This week we met in Pierre to hear the Governor’s budget address. Governor Daugaard addressed many of the topics I have written on in my weekly columns since the last legislative session. Some of them included the Unclaimed Property Fund, Building South Dakota, South Dakota’s economy, the SDSU Swine construction project along with full funding for K-12 education and health care providers.
South Dakota is seeing the rewards of its banking friendly business climate with two large national banks holding their national charters in our state along with the reduction of the number of years from five to three in forwarding unclaimed property to the state. This impact on revenue was not fully expected during the budget process as the state had never experienced a year in which all these factors were in play at the same time. The end result was very positive in that the unclaimed property revenue came in at nearly $70 million over budget. The one unanswered question for the future is how many of these new unclaimed funds will get claimed by the rightful owner. Historically, the claims have only been a few cents on the dollar actually getting claimed, and this year, with the large increase in new receipts coming from out of state or even out of the United States, it will most likely be even fewer cents on the dollar.
This increase in unclaimed property revenue gave the Governor the opportunity to propose the budget he desired. A goal of his proposed budget is to use the one-time unclaimed property revenue to reduce the state’s current obligations which in turn will allow more funds available for future funding. K-12 education and health care providers are the main benefactors as under the current funding formula their increase was to be 1.6% for the proposed fiscal year. The Governor is proposing the use of this increased revenue in two main proposals.
The first is by paying down $58.1 million on the current state’s higher interest rate bond obligations which will free up $6.3 million annually and by paying the state’s obligation on the new Veteran’s Home of $16.4 million which will free up $1.6 million annually starting in fiscal year 2016. The second main proposal is for funding “Building South Dakota” with a $30 million one-time allocation which should fully fund it for the next three years. This will free up an estimated $16.9 million per year over the next three years. These two proposals will allow the state to increase the 1.6% increased funding to 3% for K-12 education and health care providers for fiscal year 2015.
I will provide more highlights of the Governor’s address next week. Feel free to contact me at 350-1371 or by email at email@example.com.