Committee on Appropriations A/V — 2019

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Roll00:00:41
Pages00:01:32
Mr. Darin Bergquist, Secretary, Department of Transportation, made FY20 request as recommended by the agency.00:02:41
Secretary Bergquist made staff introductions and indicated senior management had been with the department for many years.00:02:59
South Dakota Department of Transportation - Presentation - Page 100:05:02
Secretary Bergquist gave an overview of the organizational chart and a description of each division within the agency. The four divisions include Planning and Engineering, Operations, Finance, and Secretariat.00:06:14
FY 20 budget request for the Department of Transportation includes $554,671 in general funds, $388,680,918 in federal fund expenditure authority, and $304,020,193 in other fund expenditure authority totaling $693,255,782 and includes 1,014.3 FTE. - Legislative Research Council Budget Briefing - Page 200:07:19
There is an increase from FY19 Budget Request. The FY20 Department of Transportation budget request has a $3,308,985 in federal fund expenditure authority for capital outlay and a ($11,383) in planning and engineering. - Legislative Research Council Budget Briefing - Page 2. Secretary Bergquist said this would help restore DOT buildings to where they need to be. The operations division had been subject to spending cuts many years ago.00:07:25
Secretary Bergquist explained sources of revenue for the Department of Transportation. - Legislative Research Council Budget Brief - Page 100:09:45
State Motor Fuel Tax - Department of Transportation- FY08 to FY18 Collections - Revenue increase came in FY15 from Senate Bill 1 - Graph - Page 400:10:40
State Motor Vehicle Excise Tax - FY08 - FY18 Collections - Graph - Page 500:11:29
Total State Highway Fund Revenues - FY08 - FY18 Collections - Graph - Page 600:12:13
Secretary Bergquist indicated FY18 total revenue decreased 0.04%.00:12:28
Local Government Funding - Bridge Improvement Grant (BIG) - Preliminary Engineering, Preservation, and Rehabilitation and Replacement - Page 600:14:23
Senator Cronin - question - who decides how grants are awards and requested a list of recipients of the Bridge Improvement Grants00:16:48
Representative Howard - question - what are the terms for the BIG grant and requested additional information00:18:30
Fast Act - Fixing American's Surface Transportation Act - Page 700:22:08
Secretary Bergquist indicated he was concerned how congress will replace FAST ACT funding after September 2020. Generally federal funds pay 80% and state funds pay 20% for highways.00:24:20
Secretary Bergquist indicated a partial Federal Government Shutdown will have an impact on the Department of Transportation. Environmental clearances will be delayed, and projects will sit.00:25:55
FAST - Special transportation circumstances - Secretary Bergquist said Alaska, South Dakota, and Wyoming are the only states eligible for this special funding. South Dakota will be awarded approximately $9M for grant eligible projects.00:26:40
Federal Aeronautics Administration provides Airport Improvement Funding - 90% federal funded, 5% state funded, and 5% locally funded. In 2018 South Dakota was awarded $20M in funding statewide. Additionally, a $4.1M supplemental grant was awarded for the Mobridge airport.00:28:23
Senator Maher - question - can federal funding be carried over from year to year00:29:33
Secretary Bergquist said the department of transportation wasn't going to restructure programs.00:30:33
Spider Van - There is a $900,000 difference in the Department of Transportation Governor's FY20 Recommended Budget request and the agency's budget request. The State of South Dakota's portion for FY19 request is $180,000 and the rest is federally funded.00:31:26
The Department of Transportation FTE levels will remain the same from last year at 1,014.3 FTE.00:33:45
The Department of Transportation has made many efforts to utilize all FTE. Unutilized FTE are from turnover. The turnover rate is 11.7% and an issue for the Department of Transportation. Certain positions in some geographic areas are difficult to fill. For example, Pierre has a hard time recruiting engineers. Project technicians and maintenance workers are hard to find statewide.00:34:01
There are enough funds in the aeronautic fund through the year 2022. The Aeronautic Commission said this fund has diminished over the years and will need to be addressed in the future.00:36:25
Senator Greenfield - question - is the only remedy to replenish the aeronautic fund is to increase the levy00:37:50
Representative Hunhoff - question - how long of an extension will be made for the aeronautic fund and how many funds have been transferred out annually00:39:24
