South Dakota’s most recent fiscal surplus fueled by unclaimed property

At the latest legislative interim appropriations meeting, a new law came to the forefront.

Thats because the state saw a windfall of one-time funds from unclaimed property.

Unclaimed property is any abandoned or private assets from bank accounts, stocks, uncashed checks, among other things.

During the legislative session, lawmakers expected about $176 million for one-time unclaimed property receipts. At the end of the fiscal year, they came in $47 million over that figure.

You can see some of that unanticipated in the one-time was unclaimed property. Its pretty normal after Legislative session you have very little unclaimed property that comes in the door,” Jim Terwilliger said. He’s the commissioner of the state Bureau of Finance and Management. “And so, this was truly kind of an unanticipated windfall. Absent that $47 million, our surplus would only have been $15 or $16 million. And so, that was truly the biggest contributor to the $63 million, was this unanticipated windfall.”

He referred to a $63 million budget surplus for Fiscal Year 2025 recently announced by Gov. Larry Rhoden. This year, all those one-time dollars are headed toward the states general funds.

In the future, however, that wont be the case. Thats because of a new state law thats reducing the amount of unclaimed property receipts allowed to head to the general fund. Starting in Fiscal Year 2026 with $61 million, the amount headed towards the general fund gradually reduces until it hits $25 million in 2035.

All cash over those amounts is placed in a trust fund.

Terwilliger said as the states revenue sources continue to struggle, because of the new law, its something legislators need to watch as they look ahead.

This will not happen because any types of windfalls to unclaimed property will be dedicated to the trust fund that was set up in Senate Bill 155,” he said. “And so, I think its important to think about that. And as we go forward, theres some challenges in our ongoing revenue sources that, you know, were keeping a very close eye on.”

The states largest revenue source, the sales and use tax, came in $3.7 million less than legislators expected.