Committee on Appropriations A/V — 2018

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Call to Order and Roll Call00:00:05
Department of Transportation00:01:00
Darin Berquist, Secretary of the department introduced his staff.00:01:03
The department's budget proposes no changes except for an increase in energy CAP.00:01:40
Secretary Berquist updated the Committee on a variety of projects including the status of federal highway funding, impacts from SB 1, the status of State Highway Future Pavement Condition and updates on the Local Bridge Improvement Grant (BIG) Fund program. 00:01:55
Federal Highway Act: the current federal highway funding program expires at the end of the federal fiscal year in 2020. In the first year of the act, South Dakota received a 5% increase in federal fund over prior years with a 2.0 to 2.3% increase each year. However, Congress has not passed the appropriation bill to date.00:02:30
President Trump's Infrastructure Initiative - this proposal would cover more than roads and bridges with a possible $200 billion program. There is a possible 25% set aside for rural states. 00:05:05
State Highway Fund - this fund is funded through the motor vehicle excise tax and motor fuel tax, both of which were changed through SB 1 in 2015. the motor fuel and ethyl alcohol tax was increased by 6 cents/gallon. License plate fees for vehicles over 20,000 pounds was increased from 60% to 70% on July 1, 2015 and from 70% to 80% on July 1, 2016.00:07:42
In FY16 the 6 cents/gallon increase generated $42.9 million and $46.6 million in FY17.00:08:28
Motor Vehicle Excise Tax - used to be 3%, SB 1 increased it to 4%. In FY16 generated $30.3 million and $30.8 million in FY17.00:08:55
State Highway Future Pavement Condition00:10:40
Local Bridge Improvement Grant (BIG) Fund - This fund was created as part of SB 1. Registration fees on vehicles was increased by 20% with $7.0 million/year of the increase placed into this bridge fund. The Transportation Commission awarded another $2.0 million from the State Highway fund making it a $9.0 million program. In 2019 the department will swap $6.0 million in state road funds for federal road funds. The counties must have a wheel tax in place and a 5-year county road plan.00:12:55
Representative Lake question on future pavement condition projections. 00:16:18
Secretary Berquist said the drop was primarily due to the way the rating system works. Pavement only stays in excellent condition for 2-3 years. 00:17:19
Senator Nesiba question concerned about the amount of local grant requests and measuring the condition of the county highway system.00:17:53
Secretary Berquist said there is not a rating system for the county system. The volume of county roads and a majority being gravel makes it a difficult task. There is better information on the condition of bridges because the State DOT does the bridge inspection work for the counties. The local bridge condition is not good, South Dakota ranks very poor nationally.00:18:23
Senator Nesiba question on county bridges and roads. Secretary Berquist said the inspections indicate if they are making progress. The grant program is new and work is just starting. At best, South Dakota is holding its own.00:20:26
Ariel Hammerquist, LRC Fiscal Analyst presented the department's budget.00:22:20
The department receives .03% of budgeted state general funds.00:22:55
FTE utilization - In FY17 there were 28.0 unutilized FTE.00:23:14
Page 3 - the department's FY19 Governor's recommended budget totals $688,917,666 and 1,014.3 FTE. This is an increase of $167,764.00:23:28
Page 5 - General Operations: The FY19 budget request is $197,304,508 and 1,014.3 FTE, an increase of $167,764 in other funds for energy cap.00:23:50
Page 12 - Planning and Engineering: The FY19 budget request is $28,449,275, 217.7 FTE, an increase of $5,882. This increase is based on anticipated rate calculations for the energy CAP. 00:24:28
Page 15 - Operations: The FY19 budget request is $127,300,921 and 740.1 FTE, with an increase of $161,882 in other funds for utility adjustments. One Time Adjustment - increase of $183,434 along with a decrease in the same amount00:25:10
Page 16 - One-Time Adjustments to Capital Outlay Budget: An increase of $183,434 in other fund expenditure authority and a $183,434 decrease in other fund expenditure authority for a net $0 increase.00:25:42
Representative Hunhoff question on energy cap.00:26:03
Kelly Beck, Finance & Management Director, explained the energy cap is utilities and natural gas usage paid to utility companies in the area.00:26:14
Construction Contracts - Informational Budget - the FY19 recommended budget is $491,613,158 with no changes00:27:05
Page 19 - Breakout of Construction costs for roads and bridges and airports for FY19.00:27:30
