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Daugaard outlines $4.8 billion state budget to lawmakers

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PIERRE, S.D. (AP) — Gov. Dennis Daugaard proposed an ambitious budget Tuesday for a state bolstered by better-than-expected revenues, backing new state aid to hike teacher pay and freeze tuition while also proposing a plan to expand Medicaid.

The $4.8 billion budget proposal, which the Republican governor outlined in his annual address, includes more than $80 million in new general state spending for the upcoming budget year.

Daugaard's openness to broadening eligibility for the health coverage program for low-income and disabled people is a departure from many other Republican governors around the country who have steadfastly resisted expanding the Medicaid program in part because of opposition to the federal health overhaul.

The governor said the state's cost would have to be covered by savings to move forward. The proposal pays for the state's share of the expansion in part by expanding access to services that are fully funded by the federal government, with the goal of freeing up enough state funding to pay for the addition of more residents to the Medicaid program.

"I cannot tell you today that everything will come together, but if it does, we should seize that opportunity, I believe," Daugaard said, adding that he shares some lawmakers' concerns about expansion.

"It bothers me that some people who can work will become more dependent on government," he said. "I hate that. I hate dependency."

The plan may face a difficult path in South Dakota's Republican-dominated Legislature. House Majority Whip Don Haggar, a Republican, said he doesn't believe the chamber will support expanding the program.

But Democratic legislative leaders, who have supported expansion for several years, celebrated the move.

"It looks like it's a very real possibility," Senate Minority Leader Billie Sutton said.

Daugaard also indicated support for using new state money to increase teacher salaries in South Dakota, but has said specific proposals will come during his State of the State Address.

House Minority Leader Spencer Hawley said he's disappointed with a "mere reference" to teacher pay in the governor's budget, but said Democratic legislators are supportive of many provisions including a proposal to keep steady the cost of getting a degree.

Much of the roughly $60 million one-time spending in the governor's budget would go to paying off debt to help the state's public universities and technical schools freeze tuition for the next school year.

The proposal shows South Dakota is committed to higher education, said Mike Rush, executive director and CEO of the state Board of Regents. He said the freeze would the amount students have to borrow or pay out of pocket for school.

The budget plan also adds more than $80 million for the upcoming budget year in general state spending, in part through savings. The money would go to increases to higher education, Medicaid providers and state workers. The governor is also pushing for extra funding for some lower-paid providers.

Daugaard has said state revenue improvements allowed him to propose larger increases than otherwise would have been possible.

The state closed the fiscal year that ended on June 30 with a budget surplus, piling up $21.5 million more than projections because of higher revenues and lower-than-anticipated spending.

Stronger receipts in construction and insurance taxes coupled with lower spending for education and Medicaid were largely responsible for the surplus for the 2015 budget year.

Bureau of Finance and Management Commissioner Jason Dilges said those trends have continued into the current budget year.

"This is an exciting time for South Dakota," Daugaard said. "We've managed our state well, I believe, and we have the opportunity to make great progress this year."

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