and Senate, and my fellow South Dakotans.
I am once again blessed to be here to discuss South Dakota’s budget. The past six years have been one of the greatest honors of my life. I love our state and everything about it. I love our natural beauty. But what I love most is our people.
Our state motto is “Under God, the People Rule.” In 2018, the people elected me as their 33rd Governor, and we accomplished an incredible amount in those first four years. Then, in 2022, they once again gave me the opportunity to lead and reelected me. They sent a clear message: they appreciated the direction our state was going. I made decisions to uphold the Constitution while focusing on the people and the families of our state. That is our charge as elected leaders. And it is how we must approach this budget.
As is always the case following an election, we have some new legislators here this year. So I’m going to repeat my philosophy when it comes to taxpayer dollars. During my time as Governor, I have always kept my budget proposals focused on our people, not government programs. After all, this is the people’s money. They entrust it to us and expect us to spend it wisely and responsibly. Every dollar that we invest, every policy that we support – every vote that you take in these legislative chambers – should be focused on our people, on making them safer, stronger, and freer. And we should always look to the future – on what will be best for our kids and our grandkids.
We focus on the core purposes of state government as outlined in our South Dakota Constitution. That focus is further underscored in a year like this one – as a result of the Biden-Harris policies, the national economy remains anemic. However, the great American comeback will soon take off. Until then, we have to make some tough decisions to deliver the 136th consecutive balanced budget for South Dakota.
As former Governor Bill Janklow once said, “We watch our cash, we watch our projections, and if it ever becomes necessary to make the budget cuts, we’ll make them unhesitatingly. Whether or not that involves any political flak or criticism, frankly, I couldn’t care less. My first primary responsibility as the chief executive of this state is to make sure that our books always stay in balance and that we never spend any more money than we have available to spend. Frankly, the people of our state do their business that way, and they wouldn’t expect any less of us.” Wise words from a strong leader.
Make no mistake – South Dakota’s economy remains the strongest of any state in America. We have the lowest unemployment rate in the country, the fastest growing incomes of any state, and folks continue to move here by the thousands to share in our Freedom. Even so, our revenue picture has tightened this year. We have $44 million in ongoing revenue available – that’s less than in recent years when I’ve addressed this body.
For one-time revenue, we have $175 million available, primarily as a result of another large infusion of unclaimed property receipts. Last year, you heard me talk about historic unclaimed property receipts of $134 million. Due to our excellent business climate, we attracted yet another large holder of unclaimed property. This year, unclaimed property funds exceeded that. They are $229 million, of which $60 million is ongoing revenue that we can safely and responsibly plan for moving forward. We are considering everything above that amount to be one-time revenue.
The people of South Dakota have repeatedly voted for fiscally conservative policy, and they expect their elected representatives to enact the same. Our budgets should always focus on our core priorities. That is what I have done in my first six years as governor, and that is what South Dakota will continue to do.
Today, I’m going to talk to you about our priorities – and how this year’s budget achieves those priorities. Our budget sets our state economy up with the Freedom to succeed; it educates our kids so that our next generation has the best opportunity for success; it promotes access to quality healthcare across the state; it preserves and protects the safety of our people; and it achieves all this while maintaining fiscal responsibility to taxpayer dollars.
Economy
We’ve accomplished a lot over the past six years. One of the things that makes me proudest is how strong we have made South Dakota’s economy. When I first ran for governor, I saw an economy that needed to grow. Our young people were leaving the state. Our businesses weren’t thriving. And major projects weren’t moving here. But I knew we had an opportunity to turn South Dakota around.
I declared South Dakota “Open for Business.” And that proclamation was put to the ultimate test during COVID when the rest of the nation shut down. Not South Dakota. We trusted our people to exercise their Freedom and personal responsibility to make the best decisions for themselves and their loved-ones. Our economy took off! So we made wise investments as a state to tell our story and capitalize on our economic strength.
We were able to make ten years’ worth of broadband infrastructure investments in just one year because of our strong tax revenues. We invested in tourism and workforce marketing campaigns so that people would be drawn to South Dakota’s Freedom and open spaces. We knew that childcare and housing availability were concerns that kept our workforce from growing as quickly as it could – so we made targeted investments in those areas to keep the momentum going. We prioritized grants to companies across the state to increase competition. And we made smart investments in communities to set them up for success – like building the DEX and the SHED at our State Fair to bring it into the 21st Century.
