Gov. Dennis Daugaard will call a special session of the South Dakota Legislature late next month to deal with a $10 million cost overrun in the construction of a new state veterans home in Hot Springs.
Lawmakers had appropriated $41 million in state and federal funds for the project earlier this year — but the lowest bid for the project was “considerably above projections,” Daugaard wrote in a Wednesday letter to legislators announcing the session. The total cost overrun was about 25 percent of the project’s initial budget.
The governor will be asking the Legislature to appropriate $14 to $20 million in surplus money from the current fiscal year to pay the extra veterans home costs instead of letting that money go into reserves.
"Needless to say, I am very disappointed with our architect," Daugaard wrote to lawmakers. "My priority is to build a durable, quality facility for our veterans – they deserve nothing less. I do not believe that we can cut $10 million from our plans and still build the facility that we need."
The revised budget for the 2013 fiscal year, which ends June 30, will have about $7 to $10 million in extra revenue and about $7 to $10 million in lower-than-normal expenses, according to new projections.
That’s the second year in a row the state budget has run millions of dollars in surplus, as Daugaard has encouraged legislators to be cautious about predicting new budget growth.
Rep. Bernie Hunhoff, D-Yankton and the Democratic leader in the state House, predicted the extra money would have broad support in both parties.
“I don’t think there’s anything political about it at all,” Hunhoff said. “We need to get this thing built.”
House Majority Leader David Lust, R-Rapid City, agreed.
“I don’t expect any controversy whatsoever,” Lust said. “When this first came through, the project and the funding, it was unanimous. I don’t expect this will change based on the increased costs.”
Hunhoff said the cost overrun was “disappointing” and that lawmakers would be sure to ask questions about where it came from and the source of the money, but predicted “broad support” in the end.
He also said Democrats would be unlikely to try to use the special session to raise other issues aside from the veterans home.
Lust said calling a special session will cost the state around $30,000. Daugaard tried to find ways to resolve the issue without calling a special session, Lust said, but ultimately had to call the Legislature back to Pierre.
The special session will be the second special session of Daugaard’s tenure as governor and the first not to be pre-planned. The Legislature convened in late 2011 to approve new legislative districts, a meeting added to its calendar long in advance.
In his letter, Daugaard predicted the special session would last a single day. He’s working with legislative leaders to pick a specific date in late June for the session.