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Finding budget solutions through our shared values
Legislative Budget Basics
Mission: To promote responsible and equitable fiscal policies
through research and education
Joy Smolnisky, Director 808 N. West Ave., Sioux Falls, SD 605-367-9667 [email protected]://sdbpp.org
Funded through a grant from theNorthwest Area Foundation
Becoming fluent in budget basics
You might say government budgets are the ultimate policy documents…
• the components of the state budget,
• how it is created, and
• the priorities and choices it reflects.
download from sdbpp.org
…. a guide to understanding
In a balanced budget:
expenses = revenues
• increase revenue
• decrease expenditures
• combination of both
Balancing the Budget
A budget is born
Page 6, SD Budget Primer
Final budget
Challenges in our process
Part time citizen Legislature
Short legislative session
Final budget amendments are often not introduced until the
last days of session
Information to support decision-making
1. Governor’s budget and budget address http://bfm.sd.gov/budget/rec12/index.htm
2. Fiscal notes on legislation
3. Revenue estimates for upcoming year
4. LRC briefings on agency budget requests and other documentation available at legis.state.sd.us
LRC Website: legis.state.sd.us
Office of Fiscal Analysis
Appropriations Notebook
Revenue Estimates
Revenue estimatesmethodology
Amendments to general appropriations bill
Appropriations Notebook agency information
Fiscal tools used by other states
that could help inform South Dakota budget decisions
• Current services budget
• Revenue review
• Tax incidence analysis
• Tax expenditure report
Current services budget
Tax incidence analysis
Tax expenditure report
SD sales tax exemptions alone lower total state revenue by $500 million.
$500 million.
Getting Involved
• Inform yourself and your community
• Influence your legislators
• Make a difference
Where do the $ come from?
South Dakota - a low tax state not a low income state
South Dakota Per Capita Income
Dependency on consumption taxes is growing
60%
62%
64%
66%
68%
70%
72%
74%
76%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
% revenue from sales, use & contractor's excise taxes
The fundamental purpose of taxation is to raise the money needed to fund public services
Where does the money go?
SPENDING: 1. General funds2. Federal funds3. Other funds
General fund expenditures
South Dakota spends less per-capita than other regional states
Two expenditure examples:
• K-12 Education
• Medicaid
K-12 Education Funding Concepts to understand:
1.School Funding Formula
2.Per Student Allocation (PSA)
School Funding Formulapage 19 of Budget Primer
SD State Aid to K-12 Education
Think of SD as one big school district…
Total Students X PSA = $ for education
53% comes from state general fund (includes video lottery $)
47% comes from local property tax
(set mil levy by dividing statewide property wealth by 47% of dollars needed)
How big is your districts Funding Formula Cup?(# students times PSA)
small
largemedium
How much local property wealth do you have?
(assessed value times mil levy)
Property-wealth rich district
Property-wealth poor district
Property-wealth average district
How much will the state provide?(enough to fill your “cup”)
Property-wealth rich district
Property-wealth poor district
Property-wealth average district
K-12 % of state general fund dropped by 25%
K-12 general fund spending as % of total personal income
dropped by 25%
SDMedicaid
enrollment changes
The vast majority of South Dakotans on Medicaid are low income children
Average cost per Medicaid enrollee varies significantly between children, adults, elderly and disabled
SD share of Medicaid costs
Graphic by SD Budget & Policy Project
Impact of initiated measure raising sales tax
• Distribution of cost across population
• Utilization of new funds – the details matter!
(50% Medicaid/50% k-12 education)
• Change in k-12 funding formula
• increase revenue
• decrease expenditures
• combination of both
Balancing the Budget
18 sessions in 16 communitiesTotal Attendance 464 (average of 27 per meeting) Legislators attending 53 of 105
“South Dakotans Talking” sessions