January 12, 2013
South Dakota and a Long Economic Winter
Yesterday we headed home early from our legislative session to try and beat a huge snowstorm that was sweeping across our state. Today is apparently the one hundred twenty-fifth anniversary of a South Dakota blizzard that killed 500 people - known to us as the Children's Blizzard of 1888. (No real weather to report here in Sioux Falls today except cold and a few flurries.)
The Long Winter is a familiar phrase to all South Dakotans reared on the beloved Laura Ingalls Wilder stories. However, here my reference to a “long winter” has little to do with blizzards or extended cold spells. Governor Daugaard was emphatic in his recent budget address and State of the State address that global and national economic realities could potentially affect South Dakotans dearly.
I'm not sure this is an exact quote but the Governor said something like: we have no idea what will happen in two months. Though he was referring primarily to Congress, the fiscal cliff and the sequestration cuts that are looming, in all economic aspects the only certainty is that things remain very uncertain. South Dakotans are hardy people and give forethought before even driving a distance in the winter. We don’t wait until we are stuck in the snow to think about having blankets in the backseat. Hopefully this is true of us in a fiscal sense.
Many economists agree it’s only a matter of time before America faces the consequences of decades of the devaluation of the Dollar, unsustainable spending, irresponsible consumption and unbridled debt accumulation. Regardless of whether or not we agree a day of reckoning is inevitable, it is the responsibility of our state elected officials to do more than wait and see if and when for example, the Dollar ceases to be the World’s Reserve Currency.
Certainly I don't have the answers, but I do hope to be asking the right questions. Initially I planned to put forth a bill this legislative session that would establish a Long Economic Winter (LEW) Work Group "to ascertain the effects of an extended and significant national economic crisis and/or correction on Main Street, South Dakota and to submit a LEW Findings Report to the 2014 Legislature including legislation recommendations and precautions or suggested considerations for our communities and general population." However, it appears I've been sucessful in getting these questions and concerns on the agenda of our Legislative Long Range Planning Committee and so I won't be bringing a bill.
Here are the questions I'm asking:
1) What would say, a 20% reduction in Federal funds mean to South Dakota? Some tell me it'd put South Dakota back into the Stone Age. Already we have no margin for additional education spending or medicaid providers. The CEO of Avera Health Systems told me they have contingency plans in place for both physical and financial catastrophes. Maybe our state needs to have the same conversations.
2) What would the collapse of the Dollar mean to Main Street, South Dakota? What would it mean to our states large financial sector, which at present is a significant source of state revenue and jobs?
3) What are the possibilities for weaning South Dakota off Federal and other uncertain (or arguably unhealthy) revenue sources? Are we insulated from the worst of a national economic crisis or correction, or would our present dependent state status mean South Dakota would be the first and/or most deeply affected?
4) What if any measures in South Dakota could be adopted so our present statutes don’t exacerbate difficulties in buying and selling, or bartering? For example, since 2005, fourteen states have introduced bills to provide for the establishment of alternative currencies and Utah and Georgia have done so. Should these be considerations in South Dakota?
5) What current state statutes might a) hamstring people simply trying to take care of themselves and their families and/or b) frustrate or prolong our recovery?
6) What would a significant disruption in the food, fuel or power supplies mean to our population? No kidding, when they closed I-90 and I-29 for three days a few years ago because of snow, the local HyVee here got down to three gallons of milk. America has no food storage, it's all on trucks. A Homeland Security employee told me last year a labor/union issue triggering a trucking strike in the southeast for example would create immediate food shortages and civil unrest in Atlanta, Memphis and Chicago. I was told South Dakota would not be first in line for food.
7) Considering the unstable and unsustainable economic environment beyond our borders, just how much should we keep in our Reserve Funds?
Obvious, I don't believe it's a time to build an events center on the backs of struggling taxpayers so we don't have to drive to Minneapolis to see Huey Lewis and the News. Sorry, that was sarcastic. But you get my point. Frankly it's nuts to be to talking about expanding anything right now with the complete uncertainty of Federal promises and programs.
Sorry for being the pessimistic one, I'd argue it's realism. The consensus is my Long Winter verbiage is too much for some and so we are going to be talking about contingency plans. I don't care what we call it.
I'm grateful that, to date, our city and state have been generally insulated from the harsh economic realities in other parts of our nation/world. But I'm not buying any talk of us being in a recovery because we are building some homes and some revenues are inching back up. If your kids diet was 50% Twinkees/10% candy you couldn't say he was healthy just because he was growing. Folks, that's a picture of South Dakota's budget reality - highly subsidized by the Fed and Video Lottery. It's okay to have some candy and a piece of cake now and then, but what I'm talking about isn't healthy.
I've long said that hard times are the best times for American's to rise up to the challenge of caring for each other and I'm confident South Dakota can lead the way and be a model for other states in this regard. Please know I am conscious of my Rev/Rep roles and I do try to not barge out into the public square with a zillion Bible verses. Even so Proverbs 27:12 needs to be included here: "The prudent see danger and take refuge, but the simple keep going and suffer for it."