Governor Kristi Noem today announced that South Dakota closed the 2019 budget year on June 30 with a $19.4 million surplus. The state general fund budget ended with lower expenditures than budgeted, while ongoing revenue finished lower than projected levels.
“In South Dakota, we don’t spend money we don’t have. We live within our means, and we operate in a way that doesn’t require us to raise taxes,” said Noem. “Once again, South Dakota is leading by example by finishing the fiscal year with a balanced budget. We are saving money for the future and ensuring that the next generation’s financial foundation remains strong. I am committed to maintaining the financial responsibility for which South Dakota has become known. We will remain rooted in fiscal integrity.”
Total spending for fiscal year 2019 was $23.1 million lower than budgeted, which includes $17.3 million of fiscal year 2019 general fund reversions and $5.8 million of unspent funds from special appropriations and carryover funding. Of the $17.3 million of 2019 general fund reversions, $15.3 million came from executive branch agencies, $1.0 million came from the Unified Judicial System, $0.7 million came from the Board of Regents, and $0.3 million came from the Legislature and constitutional offices. The unspent funds in fiscal year 2019 represent just 1.1 percent of the total fiscal year 2019 general fund budget.
Ongoing general fund revenue for fiscal year 2019 was lower than estimates adopted by the Legislature in February by $4.4 million, or 0.3 percent. Sales and use tax receipts are the state’s largest revenue source and grew by 3.7 percent over the prior fiscal year, but still finished the fiscal year $9.9 million below estimates. Other sources of general fund revenue finished the fiscal year above legislative estimates including bank franchise tax, unclaimed property receipts, and lottery.
“It’s still early, but it is prudent to have not budgeted for any additional sales and use tax from online and other remote sellers given the fact that this year’s overall sales tax numbers didn’t hit their projections,” concluded Noem. “We’ll continue to monitor the data coming to see how the Wayfair decision and the subsequent tax changes impact our state’s bottom line.”
By law, the fiscal year 2019 surplus of $19.4 million was transferred to the budget reserve fund. The state’s budget reserve fund now has a balance of $145.1 million and the general revenue replacement fund has a balance of $44.0 million, for a total reserve of $189.1 million.