South Dakota Ends Fiscal Year With Balanced Budget

Press Release

South Dakota state government ended the fiscal year on June 30 with a balanced budget and without using any state reserve funds, Gov. Mike Rounds announced today.

The state general fund budget for Fiscal Year 2010 was aided by $101,012,057 of American Recovery and Reinvestment Act funds, which helped state government avoid substantial tax increases or severe reductions in essential government services. No reserve funds were needed to balance the budget because revenue collections were slightly more than the Legislature's revised general fund revenue estimates, and many state agencies spent less money in the recently ended fiscal year than the Legislature appropriated.

When the 2010 legislative session concluded in March, the new FY2011 budget that began July 1 was balanced. However, the FY2010 budget was left with an anticipated deficit of $3,358,951 million. State agencies spent $911,366 less than appropriated, coupled with $2,447,585 of increased revenue collections, to fill the gap.

"Our goal has been to balance this year's budget without the use of reserves and without raising taxes," Gov. Rounds said. "We're pleased that FY2010 was closed successfully, and our budget for the current fiscal year anticipates no increase in taxes or use of reserves. But we must remember that FY2012, beginning a year from now, will be very difficult. Through sound management, we've been able to preserve most of our tools to address the challenge of the FY2012 budget."

South Dakota's sales and use tax receipts, the state's largest revenue source, began improving in recent months as the state and nation started to recover from the worst economic recession since the Great Depression. Sales and use tax collections in FY2010 totaled $642,775,512, which was 2.42% below the previous year, which was a modest decline considering that those revenues had declined in excess of 4 percent for much of the fiscal year. Collections from the sales and use tax accounted for 58 percent of ongoing general fund receipts. Total state general fund receipts were $1,131,634,016 in FY2010. Of the total, $21,838,270 came from one-time revenue sources.

Despite an increased need for state government services during these difficult economic times, state agencies were still able to live within their appropriated budgets. All branches of state government spent a total of $911,366 less than the amounts appropriated. Of the $911,366 reduction, $475,565 was from reduced spending during the fiscal year and $435,801 came from unspent special appropriations, contract carryovers and deferred budgets. This reduced spending by state agencies means that $911,366 fewer taxes needed to be collected to balance the budget.

South Dakota state government ended FY2010 with state reserve accounts untouched. The state's Budget Reserve Fund has a balance of $43,398,446, and the Property Tax Reduction Fund has a balance of $63,626,269. The combination of these two funds, totaling $107,024,715, represents a combined reserve of approximately 9.5 percent of total general fund spending for FY2010.

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