How much is enough in reserves? Daugaard says 10 percent seems right
PIERRE — With state government’s budget reserves at an all-time high, Gov. Dennis Daugaard laid out a new policy Tuesday.
He told legislators the target amount should be 10 percent of general-fund spending.
State government shifted $24.2 million of surplus into reserve on June 30 at the end of the 2013 fiscal year. That brought the total to a record $159 million in the two rainy-day accounts.
Under Daugaard’s 10 percent guideline, it’s nearly $20 million more than necessary. State general-fund spending currently is about $1.4 billion.
Daugaard proposed Tuesday that the Legislature shift $19 million from reserves and spend it.
It’s a big change by Daugaard, who in his first three years as governor generally protected the reserves for emergencies, as did previous governors Mike Rounds and Bill Janklow.
From 2008 through 2011, reserves hovered just below the 10 percent mark. For the 2012 budget, $20.2 million was transferred. Since then, $72 million flowed back in.
Ten percent is less than many local governments and school districts have in reserves, Daugaard said Tuesday.
He didn’t designate a specific use for the $19 million. It will be added to various unanticipated one-time revenues.
That pot of cash will provide $16 million cash for the state share of the new veterans home at Hot Springs. Another $58.1 million will reduce other indebtedness and $5.6 million will fill the final hole in the old cement-plant retirement fund.