Budget up $22.5M from Projections: Teacher and State Employee Raises Affordable

South Dakota’s general fund revenues continue to show more fiscal health than Governor Kristi Noem’s stingy and visionless budget proposal would lead us to believe. Contractor’s excise tax, unclaimed property revenues, sales tax, and tobacco tax (what? which of you knuckleheads took up smoking for Christmas?) all exceeded Legislative projections and overcame underperforming bank franchise tax and licenses, permits, and fees to net $3.3 million more than we expected in December. Our bean counters also rolled another $5.1 million in bond refinancing gains into the one-time receipts line, bringing our year-to-date budget tally to $22.5 million above projections.

This year’s budget gave 2.5% raises to about 9,600 K-12 teachers and about 14,000 state FTEs. That $22.5 million in additional revenue from the first half of this fiscal year would allow us to write each of those 23,600 public servants a bonus check of $950. Lazily assuming an average current wage for both groups of $48,000, such bonuses would constitute a 2.0% increase in pay.

2.0% is the index factor by which the Legislature by law is supposed to raise teacher salaries in the FY2021 budget. 2.0% is the index factor that Governor Noem is ignoring in her proposed budget, which gives teachers and state employees 0% increases.

As Governor Noem said to justify her flip-flop on hemp, “things have changed.” Maybe things looked grim when the Governor’s last handlers drew up the budget for her, but the latest budget estimates show that our state has the cash to follow the law on raising teacher pay and to give comparable raises to state employees.