Claiming South Dakota lawmakes were hoodwinked into approving video lottery in 1989 with false promises that the money generated would fund schools, Rep. Lance Russell, R-Hot Springs, has introduced a bill he says would correct history.
"When we passed video lottery, they fooled us. ... Some of that money might have gotten to education, but it really ended up in the (state) general fund and comingled with all the other money," Russell told a Rapid City crackerbarrel crowd on Jan. 30, 2016. "I would like to earmark dollars to a teacher salary enhancement fund. That money cannot be diverted either at the legislative or the school board level."
HB1130 would change existing state law that says the state of South Dakota's 50 percent share of video lottery revenue goes into the state general fund. Under HB1130, $75 million of about $105 million in video lottery revenue would go into a new Teacher Salary Enhancement Fund. Anything above $75 million would continue to go into the general fund.
In addition, HB1130 seeks to divert money from other state funds into the Teacher Salary Enhancement Fund as follows:
- $7.3 million from the budget reserve fund
- $3.5 million from the Petroleum Release Compensation Fund
- $3.75 million from the South Dakota Risk Pool Fund
- $4.96 million from the Department of Corrections
Money from the Teacher Salary Enhancement Fund would be divided evenly among all certified teachers in South Dakota's public K-12 schools and be paid monthly.
HB1130 would offset the $75 million taken from the state general fund by cutting state agencies across the board, except K-12 school funding, some care for the disabled and the state's bond lease payments. Cuts would be calculated using a formula that divides $14.75 million by the total of all general funds appropriated by the Legislature for fiscal year 2017. Russell did not explain how this formula was arrived at.
Rep. Dan Dryden, R-Rapid City, said video lottery funds have gone to schools as part of overall state aid to education, but the schools budgets have not increased because of it. In part, that's due to then-Gov. Bill Janklow who used video lottery money and a new school funding formula to engineer property tax relief at the local level in the mid-1990s.
"Property taxpayers got the advantage. Schools did not get an increase in their revenue," Dryden said. "It reduced property taxes by 35 percent."
Russell's plan is intended as an alternative to the plan written by Gov. Duagaard's Blue Ribbon Task Force, and other lawmakers said they intend to scrutinize the governor's plan and consider alternatives.
"I have some reservations. I won't go on record until I read the bill," Conzet said.
As House Majoirty Leader, Gosch said he wants an alternative plan to compete with the governor's plan, "using existing dollars first," noting unease with a tax increase.
"The devil will be in the details. It's hard to comment on a bill you haven't seen," Gosch said. "We have to have an alternative plan to go forward, with the main goals and purpose of education reform and to find a way to do it with existing dollars."
"We made a clear case that our teachers are the lowest paid in the country and that it is also having an adverse effect on our education system and will cause much greater adverse effects in the future," Tieszen said. "There is a clear case to improve education pay, teacher pay in particular. I believe a new source of funds is necessary, and also probably the sales tax is the best way to get there."
Sly said a poll shows strong support for the Blue Ribbon Task Force plan. The two-question poll asked, "Do you favor or oppose increasing the sales tax by one-half-a-cent for teacher salaries?" and "Do you believe teachers in South Dakota deserve a pay raise?"
On the tax increase, 71 percent of respondents supported it while 86 percent agreed teachers deserve a pay increase, Sly said. Of those who described themselves as "most conservative," 66 percent supported the tax increase.
"Passing a sales tax is very difficult. We do not take it lightly," Sly said. "We need to make decisions based on sound, sustainable policy for K-12 education. We need legislators willing to be bold and have the courage to do what needs to be done."