Roles in the state budget

by Meghan Thoreau

FACTOID: Article III of the SD Constitution establishes when the SD State Legislature, of which the Senate is a part, is to be in session. Section 7 of Article III states that the Legislature is to meet in regular session each year on the second Tuesday of January.

The SD Constitution also contains provisions concerning special sessions of the Legislature. Section 3 of Article IV allows the Governor of South Dakota to convene a special session of the Legislature. Additionally, Section 31 of Article III allows for a special session to be convened by the presiding officers of both legislative houses upon the written request of two-thirds of the members of each house.

South Dakota operates on an annual budget cycle; process:

  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.

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

On 3 December 2015 Governor Daugaard announced his fiscal year 2015 budget proposal. 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.

SD has lower per capita expenditures than the surrounding region. The only expenditures sectors to see a percentage increases are transportation and other sectors. ‘Other’ being a mixture of expenditures related to public health program, economic development, environmental projects, state police, parks, and local governments.

Total state expenditures, FY 2013 ($ in millions)(1)
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. Source: National Association of State Budget Officers
Expenditures by function, FY 2012 (as percents)(1)
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.”

Expenditures from 2008 to 2012 (as percents)(1)

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.”

Revenue trends. SD has some of the lowest tax revenues collected per capita in the region. SD does not collect personal income or corporate income taxes, which may account for a lower capital revenue stream.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corp. 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. Source: National Association of State Budget Officers

Source: http://ballotpedia.org/File:South_Dakota_GF_revenues_2013.png

Revenue sources in the general fund, South Dakota ($ in millions)(1)
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% 0% 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. Source: National Association of State Budget Officers

Budget transparency rating. 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. 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.

South Dakota – IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures  Yes
“Generally Accepted Accounting Principles” budget  No
Multi-year forecasting  Yes
Annual cycle  Yes
Binding revenue forecast  Yes
Legislative revenue forecast  Yes
Nonpartisan staff  No
Constitution or statutory tax/spend limitations  No
TOTAL 5

Following the money 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. 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.(2)

1 http://ballotpedia.org/South_Dakota_state_budget

2 http://ballotpedia.org/Following_the_Money_2014_Report

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