News
5:30 pm
Tue December 3, 2013

Governor Daugaard Gives Budget Address for FY2015

In this Dakota Digest, SDPB's Cassie Bartlett breaks down Governor Daugaard's budget address for FY2015.

In today’s budget address, Governor Daugaard’s proposed budget for Fiscal Year 2015 asks for increases in areas such as education, Medicaid and state employees. Daugaard says the state was expecting only minimal increases in those areas, with no other funds available for other departments. That was until the state received its unclaimed property funds.
 
“Fortunately the situation has changed since September, and of course the most significant change was in the unclaimed property that we received just last month. As you look at it, unclaimed property has been very unpredictable over the past several years. They increased our unclaimed property receipts to over $30 million in FY13, and our projections in FY14 were over $50 million. For FY15, we originally projected about $34 million in ongoing unclaimed property. Even after projecting this increases, though, unclaimed property changed significantly in the last month. The November 1 annual unclaimed property transfers exceeded $125 million. As we worked to craft this year’s budget, this single development dramatically affected both ongoing, and one-time revenue projections,” Daugaard says.
 
The unclaimed property designation changed last session from five years to three years for how long banks can hold money before turning it over to the state. That gave the state properties that haven’t been claimed for five, four or three years all this year. With the unexpected funds, Daugaard says it frees up opportunities for one-time monies. He says taking advantage of the one-time funds will also allow the state more on-going funds in the future.
 
“Now I spoke last year in the budget address about structural soundness, and I view one time dollars as an opportunity to increase our structural soundness. There are different ways you can do that; I see four different ways to do that. One, we can eliminate liabilities as I am proposing this year by prepaying bonds. Secondly, we can build a new asset or improve an existing asset. Last year I talked about reinforcing the floor in the rotunda—that’s a good use of one-time money to improve or secure an existing asset. That’s the third one—secure an asset; something you’ve already got, protect it from deterioration so you can preserve it. Or fourth, we can endow, endow something, an ongoing program in the future,” Daugaard says.
 
Daugaard plans to use one time dollars to help cover the state employee health care shortfall, increased cost of correctional health care, aid for the mountain pine beetle infestation, and fund the rural health care recruitment program.
 
During last year’s budget address, Daugaard was criticized for not increasing funding to education after cuts during Fiscal Year 2012. The unclaimed property funds allowed Daugaard to increase his projection for education increases from one point six percent to three percent for Fiscal Year 2015. But despite the extra funds, Daugaard still doesn’t plan to expand Medicaid coverage.
 
“I am not recommending to expand Medicaid in the FY2015 budget. The implementation of the Affordable Care Act continues to be unpredictable and chaotic. From the delay of the employer mandate, to postponing the shop exchange, to the one-year postponement of the cancellation of non-compliant policies, to the initial operating failure of the federal exchange, I continue to have doubts about the federal government’s ability to deliver on its promises,” Daugaard says.
 
Daugaard says the state has successfully kept a balanced budget throughout the years without using gimmicks or tricks. He says by being prudent and cautious when allocating money, South Dakota fared much better than other states during the recession a few years ago.
 
“We are in an enviable position because we made difficult decisions three years ago, and we’ve adhered to structurally sound budget management principles. That means even in a year when revenue growth is a little slow, our budget discussion can be about increases, not freezes or cuts. Being conservative is very important as we estimate revenues,” he says.
 
Daugaard says his budget proposal aims to maintain structural balance in the state, fund above minimal levels for schools, providers and state employees, and encourage in-state residents to remain in South Dakota and out-of-state residents to move to the state.

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