State Budget: Governor Kristi Noem Is Snubbed by the Legislature, Which Limits Her Power to Spend Federal Stimulus Funds

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PORT PIERRE — A agreement reached this week to give lawmakers more say over how federal funds are used in South Dakota brought unity to a state Legislature that had been severely split only 48 hours before.

After hours of deliberation — both behind the scenes and during a series of extremely acrimonious committee sessions — South Dakota’s 97th Legislative Session came to a close Thursday, with the House and Senate reaching an agreement on almost $7 billion in budget measures.

And as a result, state employees, teachers, and community assistance providers will see a 6% pay raise, as well as millions of dollars in one-time construction projects and big water and housing development programs.

“I don’t know if there’s anything more significant to me than the fact that we were able to work together for several weeks,” said Rep. Chris Karr, a Sioux Falls Republican who co-chairs the legislature’s influential budget-setting committee. “We started before the session and finished together.”

A series of budget bills awaiting Gov. Kristi Noem’s signature, however, is not popular at the Capitol.

Karr and other politicians were divided on the budget as recently as last week, with talks between appropriators from each Legislative chamber breaking down for a while. The issue of federal spending authority was at the heart of the dispute, which surfaced earlier this year when the Noem administration began disbursing federal stimulus funds to South Dakota daycare providers.

Stimulus check & Governor Kristi Noem & Federal Stimulus Funds (1)
State Budget: Governor Kristi Noem Is Snubbed by the Legislature, Which Limits Her Power to Spend Federal Stimulus Funds

House appropriators, led by Karr, argued that the executive branch lacked the power to spend $100 million in American Rescue Plan Act money allocated for childcare help without explicit approval from this year’s Legislature.

The Senate agreed with Noem, stating that even though the funds had been received since the current year’s budget was created, additional authorization was not required because the funds were being utilized for an assistance program that the Department of Social Services had already established.

With each side digging in and hundreds of millions of dollars in new federal stimulus money still pouring in following the passage of the Bipartisan Infrastructure Law, the impasse lingered until the closing days of the session, threatening to prevent the House and Senate from agreeing on a new budget.

Many of the governor’s spending objectives had been met with resistance in the House, but appropriators were willing to relinquish a lot of them provided the spending power issue could be overcome.

House Bill 1281 is the bill in question.

The bill, which passed with huge majorities in both chambers, will require state agencies to get formal authorization from the Legislature before spending federal monies on new programming or initiatives that do not yet exist. It would only apply to funds received in the following fiscal year.

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Noem and her administration, on the other hand, argued vehemently this week that HB1281 would require all federal funds to receive new authorization from the legislature before being spent, effectively creating a full-time Legislature and requiring a complete overhaul of the state’s financial accounting system.

Stimulus check & Governor Kristi Noem & Federal Stimulus Funds (2)
State Budget: Governor Kristi Noem Is Snubbed by the Legislature, Which Limits Her Power to Spend Federal Stimulus Funds

And with some state agencies receiving federal cash regularly, even when no stimulus packages are being passed in Washington, D.C., the state’s ability to disperse monies may be hampered.

“It’s not good, and we need to make sure this Appropriations Committee doesn’t wreck state government,” Noem wrote on social media before the Legislature passed both HB1281 and the budget legislation.

Also Read:- State Budget: Governor Kristi Noem Is Snubbed by the Legislature, Which Limits Her Power to Spend Federal Stimulus Funds

Noem has seen her influence on the budget process with legislators dwindle in recent days, as numerous members declared indifference to her demands in unison on Wednesday and Thursday.

“We’d have some pretty substantial conversations, and I’m not sure we’d get out of here very early today,” Karr added, referring to the possibility that HB1281 might not pass. “It’s what drew us all together,” says the narrator.

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While the governor has the option of vetoing HB1281 or any of the three budget bills — the general bill, the supplemental appropriations bill to revise this year’s budget, and a mil levy-setting bill — all four bills received bipartisan support from more than two-thirds of Senate and House members.

A request for a response from the governor’s office was not immediately returned Thursday evening.

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