PIERRE, S.D. – Governor Larry Rhoden announced today that South Dakota concluded its fiscal year 2025 with a $63 million operating surplus, underscoring the state’s commitment to disciplined financial management. The surplus is a result of $41 million in higher-than-expected revenues and $22 million in spending reductions below budgeted amounts.
“South Dakota is a leader in our nation – especially when it comes to disciplined financial management,” said Governor 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.”
A significant factor in the surplus was an unforeseen $47 million in unclaimed property receipts received since the 2025 legislative session. Beginning in fiscal year 2026, such windfalls will be directed to a dedicated trust fund, following the enactment of SB 155, signed into law by Governor Rhoden.
Despite the overall surplus, the state’s largest revenue source, the sales tax, finished the year $3.7 million below recent estimates and 0.6% lower than collections from the previous year.
The Bureau of Finance and Management (BFM) also released “South Dakota: A Model of Fiscal Strength,” a document detailing the state’s financial accomplishments. BFM Commissioner Jim Terwilliger emphasized, “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.”
During the 2025 legislative session, Governor Rhoden and legislative leadership agreed to retain $106 million unspent to help fund a future prison. This amount, combined with the $63 million operating surplus, means a total of $169 million will flow into the state’s two primary reserve funds as mandated by state law.
The state’s reserve funds now stand at $492 million, representing 19.9% of the fiscal year 2026 budget.