Unclaimed-property revenue might be key to 2014 session
PIERRE -- Thanks to a change in Nevada that South Dakota lawmakers decided they needed to match a few years ago, the Legislature and Gov. Dennis Daugaard have a flood of revenue from unclaimed property they can spend this year and next.
PIERRE - Thanks to a change in Nevada that South Dakota lawmakers decided they needed to match a few years ago, the Legislature and Gov. Dennis Daugaard have a flood of revenue from unclaimed property they can spend this year and next.
The Legislature called first dibs on half of the money last year before anyone knew just how much there might be. The Senate and the House of Representatives crafted the Building South Dakota package of economic development incentives.
The revenue for those programs relies largely on unclaimed property, from unredeemed gift cards to pure cash, which people leave behind with businesses, banks and other institutions. The state treasurer was to deposit 25 percent in the Building South Dakota fund in the 2015 fiscal year that starts July 1, 2014, and 50 percent starting in the 2016 fiscal year that begins July 1, 2014.
There is a circuit-breaker, so the governor can take the money in a year when there isn’t enough otherwise to meet the normal minimum needs of state government. But no one forecast the extra $68.5 million that flowed into South Dakota’s treasury from unclaimed property during the annual collection in October.
The prediction for this October is approximately $33.5 million larger than was previously thought. Roughly $70 million is the annual amount now expected going forward.
The gusher of money came because South Dakota had accelerated its standard recovery period to three years from five years and because of several location changes to South Dakota by major banking corporations.
Now Gov. Daugaard is suggesting legislators consider a new arrangement in the 2014 legislative session. He wants to use $30 million from the unexpectedly large pot of unclaimed-property revenue to “pre-pay” three years of BSD.
The $30 million is significantly less than the BSD fund would receive otherwise under the existing law passed last year: Approximately $30 million this year and approximately $35 million each year thereafter.
Right now there isn’t sufficient demand to use all of that money for economic development and related programs under the BSD umbrella. If legislators accept the deal, the big unknown is what happens when the governor’s $30 million “pre-pay” is gone.
The second piece of the governor’s plan is the “pay off” - that is, paying off some of state government’s existing debt.
The governor’s staff identified $58.1 million of bonds that could be fully paid in the coming months, saving an estimated $6.3 million in the next year and another $13.3 million in the future in fees and interest.