South Dakota FY 2017 Budget Exam: Part 3

Ahh. Back after the Christmas and New Year’s break. In this final (for now) reflection on the Governor’s proposed budget, I would like to look at some of the budget internals.

  • $561.5 million (37.6%) for Health, Human, and Social Services;
  • $451.7 million (30.3%) for Aid to Schools;
  • $206.6 million (13.9%) for Higher Education;
  • $100.1 million (6.7%) for Corrections;
  • $69.1 million, (4.6%) for the Legislature, Unified Judicial System, Public Utilities Commission, and Elected Officials;
  • $19.6 million (1.3%) for Agriculture; Environment and Natural Resources; and Game, Fish and Parks
  • $83.9 million (5.6%) for the remainder of State Government

Those are some remarkable numbers. Just over 3/8ths of the total is going to support social welfare and related programs. More than 2/5ths is for education; with the balance going to support things which one might claim should actually be the responsibility of the state government.

We could consolidate the above categories further into the following:

  • Social Welfare (37.6%)
  • Education (44.2%)
  • Other (18.2%)

If you could have asked yourself (before reading this post) to rank these categories from largest to smallest, what would you have answered?

South Dakota FY 2017 Budget Exam: Part 2

Last time, in Part 1, we looked at the big number for each year and the changes to that number from FY 2005 through the proposed FY 2017 budget. This time, I would like to consider the three main breakouts of that big number: the general fund, federal funding, and other funding.

General Fund

The general fund has been as high of 34.06% of the total budget in FY 2008 and as low as 28.29% in FY 2012. Its average from FY 2005 through FY 2017 is 31.71%. FY 2017 is 30.85%, or slightly below average.

Federal Funds

Of the three categories, federal funding has fluctuated the most. Over the period in question it has ranged from 38.73% in FY 2016 to 47.51% in FY 2011. Its average from FY 2005 through FY 2017 is 42.64%. FY 2017 is 42.09%, or slightly below average.

Other Funds

This category has been as low as 23.92% in FY 2011 and as high as 28.22% in FY 2016. Its average for FY 2005 through FY 2017 is 25.65%. For FY 2017 it is 27.06, a good bit above average.

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So, what can we tell from this? Not too much, other than the fact that federal funding is the single largest component of the budget, though the legislature spends the bulk of its time debating the contents of the general fund portion of the budget. This is true because federal funding comes with federal strings which determine how the money can be allocated and spent. As a result, there is usually little to be gained from talking about how to spend the federal funds.

There is, however, the continuing question of whether the state should be accepting such funds seeing that the federal government is providing funds to South Dakota which are created via a magical process that turns nothing into something–until that does not work anymore.

One could make argument that some of these federal funds are disbursed to the state for legitimate purposes, such as defense. Nonetheless, the underlying issue of debts and deficits remains.

South Dakota prides itself on having had a balanced budget for the entire existence of the state. It seems wrong for the state to continue to celebrate balancing its budget while taking full advantage of an increasingly lopsided imbalance of the Federal budget.

South Dakota FY 2017 Budget Exam: Part 1

I realize that its a Saturday, which means that most of us are doing different things than during the rest of the week. Despite that, I wanted to crunch a few numbers with reference to Governor Daugaard’s proposed budget for next fiscal year. For purposes of these discussions, I’m going to compare previous actual budgets with the Governor’s proposal for 2017. Historically, the difference in raw numbers between the proposed and adopted budget is quite small, so it does not signify for the big comparisons we need to do.

Let’s start with some history:

  • FY 2005: $2,907,686,333
  • FY 2006: $3,055,919,196
  • FY 2007: $3,186,869,182
  • FY 2008: $3,340,084,390
  • FY 2009: $3,548,708,486
  • FY 2010: $3,919,562,591
  • FY 2011: $4,064,074,188
  • FY 2012: $3,959,175,442
  • FY 2013: $4,006,460,307
  • FY 2014: $4,090,632,223
  • FY 2015: $4,259,323,695
  • FY 2016: $4,326,703,120

And look at a possible future:

  • FY 2017: $4,827,070,205

Next year’s proposed budget would appear to be a raw spending increase of 66% since FY 2005. In the same period of time, the state’s population has increased from 783,033 to 853,175 (as of 2014, the last year for which I could find firm numbers). Let’s be generous and say that the state’s population will go up to 875,000 by the time the new budget would begin.

As a per capita cost, then, we would have the following:

  • FY 2005: $3,713
  • FY 2017: $5,517

Doing the same math we did for the budget numbers above, that would work out to having spending indexed to population increase by 49% since FY 2005.

And yes, we still need to look at inflation. If we average inflation over the years from 2005 through 2017 (realizing that inflation years and fiscal years don’t quite match up, and the future hasn’t happened yet) we would get 2.44%. To arrive at that, I put the unknown current/future years at a 3% rate of inflation since that is the usual placeholder, at least in modern times.

If we adjust for a 2.44% annual inflation rate, the FY 2005 budget of $2,907,686,333 would increase to $3,883,134,136 for FY 2017. This works out to a 34% increase due to inflation.

If we go back to our per capita valuation from above we could change that list to the following:

  • FY 2005: $3,713
  • FY 2017: $5,517
  • FY 2017: $4,975 (if spending had kept pace with inflation and population only)

We find then that the per capita cost of the South Dakota budget has increased by 15% more than can be explained by population increases and inflation load since FY 2005.

Deliberately Ignorant or Thinking Clearly? UPDATED

The US Congress has not provided a budget in three years. Paul Ryan proposed a budget recently which could substantially changes the downward trajectory of our economy (public and private). Obama’s press secretary Jay Carney is having none of it:

“You have to be aggressively and deliberately ignorant of the world economy not to know and understand that clean energy technologies are going to play a huge role in the 21st century,” Carney said after decrying the clean energy spending cuts in Ryan’s plan. “You have to have severely diminished capacity to understand what drives economic growth in industrialized countries in this century if you do not understand that education is the key that unlocks the door to prosperity,” he added.

What clean energy (aka green energy) has to do with education is a bit beyond me, but if this is the best Carney can do, the advertisements will pretty much write themselves. Education would include telling people about the following: Solyndra, Beacon Power, Ener1, Fisker, and Tesla. Are these all examples of the role which is being played by clean energy in the 21st century? If so, is it not time that we stop paying billions for these roles to be played?

If anyone is being played here, it is Mr. Carney. Kudos to Mr. Ryan for proposing a plan that might actually work.

UPDATE

Speaking at another one of those clean energy companies today:

Obama mocked Republicans for having a lack of imagination and dismissing clean energy technologies just because they are new. The president says America must take risks and stay ahead of the curve in order to be competitive.

Mr. President, “clean energy technologies” are far from new. Yes, there have been new developments, but we’ve been pouring money into solar energy for 40+ years without seeing the rewards that we were told were just around the next corner. We don’t dismiss the technologies “just because they are new” but because they do not match up with expectations–decade after decade.

Who is being deliberately ignorant of the realities of clean energy, again?

12576 Hours to Go

Give or take a few. That is how much longer we must wait until the 2012 national elections. With that in mind, I am not against hearing about the possible contenders–Palin, Pawlenty, Huntsman, Ryan, etc–for the title of “Challenger” but I think we would be neglecting more important things were we to spend much effort and ink on these folks this far out from the starting line.

I do realize that campaigns, like celebrations of Christmas, seem to start ever earlier than they did in my youth–and I understand the financial drivers behind both of these phenomena. Leaving that aside, we have some much more critical matters of policy to address with the people who currently hold elected office in our House, Senate and White House.

As Power Line notes, the Washington Post is noticing a current deficit–not so much of money as of men–in our Senate:

The Senate is supposed to be in Memorial Day recess this week. But the chamber is so ungovernable that Majority Leader Harry Reid doesn’t even have the votes to declare a recess. So he decided instead to have a few “pro forma” sessions, such as Tuesday’s, allowing senators to take a vacation without voting for it.

In a sense, the Senate has been in a pro-forma session all year. Beyond a few ho-hum pieces of legislation — patent reform! FAA reauthorization! — senators could have taken a five-month holiday and the republic would be none the worse. Although there’s general agreement that the most pressing issue facing the federal government is its runaway finances, the Democrat-controlled Senate hasn’t passed a budget in 762 days, a new standard for dereliction of duty.

Dereliction of duty indeed. Strong words from a paper which can usually be relied upon to tell us that we’ve never had a more marvelous administration than the one which we are currently enjoying.

Meanwhile, in Minnesota, the Senate has passed several budget bills–only to see them get vetoed by Governor Dayton:

Sen. Roger Reinert, (DFL) Duluth, is confused as to why the only thing the legislature had to do, did not get done.

“It’s disappointing,” Reinert told Eyewitness News. “Very frustrating you know. We spent 5 months [in St. Paul]. Job number one is balance the budget. It’s the only thing the constitution required us to do and in fact the problem got a billion dollars while we were there. But no progress was made.”

The main point of contention between the GOP majority and Dayton, is state spending. Dayton wants to supplement the republicans’ spending plan with more revenue. That would happen by taxing the state’s highest income earners. Republicans are standing strong against his plan.

Minnesota already suffers from relatively high taxation. Increasing taxes on the state’s wealthiest citizens will not tend to increase revenues. Instead, they will go to neighboring states with much friendlier tax laws. California and New York have already discovered how much they lose when they increase taxes, but Governor Dayton seems to be  undeterred by such facts.

One notices an interesting parallel between these two articles. The politician being quoted in this second article is not a Republican, but he does not (at least not in this quote) call out the Republicans for being the bad guys. No, instead he makes a passive “no progress was made” statement.  By so doing, he does not directly attack the governor, but leaves things open for such an interpretation.

Back to where I started with all of this. Nothing wrong with talking about and listening to those who are even now jockeying for a shot at the top in 2012. We have, however, serious financial matters to address at the federal, state, local and even familial levels today and tomorrow and the next day.

Let’s not get sidetracked or sucked into thinking that we can let everything ride and look forward to a political savior to right the ship and bail out the bilges at some point in the future. We must act now in ways large and small or we shall ourselves be guilty of dereliction of duty.

Unbalanced South Dakota

When is a state budget not properly balanced? When the state borrows someone else’s debt to avoid creating its own:

We did not really balance the state budget. We accepted a one-time federal handout, aka stimulus funds, from President Obama to cover our deficit instead of cutting spending. Worse, the Obama budget “patch over” money is money borrowed from China, Japan or elsewhere that our children and grandchildren will end up having to pay back, with interest.

Using gifted federal money that’s clearly borrowed from others using long-term U. S. Treasury debt is hardly balancing the budget. It’s more akin to taking out a 30-year second mortgage to pay off current credit card debt.

Go and read it all. Sam Kephart lays out a very simple case for restraint. Would that the execution of restraint were as simple.

Already Did That

Sugar coated corn cerealThe Rapid City Journal is bringing attention to food stamp recipients by talking about the $25 per week challenge:

To demonstrate the difficulty [of living on foodstamps], the Community Food Banks of South Dakota challenges you to eat for a week on $25.

“It shows people what it would be like to live on a very limited budget,” said Monica Leitheiser, site manager of the Community Food Banks of South Dakota on North Maple Avenue.

The challenge is part of Hunger and Homeless Awareness Week in South Dakota.

That $25 limit is the average per person food stamp allotment for eligible households in South Dakota.

My household consists of 5 persons. That would mean that we should have $125 per week to spend on food. Our current monthly food budget (which we have had in place since January 1, 2008 and which we hold to) is $450. If one figures a month as being roughly 4.3 weeks, then on food stamps we would have to live on $537.50 per month.

I think we’ve already met the challenge.

Oh wait, we can’t have any other source for food? So those deer which we added to our larder would disqualify us? And the food from our garden would also put us outside the rules? How unfortunate.

But then, am I wrong to think that food stamps were never intended to be the sole source of food for a family for an extended period of time? That the programs were intended to be stop-gap measures to help those in difficult transitions between jobs, etc?

By the way, if any of those families getting food stamps also have children in schools with free (i.e, taxpayer provided) breakfasts and/or lunches, then they are already getting more than $25 per week in food assistance.

Essentially Wrong

Governor Mike RoundsSouth Dakota, like not a few other states (probably all of them, if we were only to know the facts) is looking at a contracting revenue stream from taxes. This means that less money will be available than anticipated for the next budget year. Governor Rounds has already stated that (according to radio news reports) it will be difficult for South Dakota to work with what he termed essentially flat sales and excise tax revenues since there is not much which can be cut from the budget.

I believe that the issue here is the meaning of essential. Governor Rounds, like most politicians, has a very hard time deciding that anything which government does directly or funds is non-essential. With a $3,500,000,000 budget for FY 2009, I simply cannot see things the way Governor Rounds does.

Let me put it like this. I also have my FY 2009 budget made up. Then, based on the possibility of a contracting revenue stream, I worked up a second budget for FY 2009. The second budget is about 57% the size of the first one. However, despite the difference, I would still be able to properly care for my family, any outstanding financial obligations which I have and even make a bit of progress with some projects on which I am currently working. To put it another way, I did not cut it down to the “bare necessities” — otherwise known as the “essentials.”

Do not get me wrong: I am certain that South Dakota’s budget is considerably more complex than my own. I also realize that between my wife and I, we have complete authority to change the budget. The South Dakota budget is more complicated and of major interest to hundreds if not thousands of government employees.

With those caveats, I still think that the hope for change regarding the state’s budget rests firmly on a number of adults going back to the definition of essential. For starters, one could do worse than to apply a constitutionality test to all current policies and programs.

Too Late to Wean the State?

Calf feeding on the teat.I was just looking at South Dakota’s budget numbers (PDF) for FY 2009 (which began July 01 2008). The bottom line is as follows (for monies appropriated by the legislature):

  • General Fund Expenditures: $1,220,090,055
  • Other (Not General Fund): $919,365,350
  • Federal Funds Expenditures: $1,430,901,50

By my figuring, that gives us a total just over $3.5 billion ($3,570,356,905 to be exact).

It would appear as though 40% of the funding comes directly from the Federal government. Not a majority interest, perhaps, but enough that were this a corporation, somebody would exercise considerable authority voting those shares. I’m thinking that, practically speaking, not a little Federal control comes with those Federal dollars.

I know that South Dakota is small state (from a population and revenue standpoint), but I wonder how it ranks against other states in terms of direct Federal funding. Of course, the numbers above only include Federal funding of the state government and not direct funding to farmers, ranchers, minority-owned business, Social Security, etc.

Has socialism already killed federalism in South Dakota?