|  |
 |
Madison leaders discuss economy with Rounds
| | |
By ELISA SAND, Staff Reporter
| 10/15/2009 |
| | |  | | | | | | |
Gov. Mike Rounds speaks to local business people at 2nd Street Diner on Wednesday to gather input about the local economy. Seated immediately next to Rounds are Sen. Russell Olson (center) and Lake County Commissioner Scott Pedersen.
| |
Rounds was in Madison with S.D. Secretary of Labor Pam Roberts on Wednesday to sit down with local business leaders and discuss local and state issues.
State budgets have been supplemented with federal stimulus funds in the 2009 and '10 fiscal years, and stimulus dollars are projected to be available for the 2011 budget. But, Rounds said, the amount available for 2011 might be less than anticipated due to a rapid increase in Medicaid enrollees.
In the past year alone, the number of new Medicaid enrollments in South Dakota rosn by more than 6,000 people. Rounds said that one-year increase is comparable to the new Medicaid enrollees who entered the system between 2004 and 2008.
"Taking care of those eligible will be a huge challenge," Rounds said.
The next challenge, he said, is making up for the shortfall in state revenue.
"All five of South Dakota's largest sources of income are down," he said.
Among those decreases: sales and use tax (down 4.8 percent); video lottery (down 5 percent); and the bank franchise tax (down 21.1 percent).
Rounds said that between ongoing revenue and expenses, there's probably a $160 million difference, and the increased demand on Medicaid could mean another $40 million in additional expenses.
The situation could be worse, however.
Rounds said state unemployment is typically about one percentage less than national unemployment, but right now that isn't the case. National unemployment is 9.8 percent for September, while state unemployment for September is 4.8 percent. Both are up one-tenth of a percent from August.
Rounds said the lower unemployment can be attributed to the companies in South Dakota.
"We're more efficient," he said. "We've worked hard to increase sales, we've had temporary layoffs instead of permanent ones, and we've deferred payroll increases. For most South Dakota businesses, employees are friends and neighbors. You want to help them make it through the tough times."
Other factors have also helped. Rounds said that state officials who work directly with the unemployed have helped 30 percent of them secure new jobs. Programs that provide re-training in a few weeks have also helped, and he said there are currently 300 companies looking at South Dakota.
"We've never had this many prospects before," he said.
As of right now, he said, 25 companies have committed to expanding or relocating in South Dakota.
Another positive economic sign, Rounds said, is in the trucking industry.
"There's the beginning of an uptick on trucking freight," Rounds said, indicating that there has been a consistent increase in freight each month since May, which could be indicative of the economy moving in a positive direction.
People expressed some local concerns, however.
Madison Dairy Queen owner DeLon Mork is concerned about an upcoming surcharge that will be assessed on every business in 2010 to replenish the unemployment insurance fund.
The surcharge is a one-time charge of as much as $150 per employee in 2010. The tax is based on a formula set in statute in 1939, which is calculated as 1.5 percent on the first $10,000 in income for each employee.
"We know the unemployment insurance trust fund has more going out than coming in," Rounds said. "We can borrow from the Feds at zero interest if we go in the hole, but the surcharge is an automatic trigger."
The surcharge kicks in when the unemployment insurance trust fund falls below a specific amount.
"We have to trigger the automatic surcharge," he said. "We tried to delay it as long as possible."
Rounds said at this time no other option is available to replenish that fund.
To put it in perspective, Secretary Roberts said, $21 million was spent from the unemployment insurance trust fund in 2008, and so far in 2009, projected spending is set at $62 million.
Not every company in South Dakota currently contributes to the fund. Roberts said that each business will initially contribute a set amount, but continued contributions are based on a company rating determined by the business' previous layoffs.
Jerry Johnson, co-owner of B&G Trucking in Madison, said his main concern is a proposed increase in the gas tax, which was recently endorsed by a taxation committee. That recommendation proposed a two-phase increase of 5 cents per year and an increase in licensing fees.
"We're impacted more because of our gas usage," Johnson said.
Rounds said the proposed increase is just a recommendation and will require two-thirds approval from state legislators during the next session to go into effect.
The increase in tax, however, will allow for additional road work in the state.
@1COL = "If we don't have a tax or fee increase, we'll live. We'll work on less roads and we'll get by," Rounds said.
But right now, the state Department of Transportation is running pretty lean.
"The budget goal is to match every dollar of federal funds and plow the roads," Rounds said. "We'll live with what we've got."
Jim Iverson, administrator of Bethel Lutheran Home, said the feeling among his employees is a need for continuation of the status quo.
"Among our workforce, there's a lot of anxiety," he said.
The facility is currently looking at a 3 percent cut in Medicare reimbursement and a 57-cent increase for Medicaid. Among the residents at Bethel, he said, 57 percent are on Medicaid and 5 percent are on Medicare.
"What I'm hearing from my employees is if you can just keep things the way they are, things will be fine," Iverson said.
When asked his prediction for the months to come, Rounds had none.
"If it gets worse, we'll have to deal with it," he said. "We know we're in the worst recession since the Great Depression. What people don't realize is, I don't think we've hit bottom yet. We'll get through it, but we've got to be smart about it."
| |
©Madison Daily Leader 2010
| |
| |
|
