Another Effort To Be Even Better Stewards
A column by Gov. Dennis Daugaard:
The word that best sums up the public trust held by all officials is stewardship. Stewardship – the careful and responsible management of something entrusted to one’s care – has been my goal over these past four years.
Good stewardship brought our budget into structural balance four years ago. It has been good stewardship, each year thereafter, to project our revenues and expenses with caution, so if we erred, we would err on the side of a surplus not a deficit. It was an exercise of careful and responsible management when, after receiving an unexpected windfall last year, we used the money to retire bonds early and to pay cash for our new veterans’ home rather than borrowing.
In another effort to improve stewardship of taxpayer dollars, I have initiated a new state debt policy this year.
Our Constitution prohibits debt. To finance construction projects and manage large outflows of funds, the South Dakota Building Authority and South Dakota Health and Educational Facilities Authority were created. These entities issue and refinance bonds to pay for things like state park projects, the buildings at the behavioral health center in Yankton and public university projects. Long-term leases between the state and these authorities retire the bonds that are issued.
Last year, I asked the Bureau of Finance and Management to create a new debt limitation and management policy to guide both the management of existing debt and the issuance of new debt through these authorities. Under this new policy, total debt cannot exceed 1.2 percent of the state’s GDP and total annual debt service payments cannot exceed 4 percent of the ongoing general fund revenue from the previous fiscal year.
We were well below these boundaries at the end of Fiscal Year 2014, with the total outstanding debt as a percentage of state GDP at 0.8 percent and annual debt service payments as a percentage of ongoing general fund revenue at 2.9 percent.
In January, the Lieutenant Governor and Commissioner of Finance and Management traveled to New York City to share this new debt policy with ratings agencies. When Standard & Poor’s revised South Dakota’s outlook from stable to positive last summer, the ratings agency encouraged South Dakota to continue to improve our already strong fiscal position. I appreciate a good credit rating because it saves the state money, but I also appreciate that outside experts are endorsing the strength of the decisions we have made.
The principle of stewardship – careful and responsible management – will continue to be my goal for the next four years. We won’t spend money we don’t have. We will keep our budget in structural balance. We will be frugal, not cheap, and seize opportunities to spend in the short term where it can lead to savings, efficiencies or better government in the long term.