Proposed Budget - Fiscal Year 2025
South Dakota Governor Kristi Noem released her fiscal 2025 budget proposal on December 5. The recommended budget calls for $7.3 billion in total spending, a 1.3 percent decrease from fiscal 2024’s budgeted amount. General fund spending is recommended at $2.4 billion, a 5.0 percent increase from the budgeted amount for fiscal 2024. Total fiscal 2025 general fund increases are $114.7 million, with the largest increases going towards social services ($27.5 million), state aid ($24.8 million), human services ($22.2 million), employee compensation ($22.0 million), corrections ($5.1 million), and the military ($3.3 million). General fund ongoing receipts are estimated at $2.4 billion in fiscal 2025, a 2.5 percent decline from fiscal 2024’s revised level. The total estimated reserve balance is $239.9 million, or 10.0 percent of fiscal 2025 general fund appropriations.
Proposed Budget Highlights
The governor’s budget recommendation maintains a structurally balanced budget while making investments in key areas that focus on ensuring a safer, stronger, and healthier South Dakota. The recommendation provides for a 4.0 percent increase for state aid to general education, the state’s technical colleges, reimbursement rates for health and human service providers, and salary increases for state employees. Highlights of the budget proposal include:
Education
- Recommends a 4.0 percent increase for state aid to education, special education, and state technical colleges.
- Proposes $6.0 million in one-time funding for implementing the Science of Reading evidence-based approach to reading instruction.
- Funds the expansion of the Jobs for America’s Graduates program.
- Includes $4.8 million in one-time general funds to support equipment priorities at South Dakota’s four technical colleges.
- Invests $1.8 million in general funds for an ongoing increase for technical colleges.
- Directs $0.5 million in general funds for the Dual Credit program.
Healthcare
- Directs $11.1 million in general funds for provider inflation of 4.0 percent.
- Calls for $18.3 million in general funds to be dedicated to buy-down the cost of Medicaid expansion once the 5 percent enhanced FMAP ends.
Infrastructure
- Directs $120.6 million in local water/wastewater investments with remaining federal ARPA funds.
- Includes $11.7 million in one-time general funds and $10.7 million in one-time federal fund expenditure authority to complete repairs on three key dams across the state.
- Recommends $7.0 million in general funds to support the Information Technology (IT) Modernization Fund.
Public Safety
- Recommends $2.4 million in federal State Fiscal Recovery Funds and $20.9 million in general funds to complete the Rapid City Women’s Prison.
- Calls for $10.0 million in federal ARPA funds, $132.5 million in one-time general funds, and a transfer of $95.7 million from reserves to be set aside for future construction of a men’s prison near Sioux Falls.
- Includes $2.4 million in ongoing general funds to assist counties with the cost of providing certain criminal justice services and $1.0 million in general funds to increase the incentive payment for juvenile diversion opportunities.
- Proposes the creation of the Office of Indigent Legal Services to ensure that all citizens have access to legal counsel.
Workforce
- Recommends a 4.0 percent market adjustment for state employees.
Other
- Includes $6.0 million in general funds for a new Center for Quantum Information Science and Technology.
Debt Avoidance
- Calls for additional saving to relieve debt accrued from the state’s correctional system infrastructure.
- Saves over $600 million in interest and fees.
- Avoids $50 million in annual debt service payments.