Senator Maher - question - is the source of funding for the aeronautic commission from registration fees and jet fuel tax00:40:40
Representative Hunhoff - question - which airports have jet traffic and who benefits from this tax and requested additional information00:41:00
Representative Saba - question - why does the Department of Transportation want to install roundabouts near Hartford and what is the process for citizen input 00:41:55
Representative Bartels - question - is the Department of Transportation planning for succession and leadership development00:45:40
Secretary Bergquist said a majority of his top 40 positions are eligible to retire in the next 4 years.00:46:15
Representative Bartels - question - would you explain the different sources of funding for Public Transport Providers and how does the Department of Transportation address this issue00:46:50
Representative Bartels - question - does the commission decide to budget for public transportation and is the Bridge Improvement Fund disbursement decided by the appropriations bill or is the transportation commission responsible for these decisions00:48:50
Representative Post - question - are rural transport providers exempt from fuel taxes00:50:26
Senator Wiik - referring to the Historical & Projected Future Pavement Condition Based on Current Investment Chart - Page 11. Senator Wiik - question - in FY24 many roads will need to be repaired and how will the Department of Transportation address this issue 00:51:06
Secretary Bergquist said the Department of Transportation goal is to have 80% of South Dakota highways in good to excellent condition. The Department of Transportation is dependent on federal funding and should be adequately funded through September 2020.00:53:55
Senator Wiik - question - does South Dakota have a revenue source from drivers of electric trucks or cars since they won't pay fuel tax00:55:19
Senator Greenfield - question - do you track diesel fuel sales versus regular fuel sales and why did fuel tax collections decline $3M in FY18 00:56:16
Secretary Bergquist says people in the State of South Dakota generally travel the same amount annually and a decline in revenue probably means vehicles are more fuel efficient.00:57:00
Senator Sutton - question - does the South Dakota Department of Transportation have problems maintaining bridges00:58:12
Public Testimony - Department of Transportation - Public Transportation Providers01:00:00
Mr. Myron Rau, South Dakota Transit Providers, gave public testimony in regarding shortfall of funding for public transportation providers.01:00:18
Senator Cronin - question - is there a shortfall from federal grant funding for public transportation01:05:08
Senator Kolbeck - question - are you working with the Sioux Falls Transit Authority to help people go to and from work 01:07:08
Representative Saba - question - is the public transportation system in Sioux Falls efficient and meeting the needs of citizens with disabilities01:08:08
Ms. Lisa Johnson, Prairie Hills Transit, Spearfish, gave public testimony in regarding west river public transportation funding needs.01:10:41
Ms. Brenda Schweitzer, Brookings Area Transit, Brookings, gave public testimony regarding public transportation funding shortfalls.01:15:00
Senator White - question - it appears there is a funding shortfall for public transportation and what is causing this shortfall01:19:00
Senator White - question - has public transportation use increased and requested additional information to help address this issue01:19:58
Senator Wiik - commented public testifiers could provide additional information to Amanda Doherty-Karber, Fiscal Staff, Legislative Research Council01:21:13
Mr. Craig Price, Secretary, Department of Public Safety, made FY20 Budget as recommended by the agency. Secretary Price gave an overview of the department and made staff introductions.01:23:12
The Department of Public Safety FY20 Budget agency request includes $4,556,967 in general funds, $26,016,464 in federal fund expenditure authority, and $38,696,728 in other fund expenditure authority totaling $69,270,159 and includes 420.5 FTE. 01:23:30
Department of Public Safety - Five Divisions - Page 201:24:33
Meth Interdiction - Department of Public Safety - Page 401:24:51
Representative Hunhoff - question - would you provide additional information why the four troopers were necessary01:25:55
Senator Cronin - question - would provide additional information how many drug seizures were from out of state vehicles versus vehicles originating in state01:26:23
Roadway Fatality Reduction - Fatality Reduction versus Vehicle Miles Traveled - Year 2010 to Year 2017 - Page 501:27:32
Innovation in Geographic Information System (GIS)- Department of Public Safety - Page 601:28:53
