(The Center Square) – South Dakota Gov. Kristi Noem’s fiscal year 2025 budget includes a 4% raise for educators, health care workers and state employees and a plan to spend more than $130 million in federal COVID-relief dollars.
The governor also urged legislators to make a four-year tax cut approved last year permanent in her budget address on Tuesday. The tax cut rolled back the sales tax from 4.5% to 4.2%.
The $7.5 billion spending plan includes $2.4 billion in general funds, $3.5 billion in federal funds, and $1.7 billion in other funds, according to the Bureau of Finance and Management.
Noem said the state’s revenues are exceeding projections.
‘We’re also projecting $115.6 million in available ongoing revenue for the next fiscal year,” Noem said. “We also have $208 million in one-time dollars available.”
Noem said the extra 4% given to the South Dakota schools should go to teacher raises, which the governor said has not happened in the past.
“Since I took office, and with this 4% proposal, we will have increased state funding for our K-12 schools by 26.3%,” Noem said. “But actual average teacher salaries have lagged far behind. Why should we continue to send money to school administrators and school boards when they do not pass it along to teachers? I am working with my Secretary of Education, Dr. Graves, to bring some ideas to the legislature about how to bridge this gap.”
Noem said that raises for health care workers should be given to all providers, including those in long-term care facilities, community service providers, and those who help patients with developmental disabilities.
“Some of you might support more money for long-term care, or a program that would really help your district, or even a tuition freeze at our state universities, instead of helping some providers,” Noem said. “Last year, we made those types of targeted adjustments and worked hard to make sure they were covering the needs of each specialized group. This year, an equal increase is appropriate because inflation increases are hitting all of our providers.”
The state has $130.6 million from the American Rescue Plan Act. The governor recommended allocating $10 million for revenue replacement and the rest to water projects.
Noem proposes $95.7 in reserve funds and an additional $132.4 million in one-time funding for a new men’s prison in Sioux Falls.
“The new men’s prison in Sioux Falls is needed to replace the Hill, which was built before South Dakota was even a state,” Noem said. “We will place these dollars in the Incarceration Construction Fund to prepare for construction of this new, safer facility.”
A women’s prison under construction in Rapid City has a $27 million budget shortfall. Noem recommends using federal funds for water, $4 million from the land design funding and $21 million in one-time funding to keep the state from going into debt.
Other recommendations include:
- $18.3 million to cover costs associated with Medicaid expansion
- $7 million to modernize the state’s information technology program
- $6 million in one-time funding for literacy programs
- $6 million to create the Center for Quantum Science and Technology