Thursday, Jul 16, 2026

Is it illegal for the South Dakota state government to run a deficit?

yes

South Dakota is one of 35 states that prohibits deficit carryovers from one fiscal year to the next.

Article XII of the South Dakota Constitution outlines the requirements of the state to maintain a balanced budget. Section 7 says the governor’s proposed budget must not “exceed anticipated revenue and existing funds available for expenditure or appropriation.” The Legislature, similarly, cannot appropriate funds that exceed the same revenue limits.

South Dakota ended fiscal year 2026 with a $69 million surplus. The state budget was $7.5 billion.

The surplus in FY25 was $63 million, while operating on a $7.3 billion budget.

Vermont is the only state in the U.S. that does not have balanced budget requirements written into their constitution or state laws.

This fact brief is responsive to conversations such as this one.

Sources

Tax Policy Center What are state balanced budget requirements and how do they work?
South Dakota Constitution Article XII
South Dakota Searchlight Lawmakers adopt $7.5 billion budget with 1.4% increase for schools, state workers, health providers
South Dakota State Budget State budget
South Dakota State News South Dakota Ends Fiscal Year with $69 Million Surplus
South Dakota State News South Dakota Ends Fiscal Year with $63 Million Operating Surplus
Urban Institute Vermont

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Is it illegal for the South Dakota state government to run a deficit?

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