I am blown away by what we’ve been able to accomplish as South Dakotans. You heard me talk proudly about our economic strength – but did you know that since I’ve taken office, we have had the lowest average unemployment rate of any state over that six-year timeframe? That’s incredible – and it’s because we gave our people the opportunity to go to work.
My budget proposal will continue to invest in our state’s workforce. One way we do that is by investing in our state employees and our healthcare providers. Over the last few years, we’ve provided targeted increases for both. Last year, we passed legislation to guarantee that teachers get opportunities to earn more when we make increases to education funding. Together, those make up the “Big Three.” This year, I am proposing that we do what we can to offset inflation once again. I am recommending a 1.25% increase for the “Big Three” – our schools, our state employees, and our healthcare providers. Since I took office, the Consumer Price Index has increased by 24.9%. With this budget, we will have provided inflationary increases of 27.9%. This should keep us ahead of the increase in inflation. We are not going back to the days when our kids, providers, and employees are left behind. Thank you for getting it done.
One of the best ways that we can keep South Dakota’s economy strong is to keep taxes low for our people. Last year during this speech, I asked you to make a permanent tax cut for the people of South Dakota – and I am reiterating that request today. Our people deserve better than a temporary sales tax holiday.
Education
In order to meet our workforce needs, our kids and our grandkids need to be equipped for the jobs of the future. But education holds a more fundamental place in our society than just filling open jobs.
I have prioritized education over the last six years. Let’s start with the cornerstone of education: reading. We have invested in the Science of Reading because it works. Returning to this phonics-based method ensures our educators know how to teach our kids to read efficiently and with confidence. We will bolster these efforts with a five-year $54 million federal grant to support Science of Reading programs at the district level. My Department of Education is Moving Literacy Forward.
We also emphasized Jobs for America’s Graduates to make sure that high-risk South Dakota kids can make it to graduation ready for college or a career. We invested in higher education to meet our workforce needs: like providing equipment for key professions at our state’s technical colleges; expanding training opportunities for nurses at colleges and universities across the state; and supporting the growth of the cybersecurity program at Dakota State University to guarantee that the jobs of the future will be right here in South Dakota. We provided full tuition for our South Dakota National Guard soldiers to thank them for their service to our state and nation. And we guaranteed that teachers will get increases to match state funding for education.
We will continue to prioritize education with this year’s budget. My budget focuses on making sure that our students have the best opportunity for success. Good education starts in the home. And parents should have the tools to choose what educational path is best for their kids.
I am proposing that we establish Education Savings Accounts for South Dakota students in this upcoming legislative session. I am setting aside $4 million in ongoing dollars to stand up the program to start providing support for South Dakota students. This investment will pay for a portion of private school tuition or curriculum for alternative education – beginning with about $3,000 per-student. Because this is a starting point and a limited initial investment, we must first provide for the South Dakota students who need it most. But our goal is to expand, and my hope is that these ESAs will ultimately be available to every student in South Dakota. Now, let me be clear, we will not be cutting any dollars from our public schools, as many might try to argue. Public schools are very important to our state’s educational future. And as I’ve mentioned, education has seen historic funding increases. It’s important to remember that South Dakota supports all students. We want those students to receive the education that’s best for them and to have the Freedom to do so. I look forward to working with both legislative chambers to get this done.
In 2019, I started the School Safety Center within the Department of Public Safety. This Center operates a tip line and provides training to help keep our students safe. They have completed over 150 school safety assessments, and they have made recommendations for security upgrades and improvements. However, schools sometimes struggle to afford these improvements. This year, I am proposing that we invest $10 million in one-time funds over five years to create school safety grants. These grants will support identified security upgrades and protect the next generation of South Dakotans.
Health
In my time as Governor, I am proud of the work that we have done to support the public health of South Dakotans. Every citizen in our state should have the Freedom to live where they want and the opportunity to have good health outcomes – even if they choose a rural lifestyle.
