South Dakota ended the fiscal year that closed in June with a $69 million budget surplus, state officials announced Monday. The final numbers reflect revenue coming in above projections and a significant amount of unspent money in agency budgets.
Where the surplus came from
State finance reports show two main contributors to the surplus:
- $30 million in revenue collected above estimates, with sales tax receipts providing the largest share of that excess.
- $39 million in spending reversions — funds that agencies were allocated but did not spend during the year.
Agency reversions included a large portion from the Department of Social Services, which returned $32 million of its budget to the state.
Reserves and what happens next
State law requires any surplus be placed into reserve funds. With the new addition, total reserves now stand at $325 million. The money is not available for immediate use in other programs; it is intended to strengthen the state’s fiscal cushion.
Gov. Larry Rhoden framed the result as evidence of the state’s economic strength and fiscal approach. He said the stronger revenues are driven by South Dakota’s economy and lauded the state’s low-tax stance.
“South Dakota’s robust economy is driving steady revenue growth, moving our budget in an even stronger direction,” Rhoden said. “We keep our taxes very low and ensure we have the highest return on each dollar invested. We’re setting an example for the nation of good stewardship of taxpayer dollars by doing things the right way, the South Dakota way.”
Context and implications
Surpluses driven by revenue beats and agency reversions can influence lawmakers’ thinking as they prepare the next budget. While extra revenue offers opportunities, the requirement that surpluses go to reserve funds limits the immediate options for lawmakers hoping to expand programs or cut taxes further.
The concentration of reversions in social services raises questions for budget planners. Large unspent balances can result from timing, federal funding rules, hiring lags or delays in program implementation. Lawmakers and agency leaders will likely review why such a significant portion of the Department of Social Services budget was not spent and whether adjustments are needed in future allocations or program delivery.
| Item | Amount |
|---|---|
| Total surplus | $69 million |
| Revenue above estimates | $30 million |
| Agency reversions | $39 million |
| Unspent in Dept. of Social Services | $32 million |
| State reserves after transfer | $325 million |
For residents watching state priorities, the surplus and the reserve balance will be part of budget conversations at the Capitol in the coming months. Lawmakers must weigh the benefits of a larger rainy-day fund against constituent demands for services, tax policy, and one-time investments.
Officials will provide more detailed budget documents and explanations as the legislative budgeting process continues. Agencies that returned funds may face scrutiny or be asked to justify the unspent amounts as appropriators plan the next fiscal year.
This year’s surplus is larger than the prior fiscal year’s result, according to state officials, underscoring a recent trend of revenue growth that has policymakers and stakeholders alike tracking sales tax collections and agency spending patterns closely.
