By Gov. Dennis Daugaard:
Until I became Governor, Linda and I lived in the home we built on my family's farmplace near Dell Rapids. About ten years ago, we decided to add a small addition onto the back. Our house had no debt against it, but we signed a fifteen-year mortgage to pay for the addition.
As you'd expect, we made regular payments on that mortgage for a number of years. Then, a few years ago, a cousin of my dad's died. Dad's cousin had owned a farm in Iowa. He didn't have any close family, and he didn't leave a will. That meant that many members of our extended family, including me, received a small inheritance of a few thousand dollars.
Linda and I hadn't expected to receive anything from dad's cousin, and when we received the money, we used it to pay off the mortgage for the addition. We were then able to take the money that had been used for monthly payments, and use it for other things.
In my state budget plan this year, I'm proposing that the state of South Dakota do something similar. In years past, our state has issued bonds, borrowing money to pay for building construction. We've borrowed to build a law enforcement training center in Pierre, to build treatment facilities and food service facilities at the Human Services Center in Yankton, and we've borrowed to improve science facilities at our state universities. Just as with a mortgage, the state has been making regular payments which will eventually repay our debts over a period of time.
This year, South Dakota received an unexpected windfall from a revenue source called Unclaimed Property. We expected to receive about $50 million this year from this revenue source, and were surprised in early November to instead receive more than $125 million. This was a result of changes in our laws and the relocation of bank charters to South Dakota. Much of that is a one-time windfall.
As I was planning my state budget proposal for next year, I thought back to that addition and that mortgage. That's why I'm proposing this year that South Dakota use $58 million from this one-time windfall to fully repay four outstanding bonds. Repaying these bonds early means the state will no longer need to make payments, which frees up more than $6 million a year in ongoing revenue.
This year, my budget proposal includes 3 percent funding increases for K-12 schools and Medicaid providers -- almost double the 1.6 percent that funding formulas would have required. I'm also proposing a tuition freeze for in-state, on-campus students at the state universities, and increased funding for our technical institutes.
Using this one-time windfall to eliminate bond liabilities helps to make these increases possible. It's a way that we can provide more to those we want to support. Eliminating these bond liabilities also strengthens our state balance sheet, making South Dakota even more structurally sound for the future. It's a win-win situation.
I'm heading back to the addition to see what else comes to mind. It has nothing to do with the recliner there.