In my time as Governor, South Dakota has become the standard for how to revolutionize rural emergency medical services. Innovative efforts like Telemedicine in Motion are setting an example for the nation. And we’ve put modern LifePaks in the back of ambulances across the state to save lives. We expanded the Bright Start program to support moms and babies before birth and after. We’ve started construction on a brand new state-of-the-art Public Health Lab. And we have added resources to this lab to enhance our services.
We have invested to help build and support regional mental health facilities across South Dakota. In the past, when a South Dakotan was experiencing a mental health crisis, they would end up in jail or in the emergency room. Now they can get appropriate help closer to home. This effort is a big reason why South Dakota continues to lead the nation with the largest drop in overdoses of any state. And my budget this year provides $1.2 million in additional ongoing funding for these regional facilities.
I am also recommending a $1.5 million investment into Agency with Choice at the Department of Human Services. This will continue to allow families utilizing our Family Support 360 services to choose who is providing services in their homes. And they can do so without an arbitrary cap on the hours of service that can be provided. This investment will provide greater care for South Dakotans utilizing our developmental disability services.
Public Health is influenced by so many things – including the water that we drink. My Administration has made historic investments into water infrastructure across South Dakota to make 20- to 30-years’ worth of water investments in a very short timeframe. I am proud that we have improved the quality of South Dakota’s drinking water for decades to come – and provided infrastructure to help our state grow our economic opportunities.
We are also managing the increased demand on our state’s Medicaid system with fiscal responsibility. We have $86 million in mandatory ongoing spending increases in this year’s budget – and those are primarily tied to Medicaid. This includes the remaining $33.7 million to fully fund the cost of Medicaid Expansion. I want to thank the legislature for taking steps to ramp up to that total amount in the last couple of years. That smart planning will help us afford this total in the years to come. Because our state’s economy has done so well, we have to take on a higher share of Medicaid costs. This will cost us another $27.8 million.
With all of these investments, we will continue to strengthen public health in South Dakota for years to come.
Safety
One of the core responsibilities of the government is to guarantee the safety and security of our people – to protect their rights to life, liberty, and the pursuit of happiness. I am proud of all that we have done in the last six years to improve the safety of our people.
We’ve strengthened our physical infrastructure to keep our people safer. We’ve repaired highways and bridges, including some innovative new ways to achieve safety on the roadways. We have consistently invested in our State Radio infrastructure to support public safety communications in every corner of South Dakota. We’ve fixed dams across the state. When we saw a 1,000-year flood this past summer, we didn’t have major dam breaks in South Dakota like we saw in a neighboring state. In order to continue this important work, I am recommending an additional $13 million to finish the Richmond Dam project.
We have invested in readiness centers for our South Dakota National Guard in communities around the state. Our National Guard is consistently awarded for being the best in the nation. They do every mission with excellence – whether responding to natural disasters, deploying overseas, or helping secure our border. By supporting and building training facilities, these readiness centers will help keep us safe into the future.
I have increased resources to combat the horror of human trafficking. And when President Trump secures the Southern Border, we’ll cut off the primary pipeline for human trafficking into our country.
Threats to public safety can take many forms – including attacks to our cybersecurity. Our state government systems endure countless cybersecurity attacks every year. My Administration has focused on modernizing our IT systems to protect the personal information of our people. And we’ve identified cybersecurity as South Dakota’s “next big industry” to protect our people for many years to come.
Finally, we have made historic investments into building new prisons that have been a need for our state for decades. Thank you for fully funding the new women’s prison in Rapid City – construction is well underway on that project. And as for the new men’s prison, we now have an estimated total cost of $825 million. Our current State Penitentiary is older than the state of South Dakota. The current building is falling down. It is long past time to replace it for the safety of our people. The new facility will be built to meet our medium- and maximum-security needs far beyond our lifetimes. You have already set aside $567 million in the Incarceration Construction Fund towards this project. We are estimating $76 million in interest on those dollars in the coming years as the prison is being built. My budget meets the remaining need of $182 million in one-time dollars to fully fund this new prison. Paying cash for this facility will save more than $600 million in interest, fees, and annual debt service payments. Thank you for saving ahead for this project.
