Gov. Dennis Daugaard delivered two important pieces of financial news today.
He said state government finished its 2013 budget year on June 30 with a lot more cash than was previously forecast.
The $24.2 million surplus was transferred to the budget reserve account as required by state law.
And, consequently, the state’s two rainy-day accounts now are at a combined record high of $158,952,076.
That total of nearly $159 million is equal to 12.3 percent of state government’s general-fund spending from the 2013 budget.
The governor doesn’t have a target for the percentage in the reserve accounts, according to Jason Dilges, the governor’s commissioner of finance and management.
The importance of ample reserves as a safety cushion against economic downturn was apparent just two years ago. Upon taking office in 2011, Daugaard inherited a deficit-spending situation.
He recommended that most budgets in state government must be cut 10 percent — double what his predecessor, Gov. Mike Rounds, had suggested — because of the recession.
The Legislature generally agreed, with variations in some areas. Daugaard set the example by reducing his pay and the salaries for many in his Cabinet and senior staff.
He also called for an end to past practices by the governor and the Legislature such as sometimes dipping into reserves and using accounting maneuvers that masked budget deficits.
He returned to that point today by stressing there is structural balance — ongoing revenues fully covering spending — in state government’s budget for the second year in a row.
Daugaard’s policy has been that reserves must be held back for truly dire circumstances.
South Dakota’s economy never sank to the depths seen by many state governments during the recession and rebounded fairly well so far.
Receipts of state sales and use taxes increased 4.26 percent in fiscal 2013. That is somewhat below the modern average of 4.89 percent annually from 2004 through 2012.
State officials said today they were encouraged by 6 percent growth in June.
At 57 percent, sales and use taxes are the largest source of revenue for state government’s general fund. They totaled just over $766 million in fiscal 2013 and grew by $31.7 million over 2012.
Nonfarm employment in South Dakota during 2012 meanwhile surpassed the pre-recession level.
The latest report on economic conditions issued this month from Dilges’ office said employment transitioned from a recovery phase to an expansion phase in 2012.
Those improvements showed up in the year-end financial statement issued today.
It said the treasury received $13.6 million more in tax revenue than had been estimated as recently as March, while state agencies spent $10.6 million less than budgeted.