HB 1281 Veto Reasons Mostly Bunk: Override to Watch Noem’s Spending!

The most contentious veto legislators will consider today is Governor Kristi Noem’s rejection of House Bill 1281, a restriction on the Governor’s authority to spend federal coronavirus relief dollars from the 2021 budget act, American Rescue Plan funding, and Infrastructure Investments and Jobs Act dollars. The Governor thought she’d won this fight over her unchecked fiscal authority in February, but stubborn House Republicans made HB 1281 a keystone of the final budget deal. HB 1281 is the only one of the three bills the Governor vetoed Friday that passed both chambers by veto-proof margins (52–16 in the House, 32–2 in the Senate), but a few days before the veto, seven Republican legislators led by Senator John Wiik (R-4/Big Stone City) said they would back out of the budget deal and support a veto of HB 1281.

HB 1281 simply requires that expenditures of the designated federal funds receive approval from the Joint Committee on Appropriations, which consists of sixteen Republicans and two Democrats. The Governor would thus need to convince only ten fellow Republicans to rubber stamp her proposed spending. And the Governor only needs that JCA approval for expenditures that constitute new programs or changes in policy, the kinds of things that the Legislature should probably be approving anyway. What is the Governor worried about?

Like most of Noem’s efforts to say anything more substantive than, “Welcome to the rodeo!” her explanation of her veto of HB 1281 is mostly fluff and nonsense. Her entire first page of her three-page veto statement consists of bragging about South Dakota’s triple-A credit rating, balanced budget, and “close working relationship” between the Executive and Legislative branches on financial issues. She then claims that increased oversight by the Legislature “marks a stark departure from that process.”

On page 2, the Governor finally gets to ticking off the specifics that tick her off.

1. According to the Governor, HB 1281 “lacks clarity on which agencies are impacts, when they are impacted, and the amount of budget impact.” But HB 1281 clearly states that it applies to the Departments of Transportation. Public Safety, Agriculture and Natural Resources, Social Services, Health, Education, and Tourism and the Governor’s Office of Economic Development. It would apply any time in Fiscal Year 2023 that any agency in any of those departments proposes to spend any amount from three specific federal funding laws that creates a new program or changes policy in a way not approved by the Legislature.
2. The veto message claims that HB 1281 “increases bureaucracy with unnecessary accounting and budget transfers.” Yes, budgeters in each of the eight specified departments would have to make another column in their spreadsheets. But one Governor’s “unnecessary” is one Legislature’s “necessary”. I would suggest that Legislative oversight of expenditure of federal relief money is more necessary than some of the things the Governor has spent federal relief money on, like tourism ads.
3. The veto message makes the incomprehensible claim that HB 1281 “reduces transparency by forcing budget transfers that do not accurately reflect the true base budget.” Um, how is it less transparent to have an additional column on the budget report that distinguishes extraordinary one-time federal funding sources from more regular federal support? HB 1281 seems to make it easier to see our “true base budget”, the amount of money we normally expect from Uncle Sam, and the great goblets of gravy we’re getting from President Biden’s spectacular emergency investments.
4. The veto message claims that HB 1281 “fails to recognize that because highway construction is continuously appropriated and not part of the base budget, construction projects could instead be considered a ‘new program’ under this bill that requires approval by the Joint Committee on Appropriations.” First, this concern seems overblown: what is so hard about sending a list of road projects to Joint Appropriations and getting their approval? Second, repaving existing roads and building new roads are not new programs or policies. The Department of Transportation’s mission to do exactly those things; their regular road-building and repair will not trigger HB 1281. If the Governor directs the Department of Transportation to use Biden infrastructure dollars to build a spaceport, that would be a new (and awesome!) program that would warrant some HB 1281 oversight.
5. The veto message complains that HB 1281 “duplicates hearings adding additional Joint Appropriations Committee hearings where statutory directives already require existing public boards to hold such hearings.” This argument evades the main point of Legislative oversight of Executive expenditures. It’s like saying that, since Game Fish and Parks has its own public hearing process, it shouldn’t have to seek Legislative approval to spend state dollars to build a shooting range near Rapid City. That’s bunk: there are all sorts of instances where Executive Branch agencies must hold public hearings then submit the projects that survive that regulatory process to the Legislature for budget approval.

Governor Noem does offer a reasonable complaint that HB 1281 received no public hearing; it was the product of a conference committee that hoghoused a completely different bill and thus faced no committee scrutiny or public testimony before it was approved by both chambers on the final day of Session. But in vetoing HB 1281, Governor Noem is trying to avoid public hearings on her own spending choices. Noem held no public hearings on her spending of federal relief dollars on tourism or daycares. Besides, she vetoed House Bill 1223 without ever participating in the committee process or even communicating with the sponsor about her concerns, so her profession of respect for the public hearing process here rings hollow.

Governor Noem throws some technical spaghetti at the wall on page 3 of her veto message. None of it sticks:

1. The veto message claims that HB 1281 lets Joint Appropriations “undo the majority of the Legislature’s vote on the Fiscal Year 2023 budget bill.” No—the majority of the Legislature voted for the FY 2023 budget on the specific condition that HB 1281 also pass. The two are part and parcel. Joint Appropriations’ exercise of its HB 1281 authority would express the Legislature’s will.
2. The veto message claims that HB 1281 exceeds the scope and authority of JCA granted by Joint Rule 7-12. Horsehockey: Joint Rule 7-12 authorizes JCA to act on bills appropriating money, and even if that’s not enough, an enacted law takes precedence over a Joint Rule.
3. The veto message says HB 1281 conflicts with statutes requiring federal funds “be held in trust for airport sponsors and administered in accordance with the terms of federal mandates.” But the statutes the Governor cites here, SDCL 50-4-4 through 50-4-6, do not conflict with HB 1281. If the Department of Transportation is spending money on existing programs and not changing policy, HB 1281 doesn’t apply. If Transportation is spending money from any of the three designated laws on a new program or a policy change, then they just have to add JCA approval to the boxes they have to check before disbursing. And if on the off chance the federal government imposes some additional requirement on spending that money that somehow conflicts with HB 1281’s oversight requirement, then JCA will just have to acknowledge that federal law overrides state law and approve the expenditure.

Not one of Governor Noem’s policy objections to House Bill 1281 holds water. She just doesn’t want to have to answer to the Legislature; she wants to be able to use federal coronavirus, stimulus, and infrastructure dollars as her own slush fund. Legislators, stand your ground, and keep your word to each other on the budget deal. Override the veto of House Bill 1281.