Representative Carson question on possible fees for electric cars using the highways.00:28:06
Secretary Berquist said there is possibly a bill this year to impose an annual fee on electric and hybrid vehicles.00:28:32
Senator Wiik question on the same issue for electric semi-trucks.00:28:55
Secretary Berquist has surveyed other states on this issue with little success.00:29:17
Senator Peters commented on utility companies installing charging stations at gas stations with no charge.00:30:44
Secretary Berquist has heard of this and the possibility of taxing this power source.00:31:25
Representative Ahlers question on actual energy costs last year versus budgeted amounts. 00:31:59
Ms. Beck explained the process for calculating the energy use.00:32:44
Senator White question on funding for county projects.00:35:25
Secretary Berquist said it is combination of more awareness of the needs and the increased funding under SB 1 and increases in registration fees. 00:36:13
Senator Tidemann question on the lack of signage and sidewalks near the statue "Dignity" at the Chamberlain Rest Area.00:39:04
Secretary Berquist said the department has a project planned this spring to improve the sidewalk access. Currently there is no plan to put a fence around it to prevent people from climbing.00:39:48
Secretary Berquist spoke to the plantings at the rest areas across the state.00:41:59
Senator Cronin question on the new electronic scale system located on US 14 east of Pierre.00:43:18
Secretary Berquist will provide information to the Committee.00:44:20
Department of Public Safety00:49:05
Trevor Jones, Secretary of the department introduced his staff and gave a brief overview of department activities.00:49:16
The Department of Public Safety is made up of 12 agencies.00:51:18
Budget Sources: $3.7 million in general funds, $17.2 million in federal funds and $37.6 million in other funds.00:51:54
Fatal Crash Reduction Progress: Total Fatalities 2010-2017, Fatality Rate 2010-2016, Vehicles Miles Traveled 2010-2016, Alcohol Related Fatalities 2010-2017, Speed Related Fatalities 2010-2017, Unbelted Fatalities 2010-2017, 00:52:13
SD Fatality Rate: South Dakota was one of 7 states that saw a decrease in highway fatalities.00:52:33
Representative Hunhoff question on data analysis on unbelted fatalities.00:57:06
Secretary Jones said the data has been looked at but they haven't seen a specific area. It could be one accident with multiple victims.00:57:33
Representative Hunhoff question on how many have died because of one accident. Mr. Jones said it is possible to show that data.00:58:14
Representative Ahlers question on the effectiveness of previous marketing campaigns and their effectiveness over time.00:58:45
Secretary Jones said the department is currently targeting the age bracket of 25-34. They die in crashes for a variety of reasons: speed, alcohol, seat belt violations. 00:59:13
Representative Ahlers question on federal funds that were available for making a seat belt violation primary.00:59:55
Secretary Jones said yes, the department receives federal funding to target seat belt usage and distracted driving. 01:00:25
Representative Hunhoff commented on people driving the wrong way on the interstate. Mr. Jones said the department does not have any specific campaign targeting that issue. 01:01:03
Developing Safe Drivers01:01:52
Representative Peterson question on a study on Driver's Education Programs.01:04:38
Secretary Jones said yes, the study was 2 years ago. Another meeting is planned for spring to possibly develop a new curriculum. The report is available and will be shared upon request. 01:04:54
Motor Carrier Services01:07:15
Highway Patrol Squad Enforcement Projects01:07:30
Driver Licensing Update01:08:22
Department bills in 201801:08:58
Distribution of Agency Funds:01:10:30
The Governor's FY19 budget totals:01:10:53
Ms. Hammerquist, LRC Fiscal Analyst presented the department's budget which consists of 5 budget units.01:10:55
The department receives .2% of the total state general funds. Sources of funds include 64% other, 6% general and 30% federal. The Highway Patrol receives 37% of the department's general funds.01:11:20
The department's FY19 Governor's recommended budget request totals $58,558,190 with 412.5 FTE, an increase of $89,060. This involves $3,716,565 in general funds, $17,221,973 in federal funds and $37,619,652 in other funds.01:11:55
Page 5 - Administration: The FY19 budget request totals $1,136,712 and 10.5 FTE, an increase of $139,060 and 2.0 FTE.01:12:12
Page 6 - Prior Year Net Object Transfer: the department transferred $100,000 in federal fund expenditure authority from Emergency Services and Homeland Security to other fund expenditure authority in Administration.01:12:40
