South Dakota recently made the cover of Barron's, the Dow Jones financial weekly, as the best-run state in the nation. Our state earned the top spot due to our low debt and responsible pension funding compared to our Gross Domestic Product. This is great news and a reflection on governors and legislatures, long before me, who understood the importance of debt avoidance, sound financial decisions, and making only commitments that can be kept.
Low Debt: In South Dakota, we have no general obligation debt and only a small amount of legal authority debt. While almost all states have balanced budget requirements in their constitutions or laws, many create the illusion of balance by borrowing funds, keeping highly leveraged agencies off the books, or tapping the proceeds from the sale of state assets. From California to Greece to Washington, D.C., governments are now realizing the consequences of poor fiscal management. Avoiding those bad practices, South Dakota has demonstrated fiscal responsibility.
Pension Management: Underfunded public pensions are another symptom of poor state management. All too often, governments defer or only partially meet their obligations to pay into public pensions, or they make unrealistic growth projections that create the illusion of stability. In contrast, South Dakota has maintained its pension fund integrity by faithfully depositing necessary monies and by regularly revising projections to reflect changing realities.
In 2011, South Dakota balanced the state government budget -- truly balanced the budget --without raising taxes. That action did not result in the favorable Barron's article, but it sustained past patterns of responsible money management that put South Dakota on that front cover.
It is not preordained that South Dakota will always be strong, or prosperous, or free. It is the obligation of every generation to secure those blessings for the generation to come. If we ever fail -- if we allow our state to be ensnared in a pattern of entitlement and debt -- it will be because we forgot these core values that have well served us for so long.
As your governor, I pledge to never lose sight of those values that keep our state strong and illuminate for our nation the pathway forward.