Extra Federal Aid Could Solve SD Budget Problem

The South Dakota Legislature's plans to cut state spending next year were thrown into question Thursday when lawmakers learned the state might get an extra $36 million in federal aid.

The Legislature had planned to pass a state budget before the main run of this year's session ends Friday. But the Joint Appropriations Committee might delay completion of the spending plan until March 29, when lawmakers are due to return to Pierre to consider any vetoes by Gov. Mike Rounds.

Legislative leaders said they want to find out whether Congress gives final approval by the end of March to a measure that would provide states with extra federal money for Medicaid, the state-federal program that pays the medical expenses of poor people.

"I don't see how you can ignore seeing what transpires," Senate Republican Leader Dave Knudson said.

The delay in finishing work on the state budget will give South Dakota officials time to find out if the expected extra federal aid can be used to patch holes in the state budget, said Senate Appropriations Chair Jean Hunhoff, R-Yankton.

Hunhoff said the Joint Appropriations Committee might start work to amend the budget measure on Friday, but would postpone a final vote until March 29 to find out if the extra federal money is available.

Jason Dilges, the governor's budget director, said federal rules indicate South Dakota could not get the extra federal Medicaid money if it has already balanced its budget by cutting spending. If the budget has been written to depend on using reserves, however, the federal money would be available to balance the budget and replace those reserve funds, he said.

Rounds in December proposed using $32 million in reserves to balance the state budget for the year beginning July 1. Nearly all spending increases recommended by the Republican governor are for Medicaid, which has provided medical services to more people as unemployment has grown in the past year.