By paying off bond issues early, state government saves millions
PIERRE — State government won't have to pay $15.1 million in interest and fees as the result of paying off $56.3 million of bonds ahead of schedule, an official with the South Dakota Building Authority said Monday.
The $15.1 million of savings was more than the $13.2 million that was expected when the plan was first proposed, according to the authority's Dustin Christopherson. He presented an analysis to the Legislature's Joint Committee on Appropriations.
Gov. Dennis Daugaard proposed the concept of using one-time revenues to pay off debts and to pay cash for new projects. The Legislature followed through on the debt plan with House Bill 1206 in the 2014 session.
The four bond issues represented about 16 percent of the total debt owed through the building authority and were among the only five bond issues backed by general funds rather than specific dedicated sources of revenue.
The fifth general-fund bond issue will be paid off in September through the normal course of business.
"We should celebrate the success," Rep. Don Haggar, R-Sioux Falls, said. "It's something we should be proud of. Great job."
The projects covered by the four bond issues included:
The George S. Mickelson Center for the Neurosciences in Yankton, operated by the state Department of Human Service, where $11 million of debt and fees remained from 1992 and 1993 rounds of financing and another $6.7 million of debt and fees for the dietary wing project was outstanding from 2010;
The George S. Mickelson Criminal Justice Center in Pierre, operated by the attorney general and state Department of Public Safety, where $6 million of debt and fees remained from a 2005 bond issue; and
Various science facilities and laboratories at state universities, operated by the state Board of Regents, where $32.5 million of debt and fees remained from a 2008 financing.
Had the four bond issues run their scheduled timetables, their costs would have totaled $71.4 million.
The building authority was created in state law in 1967 to construct and otherwise provide a wide range of public projects from hospitals and penitentiaries to field houses and offices.