State budget office: revenue growth slowing, recommends limited use of reserves to finish prison funding

Bureau of Finance and Management Commissioner Jim Terwilliger told the Joint Appropriations Committee on a midwinter briefing that South Dakota's revenue growth is easing back toward long-term averages and that the governor's recommended fiscal 2026 budget balances a number of one-time receipts, midyear adjustments and ongoing pressures.

Terwilliger said the administration's updated numbers include a net $175,300,000 revenue revision for the current year driven largely by larger-than-expected unclaimed property receipts and higher interest earnings, while ongoing sources were revised down roughly $26,000,000. "We're experiencing that to some extent," Terwilliger said of the return to normal growth, adding the presentation was intended to be high level because agencies will present more detail in upcoming hearings.

The budget office highlighted several items that shaped the recommendation. Unclaimed property remittances were described as volatile; the administration budgeted a conservative ongoing assumption of $62,000,000 for FY2026 but reported a net unclaimed-property inflow this year that the team estimated at about $229,000,000 when receipts and claims are netted. Terwilliger cautioned that much of…