PIERRE, S.D. (AP) — After going three years without a pay raise, South Dakota's 13,000 state employees should find out soon what, if any, kind of bonus they will get to compensate them for sticking it out through those lean years.
South Dakota lawmakers are looking at a number of options, all based on a plan submitted by Gov. Dennis Daugaard. They hope to reach an agreement in about a week.
"We're starting a discussion," House Republican Leader David Lust of Rapid City said. "We have not narrowed it significantly."
Daugaard has proposed that state employees get an ongoing 3 percent across-the-board pay raise in the budget year beginning July 1, and lawmakers expect that to be put in next year's budget with little opposition.
But the governor also wants to give state employees a one-time bonus equal to 5 percent of each employee's annual salary on March 30 to partly offset their loss of purchasing power due to inflation in the years they didn't get a raise.
Under the governor's plan, only permanent employees who were hired on or before Sept. 24 would qualify for bonuses, which would cost nearly $32 million in state, federal and other funds. The governor, lieutenant governor, attorney general, secretary of state, state auditor, state treasurer, commissioner of school and public lands and the three public utilities commissioners would not get bonuses.
A competing proposal by Rep. Gene Abdallah, R-Sioux Falls, would spend about the same amount of money but give each employee the same bonus, $2,300, no matter what that worker's salary is.
Mary Kidwiler, chair of the South Dakota State Employees Organization, said the group supports both plans. Some members of the organization would benefit more from the governor's plan while others would get a bigger bonus under Abdallah's proposal, she said.
"We're just excited they want to do something nice for state employees," Kidwiler said.
The average state employee has lost about $1,800 in purchasing power due to inflation during the three years when salaries were frozen, Kidwiler said. At the same time, cuts in some agencies meant remaining employees had to pick up additional duties, she said.
"The fact state employees hung in there and got the job done, I can't say anything but good about state employees," said Kidwiler, a program assistant at South Dakota State University.
Daugaard has said he believes his plan is best, but he's willing to listen to other ideas.
The governor's plan would give a $5,000 bonus to someone making $100,000 a year, but only $1,000 to someone making $20,000 a year.
Abdallah said his proposal would give bigger bonuses to about 80 percent of the state's workforce, those making $45,000 or less. That's the breakeven point between the two plans because someone making $45,000 would get a bonus of about $2,300 under either one.
Employees making higher incomes likely will invest their bonus payments, while those in lower income brackets will spend it, boost the economy and increase sales tax collections, Abdallah said.
"They could pay bills with it. They could buy a new refrigerator or TV, whatever they need. It puts the money right back in the economy," Abdallah said.
Republican majorities in the House and Senate have appointed three-member working groups in each chamber to assess all the options and report back to the full GOP caucuses, which will then decide what to support.
Senate Republican Leader Russell Olson of Wentworth said some lawmakers like the governor's plan, some think 5 percent is too much, and others want to take employee performance into consideration.
Some private business employees also have questioned the proposed state bonuses, saying many in the private sector did not get raises in recent years and also are not getting bonuses, Olson said.
"But I think it's justified, especially for those employees who held through the longest — three years without a raise or a cost of living allowance. They are dedicated employees and should be compensated," Olson said.
Olson said it may be unfair to give an employee hired just last year the same bonus given to someone who worked for the state all three years in which no pay raises were granted.
Assistant House Democratic Leader Mitch Fargen of Flandreau said he prefers Abdallah's plan because lower-paid employees need the money more than higher-paid officials.
"I believe the people making $30,000 or $40,000 a year are the ones who have been hurting over the last couple of years by having their pay frozen," Fargen said.
The governor's plan would spend $12.3 million in state general tax dollars on the bonuses, $5.7 million in federal funds and $13.2 million from other state funds such as the dedicated road taxes that fund the Transportation Department. Abdallah's alternative would spend roughly the same amount.
Lawmakers said for employees paid with a mix of funds, the federal government would pay its share of the bonuses under the governor's plan, but there could be a problem getting the federal match under Abdallah's proposal.
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