Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the State Debt Management topic
No spam. Unsubscribe anytime.
Committee hears proposal to use one-time funds to pay off $53.7 million in state bonds; supporters cite interest savings
Summary
Senate Bill 56 would appropriate $53,713,826 in general funds to pay off lease rental bonds for three projects, freeing ongoing general fund dollars and reducing interest costs. Proponents said payoff would save about $16.2 million in future interest and fees; committee deferred action.
Derek Johnson of the Bureau of Finance and Management presented Senate Bill 56, a proposal to appropriate $53,713,826 in one‑time general funds to retire state lease rental obligations issued by the South Dakota Building Authority for three projects: fish hatcheries, the Animal Disease Research and Diagnostic Laboratory (ADRDL), and the Precision Agriculture Building.
Johnson told the committee the early payoffs would save the state approximately $16.2 million in interest and fees over the original bond terms and would free roughly $5,043,655 in annual general fund debt service currently used to pay those bonds. Johnson said callable dates vary; ADRDL and Precision Agriculture bonds have callability in later years and payoff would eliminate future interest after call dates.
Agriculture and industry groups that originally supported ADRDL financing—including the South Dakota Farm Bureau, retailers, and cooperative associations—testified in favor of the bill and urged that previously negotiated arrangements (including an ag sector property tax relief arrangement) be respected as the committee considers premature payoff.
Committee members asked how the original ADRDL financing interacted with property tax relief previously accepted by the agricultural sector; Johnson said the intent was to honor the original timetable for property tax relief (scheduled for 2041) but that discussions would continue with stakeholders as the budget process proceeds.
Questions about callability and savings timing were discussed; Johnson said some bonds are callable in 2027–2028 and payoff savings would begin when callability permits. The committee deferred action on SB 56.
