Gov. Kristi Noem is proposing a four percent increase for education, state employees and community health providers. That comes as she’s warning lawmakers to stick with a conservative budget.
The governor laid out her spending priorities to legislators Tuesday in her fiscal year 2025 budget address.
Last session, lawmakers brought Noem a budget tens of millions more than what she originally proposed. While she signed that budget, this year, the Republican governor said it’ll be different.
“I am not proposing conservative spending because our economy is weak. I am proposing conservative spending because we are strong – and I want South Dakotans to continue to thrive for generations to come,” Noem said.
Noem wants to give four percent to what’s known as the "Big Three"—education, state employees and nursing home providers.
"We have to take care of our people first. We must address our responsibilities first before we consider special interest projects,” Noem said. “By investing 4% in our schools, we will give our school districts the money to pay teachers more.”
She wants schools to invest that money in salaries, which she said lags behind what the state has given over the last three years.
The governor's office is projecting the state can expect $115 million in additional ongoing revenue for next fiscal year. She also says the state has $208 million in one-time dollars to spend.
Despite additional revenue, the Republican governor is warning lawmakers to budget conservatively.
“Spending within our means, returning money to the taxpayers, and focusing on our priorities. I hope that you will agree with me on that approach,” Noem said Tuesday. “Remember, every interest group has a lobbyist in this Capitol building who wants a piece of this budget during legislative session. It is our job to be advocates for the South Dakota taxpayers.”
Tuesday's budget address was the first window into revenue collections since lawmakers cut the overall state sales tax rate earlier this year. That went into effect in July and will last for three years.
At the time, officials estimated that would reduce revenues by $104 million. Noem says revenue collections are $2.5 million ahead of legislative estimates.
Last session, lawmakers temporarily cut the state sales tax by point-three percent—leading to a projected $104 million dollar reduction in revenues.
Noem says state sales tax dollars are running $2.5 million above legislative estimates.
The governor said the tax holiday is helping to ease inflation.
“It is still meaningful tax relief for the people, and I am hopeful that you will consider making it permanent,” Noem said.
That tax cut is something she opposed during session, instead favoring removing the state sales tax on food.
Noem wants to direct the remaining $120 million in federal pandemic aid to water projects in the state. She also wants to appropriate another $255 million to prisons in Sioux Falls and Rapid City.
Lawmakers will consider this budget and other proposals starting next month when they gavel in for annual legislative session.
