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Gov. Dennis Daugaard gives his annual State of the State address on Tuesday to the 90th session of the South Dakota Legislature at the South Dakota State Capitol building in Pierre. Long-range budget forecasts released Friday by Gov. Daugaard's administration suggest the state could have a $12.8 million budget deficit by 2018. 

He's a Republican who didn't raise taxes in his first term, but as South Dakota Gov. Dennis Daugaard started his second term last week, he revealed his plan to raise the gasoline tax and other vehicle taxes and fees to improve the state's roadways.

Daugaard's plan is to apply $50 million in new revenue to repair roads and bridges, but even some in his own party think his proposal is not enough.

Fresh off his State of the State address, Daugaard came to Rapid City. He sat down with a Journal reporter to discuss his priorities for his second term.

What are your goals in reforming the juvenile justice system? Does this simply shift more state costs of incarceration and counseling to the counties?

No, we are going to be investing money into financial incentives to the counties. One of the things that will be proposed by the juvenile justice legislation will be to encourage more diversion. That would be a prosecutor would look at a juvenile offender and say, "Let’s divert this offender to teen court and maybe they will be handled informally in teen court." We have a lot of teen courts that aren't being fully utilized around the state, and it's a very effective way and so we are going to be paying counties some money every time they divert an offender to teen court.

It doesn’t cost the county any more; in fact, it doesn’t cost them anything. We hope if we encourage that, some of those offenders will be handled locally at less costs and everybody wins.

The judges today in some cases don’t have very good programs. Judges are looking at the juvenile in front of them and saying, "I have two choices, send them back home (and) give them a good scolding, (or) commit them to the Department of Corrections.”

There might not be a good alcohol treatment program if a juvenile is abusing alcohol or drugs or other kinds of programs, so we are going to be proposing … a significant investment in more programming to be available for these youth locally so the cost of treatment would be covered by these proposed expenditures that are in my budget.

Democrats were critical of the State of the State address for its focus on infrastructure and failure to mention the state’s role in funding K-12 teacher pay. What is your response to that criticism?

First of all, the roads and bridges issue is very complex and involves a lot of information. It was already an hour-long presentation. And so I had to decide how much information I could include about other things. Even though there was some criticism for what the state spends on education, we spend half our budget on education.

Bottom line is, you can’t spend money that you don’t have. And also, I think we need to remember that South Dakota isn’t last in the amount of money that is available to school districts. We are 39th, so how that money is available to local school boards is up to them, whether they spend it on teacher salaries or something else.

I try to give an increase to education every year … so I’m doing what I can with the resources available.

Should South Dakotans be surprised that a Republican governor is willing to call for an increase in taxes?

I think people don't want the political affiliation of their leaders to govern how they manage the state. They want legislators to do what they think is right. I was, in the early years, skeptical of the need for increased road funding. I have since become convinced it is necessary and in fact convinced that if we spend a modest amount of money now, we will prevent the need to spend much more money later, because it is a lot cheaper to maintain a good or excellent highway than it is to maintain a fair or poor highway.

A Jan. 10 Argus Leader editorial called for the state to expand Medicaid, saying South Dakota was missing out on potentially $250 million in federal funds and the chance to cover 48,000 South Dakotans. What is your response?

I have several concerns about expanding Medicaid. One is the federal cost. Certainly, it would only cost (the state) a couple of million dollars a year in the next year if we expanded Medicaid, but then it would go to 10 million, and then 20 and then 26 million and then 36 million, and to put that into perspective, everything the state does, our entire increase in general revenue is 49 million, and if we have to carve out 36 million for a new program, that leaves 13 million to do everything else. And I don't know how we would do the inflationary increase for education or the existing 116,000 that are on Medicaid. I just don't know if the money works.

And then finally, the 48,000 people that would be entitled to Medicaid, they are all adults, they are all able-bodied adults. Nearly half of them either have private insurance today or could get subsidized insurance for paying as little as two percent of their income.

The president's attitude is that it's all or nothing. You have to expand to all 48,000, even those who already have private insurance, take them off private insurance and put them on government insurance, even those who could get subsidized coverage.

For an estimated 25,000 adults that would fall into the coverage gap: Those are all able-bodied adults. The minimum wage is $8.50 per hour. Those people could work 26 hours and qualify for subsidies.

The status of Powertech's Uranium mining application is an environmental concern to many opponents in the Black Hills. Should the state re-examine its 2008 move to weaken its regulatory laws?

I don't like the notion that the state duplicates federal regulation. So, to the extent that the Atomic Energy Commission or the EPA is looking at this, I think we should let it run its course.

I don't think it makes sense to disregard scientists, simply because they are not from our neighborhood.

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