CHICAGO -- South Dakota Gov. Walter D. Miller last week rescinded $36.4 million of budget cuts after a county circuit court ruled that some of the cuts were unconstitutional.

Miller ordered the reductions last month to balance South Dakota's current $602 million budget after the state Supreme Court shut down the state's video lottery. The state's highest court ruled that the video lottery, which generates about $63 million annually, violates the state constitution because it includes games of chance, such as blackjack and keno.

After Miller ordered the budget cuts, all counties in the state filed a joint lawsuit to protest the anticipated total loss of $415 million of state revenues.

In his decision, which was issued last Thursday, Hughes County Circuit Court Judge Steven L. Zinter said that Miller did not have the constitutional authority to cut $15 million that the legislature had appropriated to counties for the 1995 fiscal year, which started July 1. Zinter wrote that the state constitution requires that spending decisions be approved by the legislature.

Janelle Toman, press secretary for Miller, said that the governor rescinded $36.4 million of cuts, instead of just the $15 million slated for the counties, because any of the remaining cuts "could have been equally challenged" in court.

Since the shutdown of video lottery on Aug. 12, the state has been losing about $1.2 million a week.

South Dakota does not issue general obligation debt.

Miller and legislative leaders last week agreed to hold a special session this Friday to address measures to eliminate the anticipated shortfall, Toman said.

State lawmakers could consider a combination of measures to fill the gap, including implementing a temporary tax increase, decreasing the budget reserve, or ordering budget cuts, Toman said. All of those measures were discussed during a special session held in July shortly after the video lottery was struck down by the state Supreme Court, she said.

During the July special session, lawmakers allowed the state to use about $18.7 million of the state's $28 million budget reserve toward the anticipated $55.1 million shortfall, but failed to enact other measures that would fill the remaining budget gap.

After the legislature failed to pass measures to eliminate the shortfall, the governor was forced to implement the $36.4 million of budget cuts, Toman said.

On Nov. 8, South Dakota residents will vote on a constitutional amendment that would allow a video lottery in the state. Toman said that the state has not determined when video lottery machines would be tumed on again if voters approve the amendment.

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