Federal money is big help to South Dakota’s budget

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — South Dakota helps itself when it comes to financing state operations but it couldn’t do it without the federal government’s help.

Since fiscal year 2019, the state has received at least $1.6 billion in federal aid each year that helps fund schools, parks and other operations in the state, according to state Bureau and Finance Management budgets. The BFM describes the federal aid as direct expenditures from state government.

And more than $1 billion in COVID-19 relief money contributed to a huge $85.9 million budget surplus for fiscal year 2021.

Every state receives federal money. South Dakota ranks about the middle of the pack when it comes to what it receives per individual.

The state received $1,409 in federal money per individual in 2021, according to World Population Review.

States do provide tax money to the federal government but South Dakota receives $1.21 for every dollar it pays, according to the Rockefeller Institute of Government. MoneyGeek said the return is $1.65 for every dollar it provides the federal government. MoneyGeek said about 19% of the state’s revenue is made up of federal money.

WalletHub ranks South Dakota 21st in terms of dependency on federal government money.

Gov. Kristi Noem in a budget address on Tuesday, Dec. 7 said more federal money was coming from Washington, D.C.

Noem described it as a “giant handout from Washington, D.C..” But the taxpayer money is attached to future taxpayers such as the state’s children and grandchildren, Noem said.

The money is part of an overall amount the state will receive in President Joe Biden’s  $1.9 trillion American Rescue Plan (ARPA) Act. which he signed in March. The state will also receive additional federal money from the $1 trillion infrastructure bill proposed by Biden and passed in D.C.

South Dakota will receive at least $2.6 billion over the next five years in infrastructure money, according to White House news.

Noem said she had first thought of refusing the federal money but realized the money would go to other states such as Michigan, Minnesota, California or New Jersey. South Dakota taxpayers would still be attached to that federal money but wouldn’t get any benefit if it refused the money, Noem said.

Those are all states that voted for President Joe Biden but Noem didn’t say that. South Dakota will receive more based on the percentage of annual budget expenses when compared to the states named by Noem, according to the Pew Trust.

The amount the state will receive in ARPA money is about 20% of last year’s expenses, according to the Pew Trust. That’s triple Minnesota’s percentage of expenses amount. California’s percentage is 8%, New Jersey’s is 9.2% and Michigan’s is 10.9%.

South Dakota will receive $3,210 per person in federal infrastructure money which is more than per capita in Minnesota which will receive $1,210 per person or California which will get $1,127 per person, according to U.S. News.

The federal infrastructure money is earmarked for areas such as $1.9 billion for highways, roads and bridges. Another example is $124 million for public transportation options.

The ARPA money is also for specific areas such as water projects in cities and towns and services to contain and mitigate the spread of COVID-19.

Noem said, “The money that has already been spent in Washington, D.C. was sent to the state with strings attached.” The state would do its best to meet conditions and spend the money on one-time expenses and not grow state government, Noem said.

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