Senator White - question - what areas in the State of South Dakota have higher percentage of highway fatalities and how is the department addressing this issue 01:29:59
Senator White - question - would the Department of Public Safety provide additional information how they are preventing highway fatalities in high risk areas and commended their public safety efforts01:31:43
Training and Exercises - Department of Public Safety - Page 701:32:04
Senator Greenfield - question - does the Department of Public Safety work with schools and other groups to teach ALICE (Alert, Lockdown, Inform, Counter, Evacuate) safety training 01:34:19
TSA Fingerprinting - Department of Public Safety - Page 801:35:42
Grant Accountability - Department of Public Safety - National Record of Five Commendations - Page 901:36:46
Department Budget - Department of Public Safety - FY20 General Funds $4,556,967, Federal Fund Expenditure Authority $26,016,464, Other Fund Expenditure Authority is $38,696,728 totaling $69,270,159. - Page 1001:38:05
Administration Division - Department of Public Safety - FY19 request to align spending with actual expenditures - Page 1101:38:48
Highway Patrol Division - Department of Public Safety - FY19 $480,000 request for federal fund expenditure authority to align budget with a change in federal motor carrier grant which allowed more personal services to be charged to the grant - Page 1201:39:57
Representative Bartels - question - how is the department addressing the $480,000 federal fund expenditure authority for personal services and where is the reduction in another account01:40:14
Ms. Angie Lemieux, Director of Administration and Grant Oversight, Department of Public Safety responded01:40:40
Representative Bartels - question - is the Department of Public Safety's personal services budget not large enough to pay their FTE01:41:30
Senator White - question - will this Motor Carrier Federal Grant be ongoing funding01:42:33
Highway Patrol Division - Department of Public Safety - FY19 $130,861 general funds for state radio due to a request from the Pennington County Emergency Center (ESCC) to increase their contract - Page 1301:43:06
Representative Koth - question - how many years has the Pennington County Emergency Service Center (ESCC) had a contract with state radio and does state radio have the right to change this agreement01:45:15
Senator Cronin - question - does the state radio contract with Pennington County Emergency Service Center allow for an automatic 3% inflation increase 01:46:16
Emergency Services & Homeland Security Division - Department of Public Safety - Page 1401:47:34
Representative Hunhoff - question - when and why did the IRS require the Department of Public Safety not to contract and make the department hire employees01:48:06
Legal & Regulatory Services Division - Department of Public Safety - FY19 general funds request $11,978 to provide inflation related to the Victims Compensation Fund - Page 1501:49:15
Special Appropriations Requests - State Metrology Lab - $1,660,000. The State Metrology Lab verifies accuracy for weighing devices and equipment at gas stations and grocery stores. The Department of Public Safety would like to move the Metrology Lab to Sturgis. Disaster Fund - $550,596 - This fund will cover the shortfall anticipated from our current open disaster declarations. - Page 1601:50:05
Senator Greenfield - question - why should the Department of Safety move the State Metrology Lab to Sturgis since Pierre is centrally located01:51:38
Ms. Angie Lemieux, Director of Administration and Grant Oversight, Department of Public Safety responded.01:52:28
Senator Greenfield stated he has concerns about the funding request for the State Metrology Lab.01:54:40
Representative Karr - question - what facility is available in Sturgis for the State Metrology Lab01:55:15
Representative Karr - question - what is the process gas pumps are being measured by the Department of Public Safety and how is a discrepancy addressed01:56:10
Representative Karr - requested additional information how the Department of Public Safety determines where and how often equipment and weighing inspections are made01:58:16
Senator Cronin - gave a historical perspective about the Department of Public Safety metrology inspections at his former gas station01:59:56
Senator Cronin - question - is the facility in Pierre adequate for the State Metrology Lab and why does the Department of Public Safety need to transfer the State Metrology Lab to Sturgis02:01:10
Senator Wiik - question - who checks truck weight scales02:02:25
Senator White - question - why does the Department of Public Safety need $1,660,000 for the building that is already owned by the State of South Dakota in Sturgis for the State Metrology Lab when new building costs are generally $110 per square foot02:03:05
