Committee: Joint Appropriations Subcommittee #2
South Dakota Department of Agriculture
Mr. Dave Becker, LRC, presented the committee with budget information ( Document #1).
Mr. Darrell Cruea, Secretary, Department of Agriculture, presented a budget overview. Senator
Frederick inquired as to cash balances in the dairy inspection fund. Mr. Darwin Kurtenbach,
Department of Agriculture, presented background information on the fund, which was begun in
1988. He explained why the fund is depleted. At one time there was a plan to add an assessment fee
on raw milk and increase the reinspection fee to increase revenue to the fund, but nothing has been
proposed for FY00. The projected FY00 balance of the fund is $66,000 in revenues; however, a
70/30 split will create a deficit in the fund.
Senator Frederick asked whether other funds are approaching a deficit situation. Secretary Cruea
responded all other funds are healthy. Representative Klaudt asked for an explanation of a $433,000
increase in grants and subsidies. Secretary Cruea replied the increase is related to economic
development programs.
Senator Frederick asked for the revenue source of the $58,447 coming from other funds to fund FTEs. Mr. Ken Anderson responded that amount will be generated by assessing each revolving
fund. Representative Putnam asked how will the money be tracked. Senator Frederick suggested
the Department have Legislative Audit approve the formula prospectively rather than retrospectively.
Discussion ensued regarding the distinction between the Ag Quiz Day program and the Ag in the
Classroom program. Ms. Melanie Schumaker, Director, Ag in the Classroom, responded. She
noted her funding request for Ag in the Classroom of $30,000 was recommended at $15,000, a
$5,000 decrease from FY99. Secretary Cruea responded that the Department is bound by regulations
of the Rural Rehabilitation Fund program and the Department could not justify the extra $5,000. The
Department is permitted to expend the interest earned by the fund for administrative expenses, but
the Department may not expend the principal for administrative expenses.
Representative Klaudt inquired how many schools participate in Ag in the Classroom. Ms.
Schumaker explained 27,000 students, 3rd and 4th graders throughout the state, are involved. The
program does work with the county agents.
Mr. Ron Cody, Department of Agriculture, detailed the original intent of the Rural Rehabilitation
Fund program. Currently there are four amendments to the use agreement. Mr. Cody noted the cash
balance of the fund was $5.4 million as of the end of December, 1998; the available cash balance
was $4.4 million as of the end of December, 1998.
Mr. Brad Berven, Department of Agriculture, answered questions regarding Agricultural Services.
He noted there are statutory limitations on how the funds within Agricultural Services can be used.
The Secretary indicated the Department is trying to address the fund balances. Representative
Klaudt requested an explanation for the increase in contractual services. The Secretary responded
the Department is dealing with more legal issues and with a transfer of services to the Department
of Commerce for inspection. Representative Klaudt also highlighted the increase in travel expenses,
which the Secretary indicated was due to a service-oriented approach.
In response to Senator Frederick's question, Secretary Cruea described the Department's vision for
agricultural development. He indicated a need to focus on increasing processing in the state by
helping with the necessary technology and by conducting marketing assessments and evaluations.
The Secretary stated there are seven FTEs in Agricultural Development and he described their
responsibilities. He indicated the Department would like to have a grain or commodity specialist.
Representative Putnam noted the Department has a considerably greater number of FTEs working
on regulation than working on development. In response to Senator Frederick's question, the
Department responded that it would take a statutory change to utilize monies from Agricultural
Services funds to fund additional FTEs in Agricultural Development.
In response to Representative Derby's question, the Secretary explained the process of mediation.
Senator Bogue noted an increase in the number of beginning farmer applications. The Secretary
stated 68 loans were awarded this past year. The Secretary estimated that adding two marketing
specialists to Agricultural Development would cost approximately $150,000.
Mr. Ray Sowers, Department of Agriculture, presented an overview of the Division of Resource
Conservation and Forestry. He stated the fund in deficit seems to be improving. Most of the
general funds in the division are applied to the fire suppression program. In response to
Representative Putnam's question, Mr. Sowers detailed capital improvements that were not
recommended for funding: $323,000 to replace the radio system; $50,000 for a radio frequency
study; $25,000 for new flatbeds, pumps, and tanks; $48,000 for three buckets; and $30,000 for a
compressed air foam engine.
Mr. Dennis Hardy, Chairman, South Dakota Soybean Council, presented a brief overview of the
council and responded to questions. Mr. John Olbertson, President, Corn Utilization Council,
presented a funding overview of his council ( Document #2) and responded to questions.
Mr. Mike O'Connor, State Fair Commission, overviewed problems of the 1998 State Fair and said
he was requesting the State Fair become a line item in the budget so it would receive continuous
appropriations. Previously the legislature appropriated $267,000 for maintenance and repair, but for
the last two years no funds have been appropriated.
Mr. Craig Atkins, Manager, State Fair, presented a budget summary ( Document #3) and reminded
the committee that the State Fair is a 12-month event. To increase revenues from the fair, the
commission has instituted a “no-free-pass” policy and initiated new fees for livestock events. Mr.
Atkins reviewed findings of the Governor's Task Force and progress made toward those findings.
The State Fair has a five-year strategic plan in place for maintenance and repair, and it is requesting
$250,000 in FY00 to meet those objectives. Mr. Atkins explained the various levels of corporate
sponsorship.
Members of a Huron delegation spoke in favor of the State Fair. Included in the delegation were the
following individuals: Ms. Peggy Woolrich, Huron Conventioner's Bureau; Ms. Debbie Hoops,
Huron Area Chamber; Mr. Ralph Borkowsky, Administrator, City of Huron; and Mr. Rich
Daugherty, Greater Huron Economic Development Corporation.
MOTION:
ADJOURN
Moved by:
Representative Klaudt
Second by:
Senator Hainje
Action:
Prevailed by voice vote.
Deborah Rumrill