Fiscal Responsibility
South Dakota has always been an example of fiscal responsibility. After all, this budget will reflect the 136th consecutive balanced budget for our state. We recognize that these dollars belong to the people of South Dakota. They work hard to earn money for their families. It is our responsibility to manage those dollars wisely.
Since I’ve been Governor, we have taken fiscal responsibility to new heights. We have truly made South Dakota an example for the rest of the nation to follow. We’re one of the only states with a fully-funded pension, and we have a AAA credit rating. We paid off tens of millions of dollars in debt. We have broken records for the largest surpluses in state history. The legislature worked with me to pass the largest tax cut in South Dakota history. And we’ve advanced long-term fiscal responsibility by implementing new IT systems – like BISON and 605 Drive – that will guarantee that taxpayer dollars are protected.
This year’s budget will continue to maintain responsible management of taxpayer dollars. I am recommending that we maintain our longstanding practice of having a minimum of 10% budget reserve balance for a rainy day. Additionally, due to the unprecedented influx of unclaimed property receipts, I am recommending that we set aside $43 million of our one-time revenues to pay future claims. This money belongs to the people, and we must be ready to pay this back. This will set our reserve balance at about 12% of our state budget.
I told you earlier that we had only $44 million in available ongoing revenue, but $86 million in mandatory new ongoing expenditures. And we’ve discussed other new spending items today. To balance the budget, we’re proposing $71.9 million in budget reductions and discretionary changes. You may have other things that you’d like to fund – but as President George Washington said, “We must consult our means rather than our wishes.” That is what South Dakota families do every day.
We’ll achieve a balanced budget by making needed changes to both revenues and expenditures. As technology evolves, it is important for state government to look at past decisions to ensure they are still relevant for today. Over a decade ago, we encouraged businesses to electronically file sales taxes by providing a credit incentive. This collections process is now normal business practice, and this incentive is no longer necessary.
We will continue to strengthen our fiscal foundation by paying off debt with one-time money. This will free up ongoing money for this year. We’ll reduce the money we set aside for Maintenance & Repair. We’ll right-size funding for programs in the Department of Social Services and Department of Human Services to match utilization – these programs had been reverting money at the end of the fiscal year over the last several years. We’ll reduce the state match in funds for Temporary Assistance for Needy Families – our economy is strong, and South Dakotans are working. And I have asked the Board of Regents to propose $2 million in budget reductions of their own.
I propose reducing funding for South Dakota Public Broadcasting to bring us in line with the national average. Currently, South Dakota has the 3rd highest per-capita funding of public broadcasting of any state in the nation. We’ve been paying more than double the national average.
Finally, I am proposing further steps to strengthen our fiscal fortitude. We will expand resources to assist the Board of Internal Controls. We need to strengthen our Department of Legislative Audit and clarify the work they do. My budget includes adding two new employees to this department. These steps will build on the actions that we’ve already taken. Also, we will continue to strengthen our financial systems to make sure that we are transparent with taxpayer dollars. The new BISON accounting system will have safeguards in place to control processes and protect taxpayer dollars – things that simply were not possible with our decades-old system. And 605 Drive will strengthen financial security and transparency within the Department of Revenue. And last week, I signed an Executive Order to stand up state employee trainings around public trust, duty to act, internal controls, conflict of interest, and a service mindset for the citizens of South Dakota.
Conclusion
Our state is an example of fiscal responsibility; of limited government; of what can be accomplished when we trust in our people and respect their Freedom. We don’t just talk about these things. We make the tough decisions to back up those words with action. And the results prove our approach is correct.
I want to thank my team at the Bureau of Finance and Management for putting together this budget. Would you all give them a round of applause?
Commissioner Jim Terwilliger and his team have been so fantastic to work with. They will be around to answer whatever questions you may have throughout this upcoming legislative session.
South Dakota has been home all my life – and always will be. Thank you all for giving me the opportunity to serve you. I want to thank all of you for joining me on this incredible journey and for serving the people of South Dakota alongside me.
Thank you all. God bless you. And Merry Christmas!
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Keep watching. I’m guessing this won’t be the last time they go on the attack.