Senator White requested additional information why the remodel of the State Metrology Lab costs $1,660,00002:05:09
Representative Hunhoff - question - how long does it take to be certified to work at the State Metrology Lab and how did you determine its new location02:05:33
Representative Koth - question - is the $1,660,000 estimate a bid for the cost of the new State Metrology Lab and requested more detailed information02:07:40
Senator Greenfield - question - what are the cost of television ads sponsored by the Department of Public Safety and where is the line item in the Department of Public Safety budget02:10:54
Senator Greenfield requested additional information what public safety television ads cost02:12:00
Senator Greenfield - question - why was the state radio dispatch signal not working adequately during the hostage situation at the State Development Center in Redfield 02:12:40
Senator Greenfield - question - is there a backup plan for the Department of Public Safety when highway patrol state radio dispatch doesn't work 02:15:11
Representative Karr - question - what are the goals, timeline, and how are you measuring success for the Department of Public Safety Marketing Campaign, and requested additional information02:15:45
Introduction of Pages02:16:20
Mr. Jim Terwilliger, Secretary, Department of Revenue, gave department overview, introduced staff, and made FY20 Budget Request as requested by the Governor. 02:17:52
The Department of Revenue FY20 is $1,315,732 in general funds, $300,000 in federal fund expenditure authority, and $74,149,565 in other fund expenditure authority totaling $75,765,297 and includes 258.5 FTE.02:17:59
South Dakota Department of Revenue FY20 Recommended Budget - Page 102:19:08
What We Do - The Department of Revenue is responsible for the administration and collection of business taxes, motor fuel taxes, motor vehicle fees, special taxes, operation of the state lottery, and regulation of the gaming and racing industries in South Dakota - Page 202:20:11
Senator Wiik - question - are certified service providers complying with South Dakota state law after the successful United States Supreme Court decision concerning online sales tax 02:22:41
Secretary Terwilliger indicated there is a streamline sales tax initiative which involves 23 states in the Midwest and if someone has questions about compliance, they should start by contacting the Department of Labor.02:24:30
Senator Kolbeck - question - is there a way to break down brick and motor sales and ecommerce tax collections 02:25:16
Representative Bartels - question - how many businesses have registered for a remote license with the Department of Labor since November 1, 2018 02:27:14
Senator Wiik - commented - that sales tax follows the consumer in smaller communities and gave an example02:27:58
Representative Bartels - comment - the online sales tax ruling has muddied the waters what constitutes South Dakota sales tax versus South Dakota remote sales tax02:29:20
Senator Kolbeck - question - what portion of ecommerce sales tax is collected by municipalities and what portion is collected by the State of South Dakota02:30:19
Mr. David Wiest, Deputy Secretary, responded and cited a South Dakota legal case in the year 1994.02:31:31
Secretary Terwilliger said the Department of Revenue and Bureau of Information and Telecommunications will be working on rewriting the software for the South Dakota Cars Program.02:33:37
Department of Revenue has had 15.7% turnover rate and Secretary Terwilliger said it was a concern.02:34:25
Organizational Chart - Department of Revenue - Page 302:34:26
State of South Dakota Map - Cities that have a Department of Revenue Offices - Page 402:35:41
FY20 Recommended Budget - Department of Revenue - Page 502:37:04
There is a FY20 request to have 3.0 additional FTE for $158,000.02:37:55
FY20 Recommended Budget - Department of Revenue - Recommended Budget Change is $483,467 in other fund expenditure authority - Pie Chart - Page 602:38:02
FY20 Recommended Secretariat Budget - Department of Labor - No Recommended Increases - Page 702:38:29
FY20 Recommended Budget - Business Tax - Page 802:39:54
FY20 Recommended Budget Business Tax - Department of Revenue - Additional 3.0 FTE request if for revenue agents - Break down by Personal Services and Operating Expenses totaling $158,329 - Page 902:40:14
Senator Cronin - question - has the delinquency rate declined since more people are filing online02:42:02
Secretary Terwilliger said there is a 10% to 12% delinquency rate on revenue collections at any one time.02:42:05
Representative Hunhoff - question - how does the Department of Revenue delinquency rate compare to the national average 02:42:40
Senator Cronin - question - how many South Dakota businesses pay taxes online and what percentage of the population still file paper returns and requested additional information02:43:30
