WIXLIB

FY2023 Budget SlidesThese slides are provided as asupplement to the slides included inthe Governor’s presentation that wasdelivered on December 7, 2021.1

ECONOMICOUTLOOK2

Economic Assumptions No economic recession included in the state or nationalforecast US real GDP growth forecast: 5.5% in 2021 and 4.3% in2022 SD real GDP growth forecast: 4.4% in 2021 and 2.4% in2022 Includes Infrastructure Investment and Jobs Act (IIJA) Price pressures to ease next year and into 20233

IHS Markit US Economy Forecast 22US Real GDP 18160150140 14130 101202.05%1.51.00.50.0Millions of US JobsMillions of US Housing Starts4%US Inflation Rate3%2%1%0%-1%4

SD Economy Forecast500450SD Employment(thousands)400 60 50300 30250 2065432(billions) 403507SD Nonfarm IncomeSD Housing Starts(thousands)6%5%4%3%2%1%0%SD Unemployment Rate5

REVENUES6

Recent Growth in Sales and Use Tax7

FY2022 Adopted vs. Revised Ongoing Receipts(millions)SourceSales and Use TaxLotteryContractor’s Excise TaxInsurance Company TaxUnclaimed PropertyLicenses, Permits, and FeesTobacco TaxesOther Ongoing ReceiptsTotal Ongoing ReceiptsAdoptedFY2022 1,157.6139.4141.697.445.370.452.5129.1 1,833.3RevisedFY2022 1,250.1161.1147.6100.640.070.651.1141.5 1,962.7Change 92.5 21.7 6.0 3.3(5.3) 0.2(1.4) 12.4 129.3*Totals may not sum due to rounding8

FY2022 & FY2023 Revenue Forecast(millions)SourceSales and Use TaxLotteryContractor’s Excise TaxInsurance Company TaxUnclaimed PropertyLicenses, Permits, and FeesTobacco TaxesOther Ongoing ReceiptsTotal Ongoing ReceiptsAdoptedFY2022 1,157.6139.4141.697.445.370.452.5129.1 1,833.3Revised RecommendedFY2022FY2023 1,250.1 0.751.150.0141.5140.9 1,962.7 1,975.9Revised FY2022vs. FY2023 5.8 2.9 2.6 3.60.0 0.1(1.1)(0.6) 13.2*Totals may not sum due to rounding9

Ongoing Revenue AvailableFY2023Current Year Revised Ongoing Revenue Growth 129.3MFY2021 Revenue Growth (Actual Above Adopted) 57.9MFY2022 Ongoing Revenue Growth 71.4MProjected Ongoing Revenue Growth 13.2MOngoing Revenue Left on Bottom Line (FY2022) 15.0MTotal FY2023 Revenue Available 157.6M*Totals may not sum due to rounding10

One-Time Revenue in FY2022FY2022 Revised Ongoing RevenueGeneral Funds 129,338,531FY2021 Revenue Growth (Actual Above Adopted) 57,885,979FY2022 Ongoing Revenue Growth 71,452,552FY2022 Revised One-time RevenueTransfer from Budget ReserveRevenue Left on Bottom Line (FY2022)Total FY2022 Revenue Available 18,193,147 28,012,008 40,000,000 215,543,68611

FY2022MID-YEARADJUSTMENTS12

FY2022 Recommendation DetailFY2022 Revenue AvailableGeneral Funds 215,543,686FY2022 Expenditure TransfersFY2022 Emergency Special AppropriationsFY2022 Continuous Appropriation AdjustmentBottom Line( 9,138,000)( 271,843,737)( 63,000) 0FY2022 General Bill ReductionsFY2022 General Bill Increases 98,915,841( 33,414,790)13

FY2022 General Bill AmendmentsReductionsFY2022 Enhanced FMAPCRF Public Health and Public Safety PayrollState Aid RevisionDual Credit ReductionSouth Dakota Developmental Center Personal ServicesDrug/DUI Court TreatmentFood ServicesTechnical Colleges FormulaTotal FY2022 General Bill Amendment ReductionsGeneral Funds 49,228,784 39,061,505 8,800,000 615,291 574,353 265,583 189,321 181,004 98,915,84114

FY2022 General Bill AmendmentsIncreasesChanges in Medicaid and CHIP EligiblesVictims Services - Grant SupplementCorrectional HealthcareHome and Community-Based Medical SuppliesWildland Fire EquipmentDrill Rig/Water Trucks for Geological SurveyDevelopmental Disabilities Eligibles and UtilizationVarious Statewide UtilitiesIT Systems and UpdatesGeneral Funds 25,371,738 3,291,000 1,052,672 763,031 680,000 675,000 574,353 315,242 217,650*List continued on next slide15

FY2022 General Bill AmendmentsIncreasesBlack Hills State University Ellsworth Airforce Base ContractCrime Scene Response VehicleLegislative Salaries and Per DiemOffice of the State Auditor Operating ExpensesTotal General Bill Amendment IncreasesExpenditure TransfersCourt Security FundIT Modernization FundTotalGeneral Funds 209,080 149,750 84,224 31,050 33,414,790General Funds 5,000,000 4,138,000 9,138,00016

FY2022 Emergency Special AppropriationsEmergency SpecialsWorkforce Housing InfrastructureDakota State University Cyber Program ExpansionRapid City Community Work Center for WomenCuster State Park ExpansionCultural Heritage Center RenovationLake Area Tech. College Advanced Manufacturing Lab SpaceRichmond Dam ReplacementFlood Repair ProjectsMitchell Tech. College Agriculture and Diesel Power SpaceGeneral Funds 150,000,000 30,000,000 28,012,008 9,890,640 8,881,785 7,500,000 6,500,000 5,600,000 5,000,000*List continued on next slide17

FY2022 Emergency Special AppropriationsEmergency SpecialsSoutheast Tech. College Health Sciences Simulation Equip.Emergency and Disaster FundRapid City Firearms Range ComplexVolunteer Fire Service AssistanceReemployment Assistance System UpgradeExtraordinary Litigation FundWildland Fire Suppression FundRural Recruitment Assistance ProgramsWagner National Guard Readiness Center AdditionGeneral Funds 4,500,000 2,946,882 2,500,000 2,000,000 1,500,000 1,500,000 1,059,318 1,028,104 1,000,000*List continued on next slide18

FY2022 Emergency Special AppropriationsEmergency SpecialsState Radio TowersