South Dakota state budget

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South Dakota state budget

Flag of South Dakota.png
Budget calendar:  Annual
Current fiscal year:  2015
State credit rating:  AA+ (as of May 2012)
Current governor:  Dennis Daugaard
Financial figures
GF expenses[1]:  $1.302 billion (estimated for FY 2013)
All funds expenses:  $4.131 billion (estimated for FY 2013)
Spending % change:  Green Arrow Up Darker.svg11.71%[2]
% from federal funding:  40.85%
State debt:  $7,707,458,000
Per capita state debt:  $9,249
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Between fiscal year 2009 and fiscal year 2013, South Dakota's total expenditures increased by approximately $0.582 billion, from $3.549 billion in 2009 to $4.131 billion in 2013. This represents a 16.40 percent increase, outpacing the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

This page contains information about budget processes and policy issues in South Dakota, including:

  • a summary of the budget drafting process
  • trends in expenditures and revenues
  • current and past fiscal year budget developments
  • financial transparency measures

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instruction guidelines are sent to state agencies in June and July of the year preceding the start of the new fiscal year.
  2. State agencies submit their budget requests to the governor in September.
  3. Agency hearings are held in September and October.
  4. The governor submits his or her proposed budget to the state legislature in December.
  5. The legislature typically adopts a budget in March. A simple majority is required to pass a budget. The fiscal year begins July 1.

South Dakota is one of 44 states in which the governor has line item veto authority.[6]

The governor is legally required to submit a balanced budget proposal. Likewise, the legislature is legally required to pass a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
South Dakota $1,302 $1,487 $1,307 $35 $4,131 $4,889.47
Minnesota $20,056 $8,637 $6,263 $810 $35,766 $6,598.43
Nebraska $3,590 $3,014 $3,559 $0 $10,163 $5,439.08
North Dakota $2,220 $1,621 $2,072 $26 $5,939 $8,209.92
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in South Dakota can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
South Dakota 14.3% 17.7% 0.8% 20.9% 2.7% 15.9% 27.7%
Minnesota 23.8% 9.7% 1.4% 27.6% 1.5% 8.3% 27.7%
Nebraska 15.3% 23.5% 0.5% 16.7% 2.3% 7.5% 34.3%
North Dakota 13.8% 17.7% 0.1% 12.1% 1.9% 16.4% 38.0%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Expenditure trends

From 2008 to 2012, the share of the state budget spent on elementary and secondary education fell by 2.40 percentage points, or 14.4 percent. During the same period, transportation spending rose by 3.20 percentage points, or 25.2 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2012 14.3% 17.7% 0.8% 20.9% 2.7% 15.9% 27.7%
2011 16.3% 18.4% 0.8% 20.7% 2.6% 15.0% 26.1%
2010 15.4% 17.3% 0.8% 21.7% 2.8% 13.7% 28.5%
2009 16.7% 19.0% 0.8% 21.7% 3.0% 12.9% 26.1%
2008 16.7% 18.4% 0.9% 22.3% 3.2% 12.7% 25.8%
Change in % -2.40% -0.70% -0.10% -1.40% -0.50% 3.20% 1.90%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
South Dakota $776 $0 $0 $1 $587 $1,364 $1,614.44
Minnesota $4,817 $8,649 $1,165 $39 $2,786 $17,456 $3,220.44
Nebraska $1,475 $2,102 $276 $1 $199 $4,052 $2,168.57
North Dakota $1,256 $596 $162 $5 $528 $2,547 $3,520.91
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, South Dakota ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $776 $0 $0 $1 $587 $1,364 $1,614.44
2012 $744 $0 $0 $1 $537 $1,282 $1,537.08
2011 $710 $0 $0 $1 $437 $1,148 $1,393.59
2010 $652 $0 $0 $1 $479 $1,132 $1,386.90
2009 $660 $0 $0 $0 $494 $1,154 $1,420.51
Change in % 17.58% 0.00% 0.00% N/A 18.83% 18.20% 13.65%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

Fiscal year 2015

DocumentIcon.jpg See budget bill: SB 187

Governor Dennis Daugaard announced his fiscal year 2015 budget proposal on December 3, 2013. Under the governor's proposal, total spending for fiscal year 2015 would have equaled approximately $4.28 billion, including $1.39 billion in general fund spending.[14]

On March 31, 2014, Daugaard signed into law the fiscal year 2015 budget. The enacted budget totaled $4.259 billion, a 4.7 percent increase over fiscal year 2014.[14]

Fiscal year 2014

DocumentIcon.jpg See budget bill: House Bill 1185

South Dakota state budget -- 2014
South Dakota State Legislature
Text:House Bill 1185
Legislative history
Introduced:January 24, 2013
House:March 8, 2013
Vote (lower house):48-17
Senate:March 8, 2013
Vote (upper house):31-4
Governor:Dennis Daugaard
Signed:March 26, 2013 (line item veto sustained)

On March 26, 2013, Governor Dennis Daugaard signed the fiscal year 2014 budget into law. To access the complete bill text, click here. A budget summary document is available here.

