A few takeaways from Daugaard’s budget proposal

SD Governor Daugaard just finished his budget proposal for FY16. I still need time to look through the details of the budget proposal, but overall I don’t think Daugaard did too bad of a job on this one.  There are some areas I disagree with, but most of those I will blog about during the legislative session when I analyze the bills the expenditures are tied to.

On the good side there is a 2% increase being given to education. That is .5% above inflation. Personally I think more should have been given to education as a way to increase teacher pay. But honestly, until school boards around the state start to take responsibility for their part in teacher pay I can’t see the state giving more money.

A low-light in this budgetary address was the reduction in revenue coming from the Unclaimed Property fund. Many of us felt this source of revenue was leaned upon too hard in the 2015 budget. It was project that in FY 2015 (which we are half way through) that only $5.5 million would be paid out to people wanting their money back. But so far this year $5.8 million dollars have been paid out. That caused the Governor to adjust the payout expectation from Unclaimed Property to $10 million in FY15. I hope the legislature will take note of this during the 2015 legislative session and not rely upon this money. Daugaard said this higher payout was due to an increase in awareness of Unclaimed Property. I think that is great, much of this money should never have been taken by the state…

Here is the chart looking at Unclaimed Property that Daugaard used:

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Looking at the chart it can be seen that the state still uses a lot of Unclaimed Property money. Even with the extra payout to the rightful owners of this money, there is still $54 million that is being used by the state. Hopefully the legislature will remember this money is not truly theirs and is a potential liability when passing the budget this upcoming session.

The last thing I want to mention is highway funding. At the conclusion of his proposal Daugaard mentioned the highway summer study and that he was looking forward to the discussion. Senator Vehle is likely to push for a plethora of new and higher taxes to pay for infrastructure coming out of the summer study. The progression of that debate will impact how the overall budget looks. Perhaps that will end up taking away that extra .5 percent increase being proposed for education.

Over the 2015 legislative session it should be interesting to see how close the legislature will follow this budget. Personally I don’t think the legislature will put up much of a fight to any of Daugaard’s proposals. Any fights will likely revolve around changes to deal with the results of the highway summer study.

Now the HHS wants to choose the health insurance plan for those auto-renewing on the exchange?

Proponents of ACA (Obamacare) have often said that this is not a government takeover of healthcare. Of course there have also been other untruths such as bringing the cost of healthcare down and being able to keep your doctor. Technically proponents of ACA may be correct in one aspect, this is not a direct takeover of healthcare, but rather an attempt to directly take over the healthcare insurance industry. Of course controlling the money that flows into the healthcare industry can been seen as a default attempt to take the industry over.

What would happen if the Department of Health and Human Services (HHS) decided it was their job to pick the plans of people re-enrolling themselves on the exchange? That is what they are proposing in new regulations recently released. Current law allows exchange enrollees in most states auto-renew their plan each year with the same plan. The proposed change would allow HHS to switch the default option and let HHS choose the best plan for them upon re-enrolling. Why would HHS want this power? Here is what Charles Hughes over at CATO has to say:

In one sense, it is not surprising that HHS is at least exploring this option. Automatic renewal presents a host of potential problems.

Due to the way the law designed the exchange subsidies, many of these people will end up paying significantly more if they automatically renew. An analysis by the New York Times found that people in the most popular plans would face an average premium increase of 9.5 percent. This could end up affecting millions of people, as a recent Gallup poll found that 68 percent of respondents said they planned to renew their current plan.

This would be a way for the HHS to artificially make it seem exchange prices are staying low for those enrolled. It would also potentially cause problems for those very same people when going to a doctor and suddenly find out they are on a lower plan that no longer covers their doctor of preference. That isn’t quite the same as government takeover of healthcare, but it sure is close enough to cause some serious havoc to people’s lives. Of course the HHS doesn’t have to worry about how they are impacting people’s lives; instead the HHS only has to make it look like they are doing things that will theoretically help people.

So no, this is not technically a takeover of healthcare. It is actually worse. It is intervention without regards to how it impacts people’s lives.

PS. Somewhat related. Remy over at Reason.tv released this video a couple of weeks ago in response to Obamacare architect Jonathan Gruber saying the American people are too stupid to explain truths about Obamacare.

SD Budgetary Address today

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Updated: Changed title of this post, originally I had a stated it was the State of the State address. Apparently I didn’t have enough coffee this morning. The title has been corrected to note this is the budgetary address.

I’m back from a short catch-up-on-work vacation and should be blogging daily(ish) again. To kick off the 2015 political year, today will be the South Dakota budgetary address by Governor Daugaard. It will be broadcast at 1pm Central on the SDPB website. Over at the Argus, David Montgomery said there won’t be too many surprises in this budget address.

It is worth mentioning one portion of Montgomery’s story:

Last year, Daugaard emphasized the state’s tough financial situation before his December budget proposal — and then surprised the state by announcing a huge windfall from the state’s Unclaimed Property Fund that paid for tens of millions of dollars of new spending.

There’s not likely to be anything like that this year. Unclaimed Property revenue was trailing expectations through October, and Daugaard budget chief Jason Dilges said nothing significant had changed through mid-November.

Venhuizen said attention paid to Unclaimed Property revenues has actually cost the state money. Because more people are aware South Dakota has millions of dollars in abandoned property, more people are looking up and claiming their unclaimed property.

There are two takeaways from this Unclaimed Property revenues being down. First, it is great to see that more people are getting their money back from the state. But secondly, maybe the legislature (and Governor) should be leaving unclaimed property alone. This is money that is held in the public trust (similar to water) and technically should not have been used as it was last year. During the State of the State address last year Governor Daugaard announced he was taking $30 million dollars of Unclaimed Property dollars to pre-fund Building South Dakota. Last year many people (including me) said it was unwise to touch this ‘extra’ money because it could be claimed by the rightful owners. It also has to be realized that the sudden surge of unclaimed money last year came from the legislature changing the law so the State can take money after three years of being “unclaimed”; that was down from the previous five years. It should be interesting to hear what Daugaard has to say about these funds not meeting expectations throughout the year.

I’ll be live-tweeting the event and plan to do a post afterwards.

PS. Thank-you to everyone that have been contacting me the last couple weeks wondering why I wasn’t blogging anymore. I did not abandon this blog. I just had to get caught up with my businesses.