South Dakota faces federal cuts, furloughs

PIERRE, S.D. (AP) -- South Dakota could lose at least $10 million in federal funding from automatic spending cuts set to take effect Friday, but Gov. Dennis Daugaard said he is most worried about what will happen in programs that educate struggling students and help low-income people heat their homes and put food on the table.

Daugaard said state officials Wednesday were still trying to understand exactly what would be cut from federal funds handled by the state and how those cuts would be applied. He said he was asking state agencies to provide more details on the cuts.

"I don't know that it'll be a dramatic impact. We're trying to understand that right now. We're trying to evaluate that right now," Daugaard said.

If President Barack Obama and Republican congressional leaders don't reach agreement on another way to reduce the federal debt by Friday, $85 billion in automatic, across-the-board cuts will take effect.

The Republican governor said he's upset that the president has insisted that the federal spending cuts be applied across the board, rather than letting federal agencies focus the cuts in programs that have little impact on people's daily lives.

For example, some of the cuts will hit grant programs that help cities build water lines and other projects. Those cities will not be forced to lay off anyone, but will only have to scale back pipelines, Daugaard said.

"That's an easier area to cut than, say, somebody who's counting on it to pay their heating bills or pay their food bills," Daugaard said.

Daugaard said school districts will lose money for special education and programs that help struggling students, such as one that provides teachers to help students who have trouble reading. Cuts also are slated for a program that helps low-income people pay winter heating bills and the nutrition program for low-income women with small children.

Jason Dilges, the governor's budget director, said the cuts could bring furloughs for state employees paid with federal money. The governor and the Legislature could decide to use state money to replace lost federal funds, he said.

"We'll have to look at the citizens of South Dakota and their well-being because these are going to affect us relatively quickly, Dilges said.

The timing of the federal cuts also complicates the process of approving a state budget for the year that begins July 1. The Legislature plans to pass that budget by the end of next week, the end of the main run of South Dakota's legislative session.

Dilges said he plans to propose only minor changes in the $4.1 billion state budget Daugaard proposed in early December, but the federal spending cuts could affect state revenue and spending. If prolonged spending cuts hurt the economy, state tax collections could suffer, he said.

Wade Pogany, director of the Associated School Boards of South Dakota, said school districts across the state likely will lose between $2 million and $3.5 million in federal funding for special education and programs that help disadvantaged students. As the Legislature prepares to pass a state budget, schools are asking that lawmakers provide extra money to help schools recover from state budget cuts made two years ago, he said.

"It couldn't come at a worse time for schools, given their financial situation right now," Pogany said of the federal cuts.

The South Dakota National Guard also has said the federal budget cuts would likely force it to furlough 548 full-time personnel for 22 days over the next five months. More than half the National Guard's 918 full-time employees would lose one day's work and pay each week for 22 weeks starting in late April. They would lose more than $4.2 million in wages, officials said.

Daugaard said a group that all states use to analyze federal spending has estimated South Dakota will lose $14 million in federal spending from March through September, but the state budget office estimates the loss at only $10 million. The state expects to lose nearly $5.7 million in federal money from March through June 30, the end of the state's budget year, and another $4.3 million from July through September, the end of the federal budget year, he said.

The governor said he expects the cuts to take place Friday, but the president and Congress might be forced to make a budget deal later to replace the automatic cuts. For example, if a budget resolution doesn't pass Congress by April 15, members of Congress won't get paid, he said.