PIERRE, S.D. (KELO) — South Dakota state government has transferred $63 million of unspent operating revenue into its reserves.
Another $106 million that is meant to be spent on a new state prison was also transferred.
The Legislature will need a two-thirds vote to approve spending money for a new prison.
The money will be added to the $322,757,524 that state government previously had in its two reserve accounts.
Gov. Larry Rhoden made the announcement on Monday. It comes as state government started the new fiscal year on July 1.
The $63 million transfer was less than the $80.7 million transferred to reserves in July 2024 and the $96.8 million transferred in July 2023.
The Monday announcement noted that state government took in 0.6% less sales-tax revenue during fiscal 2025 than in fiscal 2024 and $3.7 million less than the Legislature had expected. Sales tax is state government’s largest source of general fund revenue.
A state law requires that unobligated cash from the prior fiscal year be transferred to the budget reserve fund, with the fund capped at 10% of the general budget act for the prior fiscal year.
A second state law requires that additional unobligated cash be transferred to the general revenue replacement fund at the end of the fiscal year, with that fund capped at 15% of the general budget act for the prior fiscal year.
Together, they form what state officials commonly refer to as “rainy day” or emergency funds. A chart showed that South Dakota state government previously had $189,033,475 in the budget reserve fund and $133,724,049 in the general revenue replacement fund before the latest transfers.
State law allows the state commissioner of finance and management to shift money from the general revenue replacement fund on an as-needed basis “to balance the annual budget due to an unforeseen revenue shortfall.”
But shifting money from the budget reserve fund requires two-thirds approval from the Legislature and may only be done to address “unforeseen expenditure obligations or such unforeseen revenue shortfalls as may constitute an emergency pursuant
The $63 million transfer was the smallest since a $19.1 million transfer in 2021.
Rhoden said that $41 million came from excess revenues while $22 million came from state government agencies spending less than had been budgeted for the 2025 fiscal year.
His announcement noted, “Between the $63 million surplus and the $106 million left unspent by the Legislature, $169 million will flow to the state’s two primary reserve funds under state law. The state’s reserve funds now total $492 million or 19.9% of the FY2026 budget.”
