This story has been updated throughout Thursday as lawmakers finished their work on state government’s budgets. More details were added Friday morning.

PIERRE, S.D. (KELO) — The South Dakota House agreed Thursday to place more restrictions on how the governor can spend federal coronavirus-relief money.

The deal between the House and the Senate on HB 1281 was essential to passing state government budgets for the three-plus months remaining in the current fiscal year and for the new year starting July 1, according to Representative Chris Karr, R-Sioux Falls. He chairs the House Committee on Appropriations.

Thursday marked the final day of the main run of the 2022 legislative session. Lawmakers return to the Capitol on Monday, March 28, to handle any vetoes the governor might issue.

One of those vetoes might be on HB 1281. Governor Kristi Noem issued a video criticizing the deal as it was coming together Thursday morning and attempted to stop it through her administration’s lobbyists and others in the Capitol.

Senator Jean Hunhoff, R-Yankton, and House Speaker Spencer Gosch, R-Glenham, nonetheless signed the conference report after the committee voted 6-0 for it. Hunhoff chairs the Senate Committee on Appropriations.

House members then voted 58-11 to accept the report about two hours later.

The restrictions would apply to the Governor’s Office of Economic Development and the state departments of Transportation; Public Safety; Agriculture and Natural Resources; Social Services; Health; Education; and Tourism.

“This is going to provide more transparency,” Representative Taffy Howard, R-Rapid City, said. She is vice chair for the House committee. “It was a hard-fought agreement between the two chambers, because there were legitimate concerns about all these federal funds coming into the state and how do we properly exercise our duties to provide that authority to the agencies before they spend those funds. So there was legitimate disagreement, but we came together, we worked out those disagreements.”

Representative Tim Goodwin, R-Rapid City, spoke against it. He read the list of departments that would be affected. “That’s about everything. I think we can trust these agencies that have this money. They’ve been doing it since statehood, and I think this is a bad mistake,” Goodwin said.

Karr answered that the eight departments came from the list brought by the executive branch, along with the additional amounts of federal COVID-related aid expected they’ll receive.

“We put these dollars in the budget yesterday. Those departments were not chose by the Joint Committee on Appropriations. We were trying to be agreeable and work with the executive branch to provide them the authority they requested,” Karr said.

Noem argued in her video that the changes would force “thousands and thousands” of federal grants to go through the appropriations committee and create “basically a full time Legislature.” She said it would give the 18 appropriators “authority to speak for the entire Legislature, which would be unprecedented.”

“I think it’s incredibly concerning if you have any kind of business entity or nonprofit that sometimes deals with federal money, you should look at this bill,” Noem said.

The Joint Committee on Appropriations spent the afternoon putting together a new version of the 2023 budget for state government. The panel endorsed HB 1340 at about 4 p.m. on a 15-2 vote.

Senator Lee Schoenbeck, R-Watertown, discovered some drafting errors in HB 1281 that were too severe to be fixed by the Legislature’s code counsel. So the Senate at about 4:35 p.m. decided against agreeing with the report and a new conference committee was appointed. Schoenbeck headed to the House chamber to inform the leadership there.

The final version of HB 1281 received Senate approval 32-2 and House approval 52-16 at about 5:30 p.m. That opened the way for the two chambers to begin debating the new budget bill for state government that starts July 1 and a supplemental budget bill for the current year ending June 30.

Senator David Johnson, R-Rapid City, opposed adopting 1281. He told the folk tale about the scorpion riding the back of the frog across the river; half-way across the scorpion stung the frog, dooming both. He warned, “We have invited a scorpion onto our back with 1281.” There was a cliff at the end of the path that the Legislature was getting on and the Senate would be pushed over it, he said: “It’s inevitable. It’s going to happen.”

But Schoenbeck downplayed the threat, calling 1281 “a one-year look” to see if the Legislature should be more involved. “It does no damage to the republic,” he said. The senators should vote for it, he said, “Because it really is the only realistic opportunity on the table.”

The opposition senators were John Wiik, R-Big Stone City, and Johnson. On the final House vote passing it 52-16, opposition representatives were David Anderson, R-Hudson; Hugh Bartels, R-Watertown; Rocky Blare, R-Ideal; Roger Chase, R-Huron; Mike Derby, R-Rapid City; Becky Drury, R-Rapid City; Goodwin; Chris Johnson, R-Rapid City; Lance Koth, R-Mitchell; Paul Miskimins, R-Mitchell; Taylor Rehfeldt, R-Sioux Falls; Rebecca Reimer, R-Chamberlain; Lynn Schneider, R-Huron; Larry Tidemann, R-Brookings; Mike Weisgram, R-Fort Pierre; and Mark Willadsen, R-Sioux Falls.

The House voted 59-10 for the total budget for the coming year in HB1340 at 6:08 p.m. “Isn’t it really about the people of South Dakota?” said Representative Linda Duba, D-Sioux Falls, who’s an appropriator.

Representative Taffy Howard, R-Rapid City, spoke against it. “If you know me, I’m somewhat of a pessimist,” Howard said. She said the Legislature “drifted to the left” in the six years she’s served and said many House members questioned the constitutionality of what the Senate has been trying to do. She questioned how the Legislature can claim to be conservative when government keeps expanding.

Some House members who would later vote for the new budget walked off the floor into the House lobby during Howard’s speech, such as Chase, Koth, Tidemann and Willadsen. The House speaker, Spencer Gosch, R-Glenham, reminded Howard several times to keep her remarks about the bill.

“We do the very best we can,” said Representative Liz May, R-Kyle, an appropriator. “Is it perfect? No. We did an honest job.”

It calls for a total budget for state government of $5,775,661,650 and 13,996.9 FTEs starting July 1, 2022. That includes $1,982,654,247 of state general funds; $2,266,142,632 of federal funds; and $1,526,864,771 of other funds, such as motor-fuel taxes.

Those voting against it were representatives Aaron Aylward R-Harrisburg; Drew Dennert, R-Aberdeen; Steve Haugaard, R-Sioux Falls; Howard; Phil Jensen, R-Rapid City; Tina Mulally, R-Rapid City; Tom Pischke, R-Dell Rapids; Tony Randolph, R-Rapid City; Bethany Soye, R-Sioux Falls; and Kaleb Weis, R-Aberdeen.

The Senate started considering HB 1340 a few minutes later, led by its appropriations chair, Senator Jean Hunhoff, R-Yankton. She said state government’s revenues are strong enough to provide 6% increases for K-12 schools, Medicaid providers and state employees.

Hunhoff highlighted many of the other expansions, such as more money to home studies for adoptions and better pay for honor guards at veterans’ funerals. Senator Jack Kolbeck, R-Sioux Falls, said he had “the honor” of being in the same room as Hunhoff and the other appropriators. Senator Reynold Nesiba, D-Sioux Falls, called for a round of applause for Hunhoff.

“That won’t get you more kolaches,” Hunhoff smarted back. Senators voted for it 31-1. The only opponent was Senator Julie Frye-Mueller, R-Rapid City.

SB 60, the supplemental budget for remainder of current year through June 30, reduces use of state funds by $46,490,504; increases use of federal funds by $915,738,808; and increases use of other funds by $20,311,920.

The $46 million net reduction in state funds reflects reductions of $118,607,504 and increases of $61,978,852. Much of the $118.6 million reduction comes from a $63 million shift of Medicaid responsibility to the federal government.

There’s also a $247,927,469 increase to the state Dept. of Education in federal ESSER II (Elementary and Secondary School Emergency Relief) funding.

The Senate approved it 32-1, with Julie Frye-Mueller, R-Rapid City, as the only opponent. The House gave its endorsement 60-9. Opponents there were representatives Aylward, Dennert, Haugaard, Howard, Phil Jensen, Mulally, Randolph, Soye and Weis.