PIERRE, S.D.(Press Release) –On Monday, Governor Larry Rhoden announced South Dakota closed the state fiscal year 2025 budget year with an operating surplus of $63 million.
“South Dakota is a leader in our nation – especially when it comes to disciplined financial management,” said Governor Larry Rhoden. “We will continue to be careful stewards of taxpayer dollars by making wise long-term investments, maintaining conservative fiscal policies, and only spending within our means.”
The surplus included $41 million in excess revenues and $22 million in spending below what was budgeted.
The Bureau of Finance and Management (BFM) also published “South Dakota: A Model of Fiscal Strength,” a document highlighting South Dakota’s accomplishments as one of the best financially managed states.
“South Dakota’s disciplined financial management, low debt levels, conservative budgeting practices, AAA credit rating, and fully funded pension system helped achieve our distinction as a leader in fiscal strength,” said BFM Commissioner Jim Terwilliger. “This document puts all these accomplishments and more in one convenient place.”
Unforeseen unclaimed property receipts were the biggest driver of excess revenues; the state received more than $47 million in unexpected unclaimed property receipts since the 2025 legislative session. Beginning in FY2026, such windfalls will be dedicated to a trust fund via SB 155, which Governor Rhoden signed into law.
South Dakota’s largest revenue source, the state sales tax, finished the year $3.7 million lower than recent estimates and 0.6% lower than collections from the previous year.
During the 2025 legislative session, Governor Rhoden and legislative leadership agreed to keep $106 million left unspent on the bottom line to help cover the costs of a future prison. Between the $63 million surplus and the $106 million left unspent by the Legislature, $169 million will flow to the state’s two primary reserve funds under state law.
The state’s reserve funds now total $492 million or 19.9% of the FY2026 budget.
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