Alcester Union & Hudsonite Online

PIERRE - Energy, education, public safety and property taxes were hot topics in Gov. Mike Rounds' sixth State of the State Address to the legislature on Jan. 8. Rounds' speech marks the beginning of the 2008 Legislative Session.

Rounds said it many different ways, but his message was clear: "We must live within our means."

Rounds told legislators that if they want to increase spending, they will need to identify a way to pay for their proposals without inflating revenue projections for the year.

To balance the current budget, Rounds said $28.2 million is being taken out of state budget reserves. For next year, he is only asking that $4.6 million come out of the reserves.

Rounds said, "I'm optimistic about what we're doing in terms of energy." He said that if a South Dakota site is chosen to house a refinery for the TransCanada pipeline, it will bring 590,000 barrels of Canadian crude oil to American oil refineries.

Rounds said that Hyperion Resources, the corporation behind the proposed refinery, plans to build one of the most technologically advanced refineries in the world, and a location near Elk Point is being considered.

Rounds said he thinks a refinery in the state would help stabilize gas prices in the region.

He also said the industries of wind energy and ethanol should see gains this year. South Dakota currently ranks first in the number of farmer-owned ethanol plants and fourth in the amount of ethanol produced.

This year, Rounds is asking for a 2-cent per gallon incentive for use of biodiesel.

School reserve funds are still growing, Rounds said. He said that since he took office, the state has given schools an additional $43 million, and school savings accounts have grown by $46 million.

Next year's budget includes a 2.5 percent increase in education funding, but some legislators say that simply isn't enough.

Senate Minority Leader Scott Heidepriem, D-Sioux Falls, said, “Property tax payers are doing their job. They rate near the middle of the nation while the state's share is dead last, and that is wrong.”

Heidepriem said, “We demand our school districts to perform at the top of the nation while the state performs at the bottom in terms of support.”

Rounds said areas of public safety and transportation could see a funding shortage. He said there will still be the same number of highway patrolmen on South Dakota roads, but they will need to hold off on some purchases and perform more stationary patrol. Construction projects will also be pushed back until the state has sufficient funding.

Proposals are already in the works to change the way property is assessed in the state. Rounds and many legislators are in agreement that a new system is needed.

The legislature conducted a summer study on the property tax system in the state, and there will be a number of suggestions on how to improve it. Sen. Jim Lintz, R-Hermosa, participated in the summer study, and he thinks the state should tax property based on production.

Lintz, a rancher, said, "If we don't go to production, eventually a large number of farmers and ranchers will be taxed off their places. That's what we're trying to prevent."

The state's economy is in good shape. Rounds said, "During the last five years, the total number of jobs in South Dakota increased by over 27,000. Our unemployment rate is also the second lowest in the nation at 2.8 percent."

Rounds told legislators that it was a good harvest, but increased revenue does not give them a “green light” to spend more money. That decision will be left to the next legislature.

District 16 representatives also commented on the Governor’s speech.

"I think the Governor is just doing what he needs to do. He runs the state the way one might run a family business. Sometimes when funding is short, you need to make cuts, but we are still providing citizens with all necessary services," Sen. Kenneth Albers said.

"I will be closely following the property tax debate. I'm very concerned about the effects it could have on agriculture," said Rep. Margaret Gillespie. "We'll be working hard on education this year. I don't buy into the argument that schools have put each dollar the governor has given them into reserves."

Rep. Joel Dykstra said, "I think the Governor's overall tone is responsible and optimistic. He recognizes that there are a lot of things we need to do. I think we're going to be challenged in the next couple months to look at our priorities over the entire budget and determine how much time and how much of our budget we spend on the various issues."

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