Daugaard and lawmakers from the four legislative districts in the northeast part of the state spoke at the Aberdeen Area Chamber of Commerce's annual prelegislative luncheon on Monday at the Ramada Convention Center.
"We have, in our state, righted the ship. We have straightened out our finances," Daugaard said.
That's, in large part, because of 10 percent cuts to many parts of state government implemented earlier this year by the Legislature at Daugaard's request. But there are still reasons to be cautious, he said. South Dakota's projected revenue has been ahead of schedule in recent months. And projections are that revenue will continue to be above estimates, Daugaard said. But such projections are always uncertain, he said.
Beyond that, there is uncertainty in the global economy, the state is going to have to pay more as more parts of the federal health care bill are phased in and Congress cannot get a grip on its borrowing and spending, a problem that threatens the future of the nation, he said.
There are four prime ways in which economic recovery can be measured, the governor said. All are headed in the right direction, but three have yet to hit their pre-recession levels, he said:
• The nation's gross domestic product is fully recovered, Daugaard said.
• The number of jobs is increasing, but somewhat slowly.
In South Dakota, Daugaard said, the number of non-farm jobs in 14 of the past 15 months has been higher than in the same months of the previous year. Before then, the number of jobs had been lower in 18 of 19 months compared to the previous year.
Generally, Daugaard said, when the number of non-farm jobs goes up, so does the state's revenue.
• The national unemployment rate is slowly decreasing, he said. It's now 8.6 percent. South Dakota's unemployment rate is 4.5 percent, he said. That's down from 5.2 percent in early 2010.
• The number of housing starts nationwide is also on the rise, Daugaard said, though they aren't near pre-recession levels.
Daugaard has proposed a budget of roughly $4 billion for fiscal year 2013, which starts July 1. Of that total, $1.2 billion comes from state tax dollars, $1.8 billion is federal money and $1 billion is from other taxes and fees like the gas tax or fees charged for hunting licenses.
The governor has proposed a 2.3 percent increase for education plus an additional $12 million in one-time money. He's suggested a 1.8 percent bump for Medicaid providers, plus $9.1 million in one-time money. And he's offered a 3 percent raise for state employees starting the in July, plus a one-time payment in April of 5 percent of their salary. That, he said, would help compensate for recent years with no raises. Legislators, who convene in January, could tinker with Daugaard's budget suggestions.
Legislators offer their thoughts
District 2 includes part of Aberdeen, most of rural Brown County and Spink County.
• Sen. Jim Hundstad, D- Bath: Echoed comments first made Monday by Rep. Charlie Hoffman, R-Eureka, who said the state eventually might have try to alter that South Dakota's legislative districts all have roughly the same number of people. The problem, though, is that could require an amendment to the U.S. Constitution.
"It's going to get tougher and tougher to have a rural voice," he said.
• Rep. Paul Dennert, D-Columbia: The state's new way of assessing the value of farmland — based on potential production value as opposed to market sales — needs some adjusting.