Page 6 - Current Year Expenditure Object Transfers: the department transferred $126,500 in federal fund expenditure authority from OE Emergency Services and Homeland Security to other fund expenditure authority in Administration for personal services.01:12:55
Representative Howard question on transfers from federal to other funds and why the large amount of other funds.01:13:16
Angie Lemieux, Finance Director responded that many of the transfers were due to aligning the budget. The extra federal authority is primarily in the Homeland Security Grant. The department needs the extra authority to cover the reimbursement requests from the counties.01:14:01
Representative Anderson question what is the source of Other Funds.01:16:48
Ms. Lemieux explained the Other Fund sources: Indirect Cost fund, State Highway Funds, Motor Vehicle fund, Inspection Program, 911 Coordination Fund.01:16:58
Representative Hunhoff question on federal grants that the department is drawing down from. 01:17:59
Ms. Lemieux explained that the department receives 3 -year grants with an average total of $3.7 million. Highway Safety's grants are between $7-$8 million. Funding is issued and they are allowed to spend the carry-over. The department is not looking for new grants but the ones they have every year.01:18:28
Representative Hunhoff question on money transferred from Homeland Security to other areas. Ms. Lemieux said the money left in Homeland Security is the 3-year grants.01:18:28
Page 7 - GIS Coordinator: the department requested an increase of 1.0 FTE, $39,386 in federal funds and $34,755 in other funds for a GIS Coordinator. 01:20:51
Secretary Jones said the GIS Coordinator would assist with agency planning, gather and analyze data. This would then allow for better use of the data especially during emergencies. 01:21:20
Representative Howard question on the work of the new position. Mr. Jones said the department has done this type of work in a minimal and primitive fashion.01:24:00
Page 7 - Program Manager: the department requested an increase of 1.0 FTE, $32,464 in federal funds and $32,455 in other funds for a Program Manager to assist with internal controls and managing and monitoring grants.01:24:39
Secretary Jones said in 2016 SB 162 created an Internal Control Board requiring the various state departments to better monitor money flowing from their departments.01:25:00
Representative Ahlers question will fees increase to provide funding for the two new positions.01:26:45
Secretary Jones said no new fees are anticipated. Ms. Lemieux explained the source of the funds for these positions.01:27:02
Page 8 - Highway Patrol: The FY19 budget request totals $33,392,837 and 275.0 FTE, a decrease of $50,000 in general funds.01:29:00
Page 9 - Prior Year Net Object Transfer: The agency transferred $759,834 of federal fund expenditure authority from Emergency Services and Homeland Security to other fund expenditure authority in Highway Patrol. In the Prior Year Supplemental there was an increase of $952,628 in federal fund expenditure authority due to an increase in federal funding from the Motor Carrier Safety Assistance Program grant.01:29:21
Representative Lake question on the unused federal authority transfer to Highway Patrol.01:29:55
Ms. Lemieux said the funds transferred to the Highway Patrol came from the State Highway Fund. The actual cash is in the State Highway Fund. 01:30:37
Senator Peters commented on the differences between general fund, federal and other spending authority.01:32:00
Representative Hunhoff question on what the funding was used for.01:34:56
Ms. Lemieux said for the Highway Patrol it was for 5 FTE and current transfer to Highway Patrol was for State Radio expenses.01:35:06
Ms. Hammerquist noted a prior year reversion of $166,738 in general funds in large part due to State Radio.01:36:40
Page 10 - Budget Alignment: State Radio - The agency requests a decrease of $50,000 in general funds to align the budget in state radio with anticipated expenditures for FY19. In the Governor's recommended supplemental there is a decrease of $100,000 to State Radio.01:36:58
Secretary Jones spoke to the State Radio budget alignment and the consolidation of State Radio dispatch services. 01:37:24
Representative Anderson commented on the lack of State Radio coverage in certain parts of the state.01:38:48
Secretary Jones explained that the Department of Public Safety is the personnel side of the State Radio area, the infrastructure lies with the Bureau of Information & Telecommunications. Mr. Jones said as a temporary solution those particular areas are being covered by apps on the trooper's cell phone.01:40:07
Page 13 - Emergency Services: The FY19 Governor's recommended budget request totals $11,152,781 and 30.5 FTE.01:43:51
