South Dakota’s budget basics

According to the National Association of State Budget Officers (NASBO), South Dakota’s total expenditures in fiscal year (FY) 2022 were $7.0 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, South Dakota’s combined state and local direct general expenditures were $8.7 billion in FY 2021 (the most recent year census data were available), or $9,656 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $11,087.

(Note: We cite data from both NASBO and Census to provide a broader picture of each state’s fiscal situation. However, these sources detail spending from different levels of government in different years, and the COVID-19 pandemic and the federal government’s response to it significantly affected these totals in different ways in different years. Please only use one source if you are looking for historical comparisons.)

South Dakota’s largest spending areas per capita were elementary and secondary education ($1,995) and public welfare ($1,950). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

South Dakota’s combined state and local general revenues were $8.2 billion in FY 2021, or $9,162 per capita. National per capita general revenues were $12,277. South Dakota does not levy a corporate income tax or individual income tax. (South Dakota reports some corporate income tax revenue because it levies a special tax on financial institutions.) After federal transfers, South Dakota’s largest sources of per capita revenue were general sales taxes ($1,865) and property taxes ($1,661).

South Dakota’s politics

Governor Kristi Noem, a Republican, was elected in 2022 with 63 percent of the vote. The next gubernatorial election is in 2026.

Republicans control both the House of Representatives (63 Republicans to 7 Democrats) and Senate (31 Republicans to 4 Democrats), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in South Dakota. The entire legislature is up for election in 2024 because both representatives and senators serve two-year terms.

South Dakota’s budget institutions, rules, and constraints

South Dakota uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. South Dakota further limits annual revenue growth with a binding rule that requires a legislative supermajority or vote of the people to override. A legislative supermajority vote is also required to pass any legislation that raises taxes or revenue. South Dakota limits total debt service incurred by the state, but not authorized debt.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

South Dakota’s current budget

Governor Noem released her FY 2024 budget proposal in December 2022 and gave her state of the state address in January 2023.

South Dakota enacted its FY 2023 budget in March 2022. The enacted budget included $2.1 billion in general fund spending and $5.9 billion in total spending.

Under the American Rescue Plan, South Dakota will receive $974 million in direct state fiscal aid and $210 million in local government aid from the federal government. As of January 2022, South Dakota had not reported how it plans to spend its state ARP funds.

According to NASBO, South Dakota’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2022: $2.0 billion/$7.0 billion
• FY 2021: $1.9 billion/$6.8 billion
• FY 2020: $1.7 billion/$4.8 billion
• FY 2019: $1.6 billion/$4.5 billion

For more on South Dakota’s budget, see

• the South Dakota Bureau of Finance and Management,
   
• Open SD, and
   
• the South Dakota Legislative Research Council.

South Dakota’s economic trends

South Dakota’s per capita income (per the Bureau of Economic Analysis) was $65,806 in 2022, ranking 16th among the states. It was above both the national average of $65,423 and the Plains regional average of $60,113. The state’s median household income (five-year estimate) was $63,920 in 2021, ranking 31st among the states and below the national average of $69,021. South Dakota’s poverty rate was 12.5 percent in 2021 (five-year estimate), below the national rate of 12.6 percent.

Although South Dakota’s averages tell a story about the entire state, South Dakota is composed of diverse localities. For example, the city of Vermillion’s median household income was $47,920, and its poverty rate was 25.2 percent; the city of Brandon’s median household income was $96,367, and its poverty rate was 2.1 percent.

South Dakota’s unemployment rate has historically been below the national average, particularly following the Great Recession, and in recent years it has been among the lowest in the country.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, South Dakota does not currently have enough information available for the Bureau of Labor Statistics to break down its unemployment rate by race.