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Governor: State ends fiscal year with $21.5 million surplus; 4th straight year with extra

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SIOUX FALLS, South Dakota — South Dakota ended its fourth consecutive fiscal year with a budget surplus, piling up $21.5 million over projections because of higher revenues and lower-than-anticipated spending, Gov. Dennis Daugaard announced Monday.

Revenues grew by an unexpected $10 million and state spending was $11.5 million lower than economic estimates, which lawmakers approved in March. Stronger receipts in construction and insurance taxes coupled with lower spending for education and Medicaid were largely responsible for the surplus for the fiscal year that ended June 30.

Revenue projections had been revised down in December 2014 and again in March before finishing stronger than anticipated at the end of June, Bureau of Finance and Management Commissioner Jason Dilges said.

"If we are consistent in demonstrating a conservative approach to revenue projection, we distinguish ourselves from other states that often are rosy in their revenue projections and then end up with deficits that they paper over ..." Daugaard told The Associated Press. "In South Dakota, we don't do that."

Dilges said he's glad to see a balance of increased revenues and decreased expenditures, but that he'd like to have more gains in the state's sales tax, which makes up more than 60 percent of state general funding. It grew by 1.6 percent over the previous budget year, roughly following projections.

The $21.5 million went into the state's budget reserves, which sit at more than $125 million. Lawmakers could decide to spend much of the surplus during the 2016 legislative session, but Senate Minority Leader Billie Sutton, D-Burke, said it's often difficult to get enough support among lawmakers to appropriate reserve funds.

"South Dakota's reserves are growing and ... schools and (health care) providers in our state are struggling, and it doesn't look good," Sutton said.

Daugaard listed those areas as priorities for investing, but said he'll outline more specifics at his budget address in December.

House Majority Leader Brian Gosch, R-Rapid City, said he's pleased about the surplus but curious why estimates were so dire when lawmakers were negotiating with Daugaard during the legislative session. Daugaard's office warned spending might exceed what the state had available, Gosch said.

"They were reluctant to support any of the legislative spending priorities and showed great resistance to it," Gosch said. "To now hear there's a ... surplus makes me wonder about that."

The governor said estimates were very close to reality and said it's difficult to be exact when dealing with a budget that exceeds $1 billion.

Daugaard said that the Legislature's economists projected even less money would be available than his administration in the March estimates, and said that he and lawmakers came to a good budget compromise.

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