Page 17 - Legal and Regulatory: The FY19 Governor's recommended budget request totals $8,967,160 and 95.5 FTE.01:44:15
Page 21 - 911 Coordination Board Informational Budget: The FY19 Governor's recommended budget request totals $3,908,700 with 1.0 FTE.01:44:30
Department of Revenue01:46:10
Andy Gerlach, Secretary of the department introduced staff and gave a brief overview of the department.01:46:15
Secretary Gerlach briefed the Committee on SB 106, passed in 2016.01:46:40
Secretary Gerlach spoke to the need for the requested 6 FTE.01:51:15
Jeff Mehlhaff, LRC Fiscal Analyst presented the department's budget. The FY19 Governor's recommended budget totals $75,390,203 and 255.5 FTE. This is an increase of $392,593 and 6 FTE (1 for an accountant position and 5 for auditors).01:54:33
Page 5 - Base Program Transfer for Personal Services: the base transfer of $130,612 in other fund authority accounts for $83,991 from the Business Tax budget and $46,621 from the Audit budget. The transfer is from and to personal services within the Admin budget. This adds back what was removed in 2017.01:54:40
John Hanson, Finance Officer briefed the Committee on transfers to the general fund and Other Fund Authority.01:55:25
Page 6 - Major Request - Account II position: the agency requested an increase of 1.0 FTE and $65,300 in other funds to add an accountant II position. This position will be utilized by all divisions and will assist in preparation of the state CAFR. The source of funds is a combination of the sales and use tax collection fund (68%) and the motor vehicle fund (32%).01:59:22
Secretary Gerlach commented on the importance of the position, the CAFR and Bank Franchise work.01:59:45
Representative Hunhoff question on the increased work load.02:00:48
Secretary Gerlach said the complexity of the work is the bank franchise returns that come to the department because South Dakota requires paper filing, not electronic.02:01:00
Representative Anderson question on the funding for the new FTE coming from the Motor Vehicle fund. 02:02:30
Secretary Gerlach said one of the functions of the new FTE would be to evaluate financial operations in the department and to assist with the CAFR. Mr. Hansen said the main focus will be Special Taxes; however, a timely CAFR is very important.02:02:48
Page 13 - One Time Transfer and Base Transfer.02:03:21
Page 9 - Business Tax: The base transfer of $83,991 in other fund authority is from the Business Tax budget to the Admin budget, from and to personal services. 02:04:26
Pages 12 and 13 - Motor Vehicles: Base Transfer for Personal Services - the transfer of $109,540 in other fund authority is from the Audit budget to the Motor Vehicle budget, from and to personal services. 02:04:50
Representative Hunhoff question on transfers from Business Tax budget. 02:06:14
Mr. Hansen said there was excess authority in Business Tax and Audits.02:06:33
Representative Bartels question on the turn around time for titles in the Motor Vehicles.02:07:09
Secretary Gerlach reported on the efforts to shorten the turn around time for motor vehicle title. 02:07:20
Representative Bartels commented on quarterly filings for bank franchises.02:09:18
Senator Tidemann question on any impact from the new tax program. Secretary Gerlach said it depends on the deductions allowed, which will in turn drive the income for the banks and what the state can tax.02:11:40
Page 16 - Property & Special Taxes02:13:20
Page 20 - Audits02:13:29
Page 21 - Base Transfers for Operating Expenses and Personal Services. The total transfer of $194,957 from Audits other funds is the sum of four separate transfers. Funds are available due to lower personal services expenses than budgeted.02:13:35
Page 22 - Auditor Positions: the agency requested an increase of 5 FTE and $327,293 in other funds to add five additional auditor positions. 89% of the funding comes from the sales and use tax collection fund and 11% from the motor vehicle fund. 02:14:00
Secretary Gerlach spoke to the importance of the audit positions and the potential revenue to South Dakota from having additional auditors. The growing number of audits are out of state, with 65% of last year's audits being out of state. The focus would be out of state audits will larger companies. 02:14:24
Congress passed a bill last year eliminating the state's ability to tax internet transactions, which will amount to a $9 million loss to the states and a $4 million loss to municipalities after 2020. 02:16:40
Page 23 - Reversion History02:17:20
Page 24 - Instant and On-line Operations02:17:37
Page 27 - Video Lottery02:17:41
Page 31 - Commission on Gaming 02:17:50
Page 34 - Lean Update02:18:03
Toni Richardson, Administrative Services spoke to the LEAN process in the Department of Revenue.02:19:44
