Republican lawmakers plan: $135 million for education, property-tax relief and Medicaid

By Bill Harlan, Journal Staff Writer | Friday, January 12, 2007

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PIERRE--Republican state legislators announced Friday morning their plan to spend $135 million of increased tobacco-tax money over the next five years on education, Medicaid and property-tax relief.

“This agenda goes a long way to address critical issues in our state,” House Republican Leader Larry Rhoden of Union Center said in a press conference on the steps in the Capitol Rotunda.

Republicans also set as goals campaign finance reform and a balanced budget for fiscal 2008, without using any of the state’s reserve funds.

Gov. Mike Rounds had proposed using $6.4 million in state reserves to help replace $17 million in Medicaid lost because state per capita income has increased.

Rounds endorsed the GOP proposal. “This is a great plan for our taxpayers and our children,” he said in a written statement.

Democratic leaders offered guarded praise, saying they favored more money for education. “I applaud them for that,” House Democratic Leader Dale Hargens of Miller said.

Voters approved an additional $1 a pack cigarette tax in November, which will earn about $40 million a year. Part of that money will go to programs to prevent tobacco use.

Under the Republican plan, $45 million of the rest -- or $9 million a year -- would go toward Medicaid.

Another $45 million would go toward K-12 direct property-tax relief on all kinds of property.

Another $45 million would go to schools. The additional money would slightly increase the state’s share of per-student costs. Senate Republican Leader Dave Knudson of Sioux Falls said the education money would go toward “improved teacher compensation, educational efficiency and opportunity and measurement of positive results.”

Tobacco-tax revenues are expected to

decrease as people quit smoking. Knudson said the dollar amounts in the Republican plan reflected projected average collections over five years. “We are aiming to find levels for these programs that are sustainable over the long haul,” he said.

The Legislature could spend the money “as some in the minority party have suggested,” Rhoden said. “The option we chose, as Republicans, is to return those dollars to the citizens of the state of South Dakota in the form of property-tax relief, health-care assistance to the most vulnerable citizens of our state and for education enhancement for the K-12 system.”

But Democratic leaders said they supported the principle of providing more money for education and health care. “I say welcome to the game,” said Senate Democratic Leader Scott Heidepriem.

But Heidepriem said extra money for schools shouldn’t come with too many strings, and he and Hargens said they would watch closely the details of the property-tax relief.

Heidepriem also said Democrats likely would offer their own tobacco-tax plan next week.

Knudson said Republicans were still working on their campaign-reform measure.

Contact Bill Harlan at 394-8424 or at bill.harlan@rapidcityjournal.com