Legislative Republicans broke with Gov. Mike Rounds Friday and called for significant budget cuts this year to eliminate the state’s $32 million structural deficit.

“We’re committed to adopting a budget that includes no deficit spending,” said Senate Majority Leader Sen. Dave Knudson, R-Sioux Falls, who is running for governor.

Knudson and House Minority Leader Rep. Bob Faehn, R-Watertown, said they believe the Legislature needs to take a two-year approach to deal with a deficit next year that could exceed $100 million.

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“That is really a key to making that problem that’s going to face us in calendar year 2011 — when we adopt that 2012 fiscal year budget — manageable,” Knudson said. “We need to take a big chunk out of that deficit this year.”

Rounds proposed covering a $32 million gap between ongoing revenues and ongoing expenses this year with money from the state’s property tax reduction fund.

The governor’s budget included more funding for Medicaid and some minor cuts, but proposed flat spending in most departments.

Republican leaders did agree with Rounds’ call for the Legislature to make cuts to specific programs instead of applying across-the-board cuts.

“We believe the bulk of these budget reductions will come in programmatic cuts,” Knudson said. “The appropriations committee is just starting its process, and they will be taking an intense look — along with the Legislature as a whole — at each and every program South Dakota has, looking to determine whether these programs still meet our state’s needs and priorities and whether the budgets support the priorities of each department.”

Knudson said no areas of the budget are off the table for cuts. But Faehn said legislative Republicans believe economic development should be a priority.

Republicans pledged to find $36 million in cuts, including both the current $32 million deficit and more money to lower property tax rates and keep the state’s share of public education funding the same.

Lt. Gov. Dennis Daugaard said he and Rounds welcome the legislative Republicans’ suggestions.

“I think the governor’s budget proposal is always a starting place,” said Daugaard, who is also running for governor. “To the extent that the Legislature is going to work with the governor toward reducing the budget deficit I’m encouraged by that.”

House Minority Leader Rep. Bernie Hunhoff, D-Yankton, said Democrats are looking forward to Republican proposals for this year, too.

“I’m glad they’re joining us in a discussion about cuts and efficiencies,” Hunhoff said. “I didn’t hear a lot of specifics to reply to today, but we are certainly more than willing to look for areas of agreement where we can cooperate.”

Hunhoff said where legislative Democrats differ the most from Republicans is in calls for long-term budgetary reform. Knudson and Faehn on Thursday dismissed Democratic proposals to cap new spending and reduce the number of state jobs.

Knudson said the cuts Republicans are calling for are necessary to deal with “unprecedented times.”

“We’re trying to chart a very responsible course of having zero deficit for the fiscal 2011 budget which we’re adopting, and therefore making a very strong start dealing with the very large deficit we’ll be facing in the 2011 legislative session,” Knudson said.