Representative Ahlers question on using the LEAN process in areas where the department is adding positions.02:23:50
Ms. Richardson said the LEAN process actually led the department to request additional FTE.02:24:16
Representative Karr question is the difference in title turn-around time a result of the LEAN process. Secretary Gerlach said when the legislature charged the department to shorten the turn-around time the department did a LEAN evaluation on that process. 02:24:52
Representative Carson question on sales tax remitted to South Dakota from an out of state company. Secretary Gerlach said if the company is licensed in South Dakota and a regular remitter, they will be audited.02:26:00
Representative Lake question on unutilized auditor positions.02:30:55
Ms. Richardson said it is a combination of vacancies due to turnovers or retirements.02:31:16
Representative Bartels question on the efficiency of the audit process.02:32:03
Secretary Gerlach responded that there is more than can be done electronically before they do the on-site audit. The auditors are trained to be respectful of the time they spend at a business. 02:32:35
Department of Labor & Regulation02:35:10
Marcia Hultman, Secretary of the department introduced her staff and gave a brief overview of the department.02:35:29
In April of 2017 the department launched the newly developed, common language, real time data online job match and data management system.02:37:56
On January 15, 2018 there were 13,752 job openings in that system, 43,569 registered job seekers, of which13,954 were new and the department provided 6,800 employer services.02:38:15
Representative Anderson requested the department provide a copy of the quoted statistics.02:42:50
Representative Ahlers question on work force challenges for youth.02:43:25
Ms. Hultman said South Dakota's employment participation rate for youth is 53.2%; however, that trend is declining. South Dakota has seen a 10% decrease in the last decade and it continues to drop with fewer 16-19 year olds working. The department is focusing on how to help students make a career choice. Youth are busy, sports take up their time and academics are more rigid. Employers need to be flexible with work schedules.02:43:54
Representative Hunhoff question on the department's role with retailers who work with high school or GED students.02:46:30
Ms. Hultman said because these individuals often lack "soft" skills, the department has developed a training program to teach the skills needed when entering the workforce. 02:46:55
Senator Peters commented on taxing the income of seasonal workers.02:47:42
Jason Simmons, LRC Fiscal Analyst presented the department's budget.02:51:30
Department uses 0.1% of the state general funds. 02:51:43
Page 3 - The FY19 Governor's recommended budget includes $1,941,018 in general funds, $30,459,258 in federal fund expenditure authority and $12,400,695 in other fund expenditure authority for a total of $44,800,971 and 425.3 FTE. This is an increase of $683,373 and 6.0 FTE. 02:52:04
Page 4 - Recap of FY17: the department had 28 unutilized FTE, zero general fund reversions, $6,361,869 in unutilized federal fund expenditure authority and $1,451,095 in unutilized other fund expenditure authority for a total of $7,812,964 unutilized budget authority. 02:53:05
Page 5 - Administration - The FY19 Governor's recommended budget includes $558,543 in general funds, $11,231,038 in federal fund expenditure authority and $313,685 in other fund expenditure authority for a total of $12,103,266 and 52.6 FTE, an increase of $12,028 and 0.1 FTE.02:54:00
Page 6 - Prior Year One-Time Transfers: a one-time transfer and conversion of $160,000 in federal fund expenditure authority from the Secretariat to other fund expenditure authority in Banking for training, computer replacement, rent and legal expenses. Funds were available due to less utilization of workforce training grant funds.02:54:50
Page 6 - Prior Year One-Time Transfers continued: A one-time transfer and conversion of $80,000 in federal fund expenditure authority from Secretariat to other fund expenditure authority in State Labor Law for a computer system upgrade to the worker's compensation management system.02:55:23
Page 6 - Prior-Year One Time Transfers continued: A one time transfer of $250,000 in federal fund expenditure authority from Secretariat to Field Operations due to a change in how operating expenses are coded.02:55:39
Page 7: Prior Year Base Transfers: $15,000 in other fund expenditure authority from Secretariat to Securities for computer system improvements; $74,379 in other fund expenditure authority to federal fund expenditure authority to align the budget; $2,475,405 in federal fund expenditure authority from Secretariat to Unemployment Insurance Services and $853,870 in federal fund expenditure authority from Secretariat to Field Operations.02:55:52
Representative Hunhoff question on less utilization on the Workforce Training grant funds. Secretary Hultman explained it was excess authority used for incoming grants. 02:57:05
Page 7 - Current Year Base Transfer: $100,000 in general funds and $250,000 in federal fund expenditure authority from Secretariat to Field Operations to align the budget.02:57:43
Page 7 - Transfer between Programs: Attorney Services for Boards and Commissions: the department requests an increase of $12,028 in other funds and an increase of 0.1 FTE for attorney services provided to the appraiser program by DLR staff.02:57:55
Page 10 - Unemployment Insurance Service: The FY19 Governor's recommended budget request is $6,814,026 in federal fund expenditure authority and 74.0 FTE.02:58:50
Page 11: Prior Year Base Transfers - these transfers were discussed previously.02:59:28
Page 14 - Field Operations: The FY19 Governor's recommended budget request includes $656,238 in general funds, $12,075,880 in federal fund expenditure authority for a total of $12,732,118 and 166.0 FTE.03:00:18
Page 15 - Prior and Base Transfers: detailed earlier in Secretariat.03:00:56
Representative Peterson question on Trust Fund Balance. Secretary Hultman said the Trust Fund is entirely employer contributions designated by statute for employee benefits.03:01:20
Page 18 - State Labor Law Administration: The FY19 Governor's recommended budget includes $726,237 in general funds, $297,832 in federal fund expenditure authority and $501,606 in other fund expenditure authority for a total of $1,525,675 and 15.3 FTE. This is a decrease of $59,880 and 0.7 FTE. 03:02:08
Page 19 - Prior One Time Transfer: One-time transfer and conversion of $80,000 in federal fund expenditure authority from Secretariat to other fund expenditure authority in State Labor Law for a computer system upgrade to the workers' compensation management information system.03:02:55
Page 20 - Transfers between Programs: Attorney Services for Boards and Commissions. The department requests a decrease of $59,880 in federal fund expenditure authority and a decrease of 0.7 FTE for attorney services provided to the boards and commissions.03:03:06
Page 22 - Board of Accountancy Information Budget: FY19 Governor's recommended budget request is $330,380 in other funded and 2.6 FTE with an increase of $5,888 and 0.1 FTE for attorney services.03:03:30
Page 26 - Board of Barber Examiners: FY19 Governor's recommended budget request is $31,062 in other funds and 0.0 FTE, an increase of $1,964 for attorney services.03:03:56
Page 29 - Cosmetology Commission: FY19 Governor's recommended budget request is $324,878 in other funds and 3.7 FTE, an increase of $8,635 and 0.1 FTE for attorney services. 03:04:15
Page 33 - Plumbing Commission: FY19 Governor's recommended budget request is $629,786 in other funds and 7.1 FTE, an increase of $3,337 and 0.1 FTE for attorney services.03:04:43
Senator Haverly question will budgets be affected by plumbing license reciprocity. Secretary Hultman said there is already opportunity for fees associated with out of state of licenses, the department does not see it impacting the budget. 03:05:12
Senator Peters question on reciprocal licenses and the requirement for a temporary license.03:06:13
Secretary Hultman said if there is a system in place that's easier, that system will over ride. 03:06:58
Representative Hunhoff question are attorney services shown as salary or contractual services. Secretary Hultman said salary. 03:07:16
Page 37 - Board of Technical Professions: FY19 Governor's recommended budget request is $382,321 in other funds and 3.6 FTE, an increase $11,774 and 0.1 FTE for attorney services. 03:07:40
Page 41 - Electrical Commission - $1,934,958 in other funds and 23.1 FTE, an increase of $242,201 and 1.1 FTE. This increase includes $3,924 in other funds and 0.1 FTE for attorney services. The Commission also requests an increase of $58,074 in other fund expenditure authority and 1.0 FTE to add an additional electrical inspector to increase compliance with electrical laws.03:08:08
Senator Peters question on the FTE requested for the Electrical Commission.03:08:35
Tom Hart, Deputy Secretary, said the additional inspector will be assigned to west river, specifically Rapid City.03:08:55
Page 45 - Real Estate Commission: FY19 Governor's recommended budget request is $589,188 in other funds and 5.1 FTE, an increase of $8,831 and 0.1 FTE for attorney services.03:09:35