Daugaard did exercise line item veto authority over the budget as passed. His veto pertained to a technical matter and was not overridden by the legislature.[15]

Fiscal year 2013

See also: South Dakota state budget (2012-2013)

Fiscal year 2012

See also: South Dakota state budget (2011-2012)

Fiscal year 2011

Click here to see a budget summary document for fiscal year 2011

Fiscal year 2010

Click here to see a budget summary document for fiscal year 2010

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in South Dakota ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $1,215 32.9% $960 26% $1,488 40.2% $35 0.9% $3,698
2010-2011 $1,167 30.2% $957 24.7% $1,679 43.4% $67 1.7% $3,870
2009-2010 $1,149 30% $892 23.3% $1,726 45% $67 1.7% $3,834
Averages: $1,177 31% $936.33 25% $1,631 43% $56.333 1% $3,800.67
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, South Dakota had a state debt of over $7 billion. Its state debt per capita was $9,249. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[16][17]

Total state debt in South Dakota[18]
Type Totals U.S. rank
Total state debt $7,707,458,000 50
Per capita debt $9,249 46
State and other fund expenditures $2,175,000,000 33

Public pensions

See also: South Dakota public pensions and South Dakota public employee salaries

South Dakota public pensions are the state mechanism by which state and many local government employees in South Dakota receive retirement benefits. In South Dakota, there is one state-run system, administered by the South Dakota Retirement System (SDRS). The system administers one plan: the South Dakota Public Employees Retirement System.

As of the end of June 2012, South Dakota public pensions had total estimated liabilities of $8.4 billion dollars, and had 92.6 percent of those liabilities funded, resulting in unfunded liabilities of $625 million.[19]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit rating indicates lower risk for an investor, which in turn lowers costs for taxpayers.[20]

The table below lists the Standard and Poor's credit rating for South Dakota from 2001 to 2012 (grades from surrounding states are provided for additional context).[20]

S&P credit ratings from 2001 to 2012
South Dakota Minnesota Nebraska North Dakota
2012 AA+ AA+ AAA AA+
2011 AA+ AAA AAA AA+
2010 AA AAA AA+ AA+
2009 AA AAA AA+ AA+
2008 AA AAA AA+ AA
2007 AA AAA AA+ AA
2006 AA AAA AA+ AA
2005 N/A AAA AA+ AA
2004 N/A AAA AA+ AA-
2003 N/A AAA AA+ AA-
2002 N/A AAA AA+ AA-
2001 N/A AAA AA+ AA-

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[21]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[21]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
South Dakota 40.85% $1,630,220,000 4
Minnesota 28.13% $9,608,018,000 39
Nebraska 34.34% $3,141,413,000 22
North Dakota 20.49% $1,750,134,000 49

Budget transparency

Transparency evaluation
Open.SD.gov
Searchability P
Partial.png
Grants Y
600px-Yes check.png
Contracts Y
600px-Yes check.png
Line item expenditures Y
600px-Yes check.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries Y
600px-Yes check.png
Last evaluation date unknown.
See also: Evaluation of South Dakota state website and Constitutional provisions regarding reading of bills

Open.SD.gov is the state's official spending transparency database. Its creation was announced on March 12, 2008, approximately six months after transparency legislation by State Representative Hal Wick had been vetoed.[22] South Dakota Senate Bill 143 (2009), which was signed into law on March 13, 2009, required "a searchable internet website for the posting and access of certain public records and financial information."

Open.SD.gov provides a database of state financial information, organized around broad topics such as budget, expenditures, revenues, vendor contracts, and payroll. Much of the information is updated twice per week. Since data populating the database is tied directly to South Dakota's accounting system, payroll information is updated in real-time (that is, as soon as information enters the general accounting system software, it will appear on this database).

The table to the right is helpful in evaluating the level of transparency provided by a state spending and transparency database.

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for South Dakota, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[23][24]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. South Dakota tied for 20th in the nation with 12 other states, earning five out of eight possible points.[24]

South Dakota - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget N
600px-Red x.png
Multi-year forecasting
{{{1}}}
Annual cycle Y
600px-Yes check.png
Binding revenue forecast
{{{1}}}
Legislative revenue forecast
{{{1}}}
Nonpartisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations N
600px-Red x.png
TOTAL 5

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[24]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[25] According to the report, South Dakota received a grade of B+ and a numerical score of 89.5, indicating that South Dakota was an "advancing" state in terms of transparency regarding state spending.[25]

Accounting principles

See also: South Dakota government accounting principles

The State Auditor is an elected and constitutionally independent office holder who performs pre-audits and performance audits of all state government agencies.[26]

The South Dakota Department of Legislative Audits (DLA) performs financial and compliance audits of state agencies and local governments, including the following types of entities:[27]

  • State agencies
  • Universities
  • Authorities
  • Counties
  • Municipalities
  • School districts
  • Townships

The DLA publishes its audit reports online.

Contact information

South Dakota Bureau of Finance and Management
500 East Capitol Avenue
Pierre, South Dakota 57501
Telephone: 605-773-3411

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. 14.0 14.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  15. South Dakota Legislature, "House Bill 1185," accessed May 1, 2014
  16. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  17. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  18. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  19. South Dakota Retirement System, "2012 CAFR," accessed November 20, 2013
  20. 20.0 20.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  21. 21.0 21.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  22. Office of the Governor, "Gov. Rounds Announces Government Records Website," September 12, 2008
  23. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  24. 24.0 24.1 24.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  25. 25.0 25.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  26. The South Dakota State Auditor, "Home page," accessed November 12, 2009
  27. South Dakota Department of Legislative Audits, "Home page," accessed November 12, 2009