There are ways to dissolve state’s deficit, but most of them are doozies


Gordon Garnos

AT ISSUE: Our soon-to-be governor and the members of the Legislature are scooting to find new revenue sources to erase the next fiscal year’s budget. Unfortunately, there are very limited ways a government has to find new revenue that doesn’t include raising existing taxes and fees or creating new ones. And didn’t we hear from the candidates a few weeks ago there would be no increase in taxes? The search is on.

DIDN’T WE LEARN in grade school that the only government that can print money was the federal government–not cities, not counties and not states? At the same time it seems like the times the federal government prints a few bucks (like the stimulus package) the dollar gets devalued a little more.

So, what does this mean for South Dakota? Our state government is searching for other ways to make up for the deficit expected for the next fiscal year and meeting the demands of the fiscal year’s budget.

Consequently a government only has very limited resources to draw from. Looking at South Dakota’s financial plight mentioned above. It can spend its reserve funds, which doesn’t seem like a popular thing to do. It can raise taxes and fees or create new ones, which we will take a look at. Or it can reduce or eliminate services and/or employees, which also can be a ticklish situation.

image-South Dakota State Capitol

South Dakota State Capitol

AN EXAMPLE OF reducing or eliminating staff, in our recent travels to the south we learned from the Kansas City Star that the Missouri Corrections Department is considering a unique possibility of eliminating inmate visitation privileges from April through June of next year if it doesn’t receive a supplemental appropriation before then.

The fiance of an inmate in one of Missouri’s prisons said, “That’s insane. That seems inhumane.”

The warden explained the proposed visitation policy change is a manpower issue. And manpower here means money, or the lack of it.

Because of its budget crisis, Correction employees are already being furloughed two days a month and there is a plan to increase the number of furlough days to three a month starting in April. He said that isn’t a good situation. At the present time he only has a 71 percent of authorized prison positions filled within the department because of the budget crisis and that isn’t good either especially since the prison population stands at 98.3 percent of capacity. He has asked for a $37 million dollar supplemental appropriation to ease the crisis.

ISN’T THAT ABOUT where South Dakota’s budget crisis is at now. And while the proposal sounds insane to some, that is a proposed solution to the crisis. Will it fly? we¹ll have to wait a few months to find out. At the same time are there any services or reduced or eliminated state government staff in South Dakota¹s government that could be undertaken with as little pain as possible or affect as few as possible?

Raising taxes and fees or creating new ones isn’t ever a popular idea. And didn’t we hear the candidates say, “No new taxes!”

There has already been a few test balloons sent out about raising some of the various fees the state is charging. Where this will go next month will be up to the Legislature. However, to eliminate our financial crisis, I don’t see how it can be reached without increasing or creating some tax resources.

An example. I don’t have any idea what this would raise, but I have often snickered at the nine-tenths of a cent per gallon that is tagged onto the dollars and cents price on gasoline. What if that gas tax was raised that one-tenth of a cent as well as the 15 cents I’ve been hearing about? Or would that be just another doozie?

AND SPEAKING OF Missouri, it has a permissive tax that allows cities to have an “earnings tax.” This is charged to everyone employed within a city limits. Only St. Louis and Kansas City use this earnings tax, which brings in million’s of dollars into those cities’ coffers. At the same time opponents cry the tax is anti-economic development.

Another goofy tax I remember from being overseas in the military was a “value added tax (VAT).” According to Google, “It is a form of consumption tax that taxes all–business, profit and labor.” It was first started in Europe in 1954 and is still in use.

“The tax is levied on the value added to the product at each stage of its manufacturing cycle as well as the price paid by the final consumer…The cost of materials, sub components, tools, equipment, facilities and supplies and any services purchased from other businesses are not re-taxed under the VAT. These purchases would have already been subjected to the VAT by the supplying businesses.”

These are just a couple of ways governments draw down or eliminate their budget deficits, but there are literally hundreds of ways a government has to raise money to pay for its services and employees. Unfortunately, their names are followed by the word “tax” or “fee.” What’ll it be?….

Gordon Garnos was long-time editor of the Watertown Public Opinion, retiring after 39 years with that newspaper. Garnos, a lifelong resident of South Dakota except for his military service in the U.S. Air Force, was born and raised in Presho.

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