Page 49 - Abstracters Board of Examiners: FY19 Governor's recommended budget request is $45,831 in other funds, an increase of $18,313. Of that increase $1,313 is for attorney services and the remaining $17,000 due to the Board requesting a contracted executive director.03:10:00
Page 53 - SD Athletic Commission: FY19 Governor's recommended budget request is $57,926 in other funds, an increase of $2,186 for attorney services.03:10:30
Page 57 - Division of Banking: FY19 Governor's recommended budget request is $3,737,088 in other funds and 34.5 FTE, an increase of $528,861 and 5.0 FTE. 03:11:00
Page 58 - One-Time and Base Transfers: One-time transfer and conversion of $160,000 in federal fund expenditure authority from the Secretariat to other fund expenditure authority in Banking for training, computer replacement, rent and legal expenses. Base transfer and conversion of $40,758 in federal fund expenditure authority, $227,050 in other fund expenditure authority and 1.0 FTE from Unemployment Insurance Service to other fund expenditure authority Banking.03:11:31
Representative Karr question on the increase in event fees under the Athletic Commission. Secretary Hultman reported it one specific event held in Sioux Falls, SD.03:11:52
Representative Hunhoff question on the increase in Capital Outlay for the Electric Commission. Ms. Ward said the Electrical Commission replaces one-third of their computers each year. 03:12:47
Page 59 - Requested Increases for Banking: the department requests an increase of $5,000 in other funds due to increases in annual membership fees; an increase of $469,861 in other funds and 5.0 FTE to hire additional financial institution examiners and an increase of $54,000 in other funds for additional office space due to increases in the divisions staff.03:13:56
Brett Afdahl, Director of the Division of Banking explained the need for the requested 5.0 FTE: one for bank examination functions, one in the trust division, one in the licensing examination division, a chief examiner and a training officer.03:14:42
Senator Peters question on the cost analysis of contracting these positions vs. hiring.03:18:03
Mr. Afdahl said the state does not pay enough to contract this work. The positions are posted in both Pierre and Sioux Falls; however, the office expansion is in Sioux Falls where the individuals will likely be housed.03:18:18
Representative Howard question on back-up personnel for the licensing exam position.03:21:18
Mr. Afdahl said they used bank examiners to fill in the gap; however, that is not their primary function. The new position will not be a back-up but will be equal in duties; there is more than enough work for both positions. 03:21:35
Mr. Afdahl assured the Committee there is more than enough work to justify the positions. The work hasn't doubled from last year but has been a steady increase for the past 5 years. 03:24:00
Senator White asked if there had been a downgrade of banks due to the farm industry.03:25:00
Mr. Afdahl said in calendar year 2017 three banks were downgraded to problem status, one will involve a public enforcement action. There is a combination of asset quality deterioration and lack of management oversight. It is not getting easier. 03:25:42
Page 64 - Accounting Services: the department requests an increase of $3,485 in other funds in personal services for accounting staff to prepare the annual financial statements instead of a 3rd party. The department also requests an increase of $3,000 in other funds for transportation of the actuary consultant to board meetings.03:26:45
Senator Nesiba question regarding Initiative Measure 21, how does the department determine if the money lenders should remain open.03:27:24
Mr. Afdahl said in 2016 after the law went into effect, the department surveyed all lenders. It showed very few are issuing new loans, those remaining open are servicing the loans issued prior to IM21.03:27:47
Page 62 - Trust Captive Insurance Company: FY19 Governor's budget request is $173,046 in other funds, a decrease of $100,765. The reason for this decrease is to replace the start-up budget with the ongoing budget for the Trust Captive Insurance Company. 03:29:16
Page 65 - Division of Insurance: the FY19 Governor's recommended budget request is $40,482 in federal fund expenditure authority and $3,348,940 in other fund expenditure authority for a total of $3,389,422 and 37.7 FTE. 03:29:56
Page 66 - Transfers: One-time conversion of $30,000 in other funds to federal funds within the Division of Insurance to be utilized on a federal grant which was extended beyond its expiration date.03:30:35
Representative Anderson question on why state employees are not used as insurance examiners vs. contracting examiners and the increasing costs.03:31:01
Secretary Hultman will provide information to the Committee.03:32:25
Motion to Adjourn: Peters/Bartels03:34:18