David Montgomery

PIERRE — Gov. Mike Rounds is warning legislators not to count on a federal stimulus package to ease South Dakota’s structural budget deficit.

Though the contents of the multi-billion dollar package being debated by Congress change daily, Rounds said Thursday any stimulus will likely be composed of one-time money with strings attached. Because the state’s ongoing expenditures exceed its ongoing expenses, Rounds said any one-time money will only postpone the problem.

David Montgomery | Capital Journal Gov. Mike Rounds (right) speaks at a press conference Thursday morning in the Capitol, while press secretary Joe Kafka takes notes. Advertisement

“It means we wouldn’t take money out of our savings accounts to pay that bill,” Rounds said. “But it would be one-time in nature and only give us some breathing room.”

Rounds’ budget proposal would drain some of the state’s savings accounts, such as the property tax reduction fund, if approved. Any windfall of federal money, he said, should be used to refill those funds instead of preserving existing programs or creating new ones.

“The goal over the next couple years is to fix the structural deficit that has developed,” Rounds said. “The only way you can fix it is either to increase the ongoing revenues at a faster rate than the ongoing expenses go up, or you have to slow down the ongoing expenses while your revenues catch up.”

Among the aid packages for states being debated in Congress are more money for education, a large investment in transportation infrastructure and the federal government paying a larger share of Medicaid expenses.

President Obama’s stimulus proposal also includes construction projects, tax cuts and other measures not aimed at states.

Rounds said South Dakota might not want to accept some offered money because it comes with conditions. For example, he said one proposal would give additional money to the state Department of Labor to help out with the unemployment benefit trust fund — but only if South Dakota agreed to raise its unemployment benefits, which would stay at an elevated level even after the one-time money was gone.

Rounds also said he hopes any stimulus package will pass before the end of the 2009 Legislative Session. If so, the Legislature can take any action required to spend the federal money without Rounds calling a special session, something he said he will do if necessary.