Daugaard Posts Seventh Budget Surplus

Governor Dennis Daugaard successfully outperforms my budget projection from a week ago and announces that South Dakota underbudgeted K-12 education by $16.9 million:

State agencies demonstrated fiscal restraint by spending $10.7 million, or 0.67%, less than appropriated. Additionally, revenue for fiscal year 2018 exceeded estimates adopted by the Legislature last March by $6.2 million, or 0.38%. In total, the state’s budget for fiscal year 2018 ended with a $16.9 million surplus.

…Collectively, the three branches of state government spent $10.7 million less than appropriated. Of the general fund reversions, $8.5 million came from Executive Branch agencies, and $2.2 million came from the Unified Judicial System, the Legislature, the Board of Regents and constitutional offices.

South Dakota’s sales and use tax receipts, the state’s largest revenue source, finished the fiscal year growing 4.0% over the prior fiscal year. Collections from the sales and use tax accounted for 61 percent of total general fund receipts in Fiscal Year 2018.

Other sources of revenue with notable increases were the insurance company tax and lottery revenue, which grew 9.3 percent and 4.3 percent, respectively, over FY2017. Ongoing receipts to the general fund totaled $1,593.4 million which grew 3.4 percent compared to the previous year [Office of the Governor, press release, 2018.07.16].

That $16.9 million which could have paid for schools now goes to the state reserves, which total $176.4 million.

Worth noting is the fact that lottery revenue still went up in our first full budget year without payday lenders. Dang—I was kind of hoping that a 36% rate cap on the usury industry might put a crimp on gambling. No such luck.

This is Governor Daugaard’s seventh straight budget surplus:

This year’s surplus is the Daugaard median: it beats last year’s $7.9 million and two other years’ surpluses but lags behind the Bertha-sized underruns from Daugaard’s first term. The seven surpluses total $142.2 million, finally exceeding the $127-million structural deficit that Governor Daugaard’s predecessor Marion Michael Rounds left him back in 2011.

Our continued under-investment in education allows us to hang onto our AAA Issuer Default Rating from Standard & Poor Global for the fourth year running. “Upgrades typically allow issued bonds to carry a lower interest rate, providing interest savings to issuers as well as the State of South Dakota and taxpayers.”