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South Dakota is a state of modest means.

As obvious as that statement is, it bears repeating. We need to constantly remind ourselves that short of a tectonic shift in either the state or the U.S. economies, our humble home is going to remain near the bottom in state revenue collection rankings.

Our governors always announce with pride the fact that South Dakota has always been able to balance its budget while at the same time keeping tax rates among the lowest in the nation. Low taxes are good. Indeed our tax structure is one of the state's best tools for attracting new companies and growing the state economy, which grows the tax base. Low taxes also increase the spending power South Dakotans even though our wages tend to be lower.

That being said, low taxes present our state with a few challenges. We struggle to pay for basic services such as road maintenance. Our generally conservative outlook on spending also tends to trap our state's leaders into failing to adequately pay state government's most valuable resource — the people who work for us.

The folks who work for us are hardworking, thoughtful individuals who chose public service not to make a ton of money but to do what they love, whether its monitoring deer populations for Game, Fish & Parks or crunching numbers for the Department of Revenue. Still, if your job doesn't pay enough to feed or family or keep a roof over your head, it doesn't matter how much you love it. And every time there's a lean year, these folks' pay often is the first item on the chopping block.

For two years now, our employees have gone without even an inflation-based raise. Now, some will argue that no employee should get a raise every year just for doing their job. That argument has merit when applied to raises beyond the rate of inflation. But you see, when pay doesn't rise with inflation you're actually getting a pay cut because your take home pay purchasing power drops by a few percentage points.

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South Dakota has always paid its employees below the national averages. Again, we're a state of modest means and we rely on quality of life, low taxes and a stable retirement plan to attract people to work for us. But as the rate of pay falls further behind our neighbors, it's becoming harder to hire the best people. A high-profile example of this is the state's struggle to hire and keep an administrator for the Human Services Center.

There are more important positions in state government that have gone unfilled because quality applicants are hard to come by. This appears to be particularly true when it comes to the fields of accounting and auditing. Being short-handed affects the level of service we see from our government and could lead to bigger problems in the future.

We can only balance the state budget on the backs of state employees for so long before the quality of service degrades. If we continue to be unwilling to pay them what they're worth, we'll be deserving of the dysfunction we'll face.

As tax receipts rise we should keep that in mind.

— Pierre Capital Journal

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