Gov. Daugaard delivers FY2019 budget address

Gov. Dennis Daugaard presented his seventh and final budget address to the South Dakota Legislature Tuesday afternoon. His budget address portrayed a cautious economic outlook, while at the same time acknowledging the successful history of the past several years of maintaining a structured, balanced budget, which is an achievement many states lack. The $1.6225 billion general budget proposal includes a modest $32 million spending increase for the upcoming budget year (FY2019) and includes a $34 million shortfall for the current fiscal year.

The shortfall is primarily the result of weakened sales tax revenue, and as a result the budget will not include inflationary increases. The GOP-held Legislature will reshape the current budget and consider for approval the new budget during the legislative session that begins in January.

The governor’s plan anticipates that revenue for the current budget year will be about $34 million lower than previously anticipated. Here is a breakout of revenues and expenses that directly affect health care providers:


  • Ongoing receipts for FY2018 were revised: $1.569 billion, a projected decrease of $20.3 million caused by weaker sales and use tax from less spending on agriculture equipment, low inflation and online purchasing.
  • Revenue available for ongoing revenue growth in FY2019: $32.4 million. Recommended adopted FY2018 general fund budget of $1.590 billion and FY2019 general fund budget of $1.622 billion.
  • Emergency Special Appropriations funding for FY2018 to help fund Rural Recruitment Assistance for Healthcare Workforce of $837,972.


  • Medicaid Discretionary Inflationary Update: No increase – approximately $4.5 million expenditure from general funds to go to community based providers from the SD Healthcare Solutions Coalition efforts, the third and final year of targeted investment to enhance provider payments to 90 percent of costs.
  • State employees and primary public education staff will receive no increase. However, targeted positions are recommended to receive market minimum adjustments equal to $631,981.
  • Medicaid FMAP: The state blended rate decreases 1.13 percent from 44.76 percent to 43.63 percent resulting in $9.8 million savings to the General Fund.
  • Medicaid Growth: The state has seen a slow growth of .8 percent resulting in an additional 945 Medicaid enrollees annually, accounting for $4,838.459.

The governor remained committed to a balanced budget, stating, “South Dakota has set a strong fiscal example for other states, maintaining sound financial practices that have achieved a AAA bond rating from national rating agencies.”

In years past, South Dakota lawmakers have generally agreed with the governor’s proposed budget. We will share additional information as it emerges over the next few days and weeks.

Gov. Daugaard’s FY2019 budget recommendation slides can be found here.