This interview originally aired on "In the Moment" on SDPB Radio.
Last year, the South Dakota Legislature killed a bill related to the Uniform Commercial Code. The bill was resurrected this year — but will it survive the session?
Plus, we talk about why state employee salaries are decided separately from agency budgets.
Jon Hunter is publisher emeritus of the Madison Daily Leader and was inducted into the South Dakota Newspaper Hall of Fame in 2022.
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The following transcript was auto-generated.
Lori Walsh:
Jon Hunter is publisher emeritus of the Madison Daily Leader. He's been inducted into the South Dakota Newspaper Hall of Fame in 2022. He is our Political Junkie for the day.
Welcome, Jon. Thanks for being here.
Jon Hunter:
Thanks for the invitation, Lori.
Lori Walsh:
All right, we're getting into the brass tacks of some of these complicated banking and budget and appropriations. Next week, revenue projections. So we're going to help listeners understand a few of the complicated stories that are unfolding in here.
You want to break in with the Uniform Commercial Code?
Jon Hunter:
Yes, that's a great one. Let's go back and explain what that is. Uniform Commercial Code is really a set of laws. Remember, states have the right to regulate commerce in their state, but it doesn't make any sense to have every state with different rules.
So there's a group that gets together and represenative of all 50 states plus American territories plus the District of Columbia, and they tried to say, "Look, let's be common about these things." Then they make these proposals to the states, then states adopt them. And that's how, let's say the project across the street, they can buy steel from another state and they can have contractors, architects and so forth to conduct business.
But they don't get adopted uniformly. Typically, there is a timeframe circumstance. They may be proposed one year, they may not get adopted until the next year. But eventually all states, with the exception of Louisiana, believe it or not, and American Samoa, have adopted basically everything that's in this, and it makes sense. It's a common set of rules that we can all use.
South Dakota last year in the recent proposals passed acceptance of those new rules, State House and the State Senate both passed them, sent it off to the governor, who vetoed it and they did not override it.
It passed by about 75% of each House, but the veto was not overridden. So a few changes, a few word changes, and the governor said she would support that this year. Last year's controversy was over cryptocurrency and there were some, I think in my opinion and I wrote about it this week, there were some misunderstandings and there were some politics that got involved with that and I think both of those were kind of cleaned up, and I think it'll all pass this year. It's passed one chamber, but it still has a ways to go.
Lori Walsh:
So part two, with greater clarification and time for education, do you think? Because there's not much that has changed from last year. It's just clarifying what exactly this will do explicitly.
Jon Hunter:
Very good. Yes. That's, I think, exactly what it is. There is very little different from last year to this year. Some of it is defining cryptocurrencies and what's called the central bank. I forgot, there's an acronym. But having to do with a digital currency issued by the U.S. government. And there are times when Governor Noem says anything proposed by the Biden Administration is bad, so therefore let's not do this.
I think if there was a Republican administration, it would've been adopted, those same circumstances last year. But clarification, a few minor changes, and it looks as though it will go.
Lori Walsh:
All right, so tomorrow on the show, we're going to have a conversation with the president of the South Dakota Bankers Association. Lee Strubinger talked to him.
The bankers are for this, the blockchain groups are for this, and now does it seem like the governor's for this?
Jon Hunter:
Yes, it sure does. And the bankers were for it last year too.
Lori Walsh:
And most lawmakers were, just the governor did the veto.
Okay. So let's move on to some other things that you're following right now with the budget and state departments.
Jon Hunter:
Yeah, there's an interesting process. This has evolved over my career in journalism and following state budgets. Remembering the process of appropriations in South Dakota goes to a joint committee, and agencies make their requests.
Some time ago there was a focus on taking out a portion of that and it was employee salaries, because they were saying, "Look, state employees, we want to make sure that they get raises this particular year." So then they said, "Let's talk about that as a group and we'll discuss that. And then the rest of the budgets we'll take care of separately."
Later, state education got in there and also community health providers got grouped in there and eventually now what's called the big three, and it's very common term. It is relatively new in state budgeting history. And not only those are big three and yes, they are a very big portion of the budget, but they now typically in the Governor's budget address get the same rates. So it's a 4% rate and it would apply to state-aid education, state employee salaries and community health providers.
But what does that do? And remember, the state appropriation still has to budget for all this stuff and appropriate. So if an agency said, "Look, our employees are going to get a 4% raise this year," but appropriation said, "Yes, but your whole department, including salaries and everything else, only gets a 2%," what does that mean? It means everything except for employee salaries is going to get squeezed.
Let's take education for a second, Lori. It's probably the easiest to understand.
Roughly 80% of school budgets go to salaries. And so if teacher salaries go up a certain amount, but the whole budget does not go up by the same amount, then all the non-employee salaries, buses, buildings, books, that was intentional, the three Bs, cafeteria, all the other kinds of things that go with that, would have to be cut down or you'd have to reduce your headcount. That would happen in state agencies as well. Department of Ag and Natural Resources, Department of Education, Department of Health and Human Services and so on. So there is a kind of this two-parted pressure. One, you get the state employee salary on one side and then kind of everything else from the other.
Lori Walsh:
All right, so are you seeing some of these conversations year-by-year? Are there changes in the year? Because I remember hearing something about should we separate the big three? Should we separate state employees? And by the way, South Dakota Public Broadcasting employees are state employees, so we are talking about legislation that would impact us.
But separating them, state employees broadly, from teacher salaries, from the community care providers, is there any traction for that or do they pretty much all move forward at the same pace for a reason?
Jon Hunter:
Oh, boy. I would say they move together out of convenience, most of all, and maybe political reasons because it's palatable. They say, "Look, we're treating everyone the same. We're treating everyone fairly. 4% to everyone." It's probably politically pretty easy to deliver that message.
There are three different animals. State employees and they're all across the state, tens of thousands of, I don't know, 12,000 employees or whatever there are. State education is not teachers, as we've discovered, and there is certainly pressure, if we're giving 4% to the education system, but only 2% raises to teachers or something like that. And community health providers, nursing homes, mental health, that sort of stuff is completely different.
I've always favored separating them.
Lori Walsh:
We're seeing that trend nationwide where you hear Senator John Thune say some of these big omnibus bills that are going through Congress, "I'm in the favor of separating them." Not a lot of traction nationwide, in Congress to actually do that though, partially because of the amount of time that it would take?
Jon Hunter:
Well, yes, in South Dakota, part-time volunteer, not a volunteer, but a —
Lori Walsh:
Citizen legislature.
Jon Hunter:
Citizen. Thank you. Thank you. Citizen legislature doesn't have much time. Going back to the UCC bill, the second one, 1163, or whatever that was, was hundreds of pages. Do citizen legislators have time to read hundreds of pages to vote on something? But yes, I've always favored breaking those up. And as much as you can, have every agency or every budget stand on its own merits and earn that.
But you're right, I think in the limited time, and I think political posturing, I think posturing maybe is too strong a word, political presentation, they like to group those together.
Lori Walsh:
And they're together also because of some of the challenges of retention that you're seeing in all of those areas as well.
Jon Hunter:
Right, that's true.
Lori Walsh:
Again. Welcome to South Dakota right now, right? Workforce being a grand challenge. Any other thoughts that you have going into pass the crossover day as we look at the midway point here?
Jon Hunter:
Well, you just briefly mentioned, I hadn't thought about this before, but when you get the new revenue projections, that's always, to me, it's a mark. They've been basing most of their assumptions so far on forecasts that were done late in 2023 and now. But remember, we're trying to budget for July of '24 to June of '25, and so when these forecast things come in next week, that could change a lot. It's like, "Oh, sales tax."
Now we project them, it'd be lower or going to be higher than what we thought, and that could affect all sorts of things. It's always fun when they come in higher and then we say, "Look, we can fulfill more people's requests and so forth." If it comes in lower, the belt gets tightened.
Lori Walsh:
Right. Which Governor Noem warned during her state of her budget address in 2023 for this coming session. Don't get too comfortable with having a lot of funds because the COVID pandemic influx of dollars is over. They're still trying to figure out where some of that money is going to go. But now we're back to regular time. But regular time can be filled with growth and great sales, great revenue as well, in South Dakota, especially.
Jon Hunter:
South Dakota does budget conservatively. I mean, typically our budget comes in under or close to where we budgeted it. So I think people don't spend money they don't have typically in the legislature.
Lori Walsh:
Jon Hunter, publisher emeritus with the Madison Daily Leader, South Dakota Newspaper Hall of Fame Inductee, and one of our Dakota Political Junkies. Thanks so much.
Jon Hunter:
Thanks, Lori.