FY20 Recommended Budget - Motor Vehicle - Page 1002:45:10
FY20 Recommended Budget - Property and Special Taxes - Page 1102:47:16
Secretary Terwilliger said the sales and use tax audit have increased over the past five years.02:49:03
FY20 Recommended Budget - Audits - An additional 5.0 FTE is requested which will cost $325,136 - Page 1202:49:28
FY20 Recommended Budget Audit - Additional FTE for Auditors Break down by Personal Services and Operating Expenses totaling $325,138 - Page 1302:50:25
Senator Kolbeck - question - are there any vacancies in the audit department and Secretary Terwilliger would provide additional information02:51:43
Representative Hunhoff - question - has the Department of Revenue requested additional auditors in the past02:52:21
Representative Hunhoff - question - can the Department of Revenue deal with audit with the lack of auditors.02:53:49
Representative Koth - question - could an auditor be cross trained from one department to another to fulfill workload demands02:54:30
Secretary Terwilliger said more experienced auditors can handle complex audits from out of state businesses.02:55:10
Representative Koth - question - how many auditors does the Department of Revenue employ and are these auditors needed to monitor online sales tax02:56:00
Secretary Terwilliger said the number of audits has increase by 20% over the past few years and if the State of South Dakota wants to conduct audits at the same rate they will need additional FTE.02:56:54
Senator Nesiba - question - does the South Dakota Department of Revenue have relationships with other states and is there a compact to conduct remote seller audits02:57:34
Secretary Terwilliger said South Dakota has a broad base of sales and use tax. Other states may be more specialized.02:59:05
Representative Bartels - question - are there provisions in the streamline sales tax initiative to reduce the number of audits02:59:25
Senator Wiik - question - will there be something done to streamline multi-state audits to big companies like Amazon 02:59:51
Mr. David Wiest, Deputy Secretary, responded and would provide additional information about the multi-state streamline sales tax initiative.03:00:18
Representative Gross - question - are there high, medium, and low risk audits of main street businesses03:01:30
Deputy Secretary Wiest would provide a slide show about Department of Revenue auditing guidelines to Representative Gross.03:02:42
Senator Sutton - question - how many people file with remotely and how many use paper with the Department of Revenue03:03:29
Senator Sutton - question - are some businesses struggling to file with the Department of Revenue online since they don't have access to the Department of Revenue epass system03:04:44
Representative Bartels - question - how much revenue has been recovered through audits03:06:20
FY20 Recommended Budget - Department of Labor - South Dakota Lottery - Instant & On-line Operations (Informational Budget) - Page 1403:09:15
FY20 Recommended Budget - Department of Labor - South Dakota Lottery - Video Lottery - Page 1503:09:45
Senator Cronin - question - would you provide additional information how gaming funds are distributed03:10:06
Senator Cronin - question - was there a proposal to obtain newer video lottery machines and expressed concern about the cost03:10:16
FY19 Emergency Special Appropriation - An act to make an appropriation to fund tax refunds for elderly persons and persons with a disability, to revise the income eligibility requirements for property and sales tax refunds, and to declare an emergency - Page 1703:11:24
FY20 Recommended Budget - Department of Revenue - Commission on Gaming (Informational Budget) - Page 1603:11:49
Senator Cronin - question - would you provide gaming tax distribution breadkdowns.03:12:46
Mr. Jeff Mehlhaff, Fiscal Analyst, Legislative Research Council, has Commission on Gaming information and would provide the information to Senator Cronin.03:13:20
Representative Hunhoff - requested additional gaming tax revenue information and requested a list to be distributed to the Joint Committee on Appropriations.03:13:20
Senator Greenfield - question - when was the last time the act to fund tax refunds for elderly persons and persons with disabilities been reviewed03:14:48
Senator Greenfield - question - when will the next set of license plates be issued and what is the budget 03:15:30
Senator Greenfield - question - what is the history of the sales and use tax law and why aren't these funds deposited in general funds03:17:28
Outstanding Letter of Intent - Department of Revenue - Automated Lock Box Services 03:20:30
Announcements03:21:40
Adjourn - Cronin/White03:21:50

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