Legislative Highlights

Posted December 20, 2011 at 10:09 am

Governor Daugaard mentioned a desire for South Dakota to write language in our Constitution to specifically require our state operate under a “balanced budget” each year. We are required by law to spend no more that we receive in revenue.

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There is a difference between directives created passing a bill in the Legislature as compared to that language being implanted in the Constitution. That difference has to do with how changes or amendments can be made. Laws passed by the Legislature can be changed by any future Legislature. That also holds true for issues initiated through a petition gathering process and adopted by a public vote.

There is only one process for amending or adding to the Constitution. That is ratification by a vote of the people. There are a couple different ways to bring a Constitutional question to the ballot, but it can only be completed by the public vote.

For years we have adherence to the idea that we must have a balanced budget. That has led us to believe the idea is coming from language in the Constitution. In reality however but it is not. It is in law, but not in the Constitution. It is unlikely that a future Legislature would repeal that law, still in theory it could happen.

Following the law that currently exists we do not borrow money to fund the ongoing expenses of the general fund. Our state does however have instances where we are allowed to borrow money. An example would be the sale of bonds to construct a building and then pay off the debt with revenue generated by that building. Any public entity going into the bond market has a credit rating according to the amount of risk the bond purchaser (the lender) would be taking.

The bond rating agencies are telling us that our state would have a better credit rating for our bonds if the requirement that we operate under a balanced budget was written into our Constitution. That would mean being able to borrow money in the bond market at a lower interest cost.

Our Constitution does not give the Governor direct authority to put a question on the election ballot. One of the ways Constitutional ballot are brought forward is through a petition gathering process. That method has been used on a few instances over the years. Most proposals for changing the Constitution come as result of both chambers of the Legislature passing a Resolution requesting the issue to be brought to a state-wide ballot for the needed public vote. That is what Governor Daugaard is asking for.

Proposals to write a “balanced budget” amendment into our federal Constitution have been circulated several years. Changes at that level are much more difficult than changing a state constitution. There would also be many more ramifications to that change.

It is doubtful there would be much objection from our Legislature in bringing language into our state constitution that would require us to continue doing something we have been doing. The question would then go to the voters in November. Would this proposal be viewed as a benefit?

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