- Associated Press - Monday, December 1, 2014

PIERRE, S.D. (AP) - Gov. Dennis Daugaard said Monday that his spending plan for South Dakota’s 2016 budget period will include modest growth based on relatively flat revenue gains so far this year.

The governor will release his budget proposal on Tuesday in an address to lawmakers at the state Capitol. The budget plan marks the beginning of the lead-up to the 2015 legislative session, which will start in mid-January.

“We continue to see revenue growth, albeit somewhat less than we had believed it would be when the budget was adopted last March,” Daugaard said. “Still, we do have growth that will allow for some modest improvement.”

But Daugaard doesn’t have much freedom to spend on new programs such as the juvenile justice overhaul that was put forward on Monday because state revenue isn’t growing quickly. State budget chief Jason Dilges said South Dakota has seen lower-than-expected sales tax revenue and unclaimed property receipts this year that have contributed to a revenue dip through the end of October.

South Dakota got help in last year’s budget from a one-time windfall from unclaimed property, which comes from bank accounts and other financial holdings turned over to the state when owners cannot be found. Sales and use taxes through this October - about four months into the budget year - took in about $2.7 million less than anticipated, while unclaimed property receipts were roughly $3.8 million short of expectations. The sales tax is the state’s largest general revenue source, but low inflation has held back gains in the state’s receipts.

But Dilges said spending for Medicaid and other entitlement programs has been lower than anticipated, calling the situation “about a wash.” He said the state’s economy is seeing slow-but-steady growth. A tax on insurance companies outperformed expectations, bringing in nearly $1.9 million more than expected by the end of October.

Lawmakers will review Daugaard’s proposal in a Tuesday committee hearing after the budget address.

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