Committee: Joint Appropriations Subcommittee #2
South Dakota Office of the Governor
Mr. Dale Bertsch, LRC, presented the committee with budget information ( Document #1).
Senator Dennert moved the committee approve Subcommittee #2 minutes for January 19, 1999.
Seconded by Representative Burg. Motion prevailed by voice vote. Representative Putnam moved
the committee approve Subcommittee #2 minutes for January 14, 1999. Seconded by Senator
Dennert. Motion prevailed by voice vote.
Ms. Pam Roberts, Chief of Operations, Office of the Governor, introduced Ms. Marty Davis,
Fiscal Affairs, Office of the Governor, and Mr. Webster Two Hawk, Sr., Commissioner, Tribal
Government Relations Office. Ms. Roberts presented an overview of the Governor's Office budget.
She noted the Office is recommending a $154,600 budgetary increase for personal services and will
return at a later time to recommend a previously un-requested $100,000 budgetary increase for
travel.
The Governor's Office also is requesting a $40,000 increase in the Contingency Fund to bring the fund up to $100,000. Examples of FY99 expenditures from the fund include $5,000 for legal work, $27,000 for computer programming to enhance the mail tracking system of the executive branch, sponsorship of an art show, and assistance with the Spencer tornado disaster. Ms. Roberts noted
outside legal staff were hired to conduct work in specific areas. The increase in personal services
is due to personnel vacancies which are expected to be filled. In previous fiscal years, those
vacancies were used to pay salary increases.
Ms. Roberts reviewed the Office of Lieutenant Governor. This program pays the expenses of the
Lieutenant Governor during legislative session.
Commissioner Two Hawk presented an overview of his office. He works primarily with tribal
councils and the federal government. He assisted tribal councils to some extent with the Temporary
Assistance for Needy Families tribal program.
South Dakota Bureau of Finance and Management.
Mr. Dale Bertsch, LRC, previously presented budget information (Document #1) to the committee.
Mr. Curt Everson, Commissioner, Bureau of Finance and Management, presented an overview of
the Bureau. Commissioner Everson explained the increase in expense vouchers from FY99 to FY00
is related to a policy change in the accounting system. Representative Derby noted a significant
increase in monies spent on contractual services for FY98. Commissioner Everson responded the
increase was for a one-time, short-term expenditure. He noted the actual expenditures for FY99
were close to what was budgeted for FY99. The Bureau is ensuring all equipment is Year 2000
compliant.
Representative Klaudt inquired about the decease in capital outlay funds in between FY98 budgeted
and FY99 budgeted. Commissioner Everson responded FY98 involved the purchase of several
major pieces of technology.
Representative Derby inquired whether the rolling budget file could be redesigned to show budgeted
versus historical figures. The Bureau is capable of doing that.
Commissioner Everson reviewed the original sale/leaseback program of 1986. This program runs
out in the Year 2016 and is a zero sum gain for the general fund. Commissioner Everson
summarized the Computer Services and Development program. The Bureau believes it is not very
vulnerable to outside systems that may not be Year 2000 compliant.
In response to Senator Frederick's question, Commissioner Everson explained the Bureau does take
an independent look at the budget of each state agency, bureau, and office.
South Dakota Lottery
Mr. Dale Bertsch, LRC, previously presented the committee with budget information ( Document
#1).
Mr. Roger Leonard, Director, South Dakota Lottery, presented the committee with an overview of the state lottery and a budget summary ( Document #2). He noted the state lottery initially operated like a business but is currently structured more along the lines of an agency. The state
lottery has both informational and legislative budgets. The three categories of games operated by
the lottery are instant, on-line, and video.
Senator Kleven assumed the gavel.
Director Leonard noted the state lottery does pay a licensing fee for some instant games (e.g.,
Monopoly, Battleship). Those games are among the best selling. With respect to Lotto games, a
minimum of 50% of the state's share of proceeds goes to the Capital Construction Fund. In FY99,
the Fund proceeds were dispersed to water development, ethanol production, and special and public
transportation projects. In FY00, the percent of funds dispersed to water development will decrease
and the percent dispersed to ethanol production will increase. Discussion ensued on the Multistate
Lottery Association.
Director Leonard reported on video lottery. He emphasized licenses for video lottery have a 50%
South Dakota citizenship requirement. He further noted video lottery is a mature market and has not
grown, independent of inflation, since FY94. Director Leonard explained the Request for Proposals
(RFP) process, which was issued to private firms in July. The RFP this year was unique because it
was much less structured than in previous years. Two firms bid for the management of the on-line
games system, which is not yet Year 2000 compliant. One firm bid on the video lottery system,
which also is not yet Year 2000 compliant. The Bureau foresees requesting an amendment to the
video lottery budget in a few weeks. The state's instant games system has been brought into Year
2000 compliance at a cost of $400,000.
Representative Klaudt raised a question on salary increases. Director Leonard explained most
employees are paid out of both video and instant game categories. He affirmed the state lottery pays
$200,000 per year to the Department of Human Services for gambling treatment.
South Dakota Animal Industry Board
Mr. Dave Becker, LRC, presented the committee with budget information ( Document #3).
Dr. Sam Holland, Executive Secretary and State Veterinarian, Animal Industry Board, reviewed
the responsibilities of the Board.
Senator Frederick assumed the gavel.
Dr. Holland explained 26 states conduct state inspections of meat plants. Currently state-inspected
plants cannot ship interstate until they come on-line with the Hazard Analytical Critical Control
Point (HACCP) program. There are approximately 50 plants in South Dakota that currently cannot
ship interstate because they are not scheduled to come on-line with HACCP until the Year 2000.
If a particular plant's market grows, it may switch from state inspection to federal inspection in order
to accommodate interstate shipping. Dr. Holland explained South Dakota has placed tuberculosis
testing requirements on Canadian and Mexican cattle.
Dr. Holland explained the Livestock Disease Emergency Fund. Ninety percent of auction agency
inspection fees are paid to inspecting veterinarians; 10% of the fees go into the emergency fund. The
Board would like to see the fund accumulate to $2 - $5 million. Each year approximately $50,000
is deposited into the fund, which is then directed toward the state investment fund.
MOTION:
ADJOURN
Moved by:
Representative Klaudt
Second by:
Representative Derby
Action:
Prevailed by voice vote.
Deborah Rumrill