- Associated Press - Tuesday, February 25, 2014

PIERRE, S.D. (AP) - The South Dakota Senate voted unanimously Tuesday to approve Gov. Dennis Daugaard’s plan to use a windfall in unclaimed property payments to finance the state’s new economic development program.

The bill will use $30 million from unexpectedly large receipts of unclaimed bank accounts and other abandoned assets to finance the Building South Dakota Fund, which provides loans and grants for housing, workforce education and infrastructure that support development projects. The measure will support the development fund for three years.

Senators on Tuesday also approved a companion bill, which will use any state budget surpluses to support the development fund after the unclaimed property money runs out in three years.

The development fund generally could not spend more than $10 million a year.

The two bills, which next go to the House, change the financing of much of a major economic development program passed by the Legislature last year.

The 2013 law seeks to attract large projects by refunding all or part of the state sales tax paid by projects costing more than $20 million. But the contractor’s excise tax paid by such projects would go into the Building South Dakota Fund, which also would get money from the two bills passed Tuesday by the Senate.

After the unclaimed property money has been spent, budget surpluses could be used each year to replenish the development fund, said Sen. Corey Brown, R-Gettysburg.

Any surplus revenue at the end of each year would first be used to make sure the state’s total reserves equal 10 percent of the prior year’s general spending, Brown said. Any surplus left after that would be placed in the Building South Dakota Fund, which could not exceed 1 percent of the prior year’s budget. That would build the development fund to about $15 million in the next few years, he said.

Senate Democratic Leader Jason Frerichs, D-Wilmot, said he supports the measures because they essentially provide that the state’s budget reserves should be 10 percent of annual spending. Lawmakers in recent years have debated how large the budget reserves should be, he said.