South Dakota Ends Budget Year

South Dakota ends budget year

South Dakota state government ended the fiscal year on June 30th by transferring $25.7 million from the state's Property Tax Reduction Fund to balance the budget. The transfer was needed in part because the incoming revenue projected by the legislature fell short by nearly $4.9 million. The shortfall of revenue is mainly due to higher than anticipated liabilities as a result from large project construction refunds. Over $25.8 million of sales, use, and contractor's excise taxes in the fiscal year were obligated as liabilities that will be refunded in the current and future fiscal years.

South Dakota's sales and use tax receipts, the state's largest revenue source, were strong during the fiscal year indicating that the South Dakota economy continues to outperform a national economy that many people believe is facing recession. Sales and use tax collections in FY2008 grew 6.87% to $644.6 million, well above the average growth of 5.1% over the last eight fiscal years. Collections from the sales and use tax accounted for 56% of ongoing general fund receipts. Total state general fund receipts were $1,176,506,396 in FY2008. Of this total, $32.2 million were from one-time revenue sources, including $25.7 million from reserves that were transferred on a one-time basis to cover the budget shortfall.

Despite increased transportation and utility costs, state agencies were still able to live within their appropriated budgets. All branches of state government spent a total of $1.13 million less than what was appropriated. Of the $1.13 million reduction, $0.8 million was from reduced spending during the fiscal year and $0.4 came from unspent special appropriations and contract carryovers. This reduced spending by state agencies means that $1.13 million less in reserves needed to be used to balance the budget.

South Dakota state government ended FY2008 by transferring $150,957 to the Budget Reserve Fund as required by law. The State's Budget Reserve Fund now has a balance of $43.4 million, and the Property Tax Reduction Fund now has a balance of $63.6 million. The combination of these two funds, totaling over $107 million, represents a combined reserve of approximately 9.3% of total general fund spending for FY2008.

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