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Committee recommends law to keep rainy day fund at 10% and require phased replenishment
Summary
House Bill 10 36 would codify a long-standing 10% target for South Dakota's combined budget reserve and general revenue replacement funds and require that any amount withdrawn be replenished in roughly equal thirds over the following three fiscal years; the committee recommended the bill for passage.
The Senate Appropriations Committee voted to give House Bill 10 36 a "do pass" recommendation after Bureau of Finance and Management officials described the measure as a way to enshrine the state's 10% rainy day policy into law and set a replenishment schedule if the funds are used.
Steven Collier of the Bureau of Finance and Management told the committee that the state's rainy day balance is currently about $323 million and that a 10% target of adopted general-revenue levels is about $250 million. "What we don't have today is we don't have a law or anything saying that it should be at 10%, nor do we have anything that says if we do go below that level, what should we do to replenish it," Collier said.
Under the bill, the combined budget reserve fund and the general revenue replacement fund would have a 10% floor. If the legislature authorizes use of the funds and the funds fall below the floor, the bill calls for replenishment of one-third of the amount withdrawn in each of the next three succeeding fiscal years, subject to subsequent legislative action.
Collier and other BFM staff said the change would not prevent future legislatures from taking different actions, but would provide a statutory target and a plan for restoring reserves after an emergency. He cited past uses of the reserve for flood response and mountain-pine-beetle work and told senators the proposal promotes long-term budget stability.
Senator Howard moved the committee "do pass" recommendation; the motion passed on a roll call in committee. The bill will go to the floor with a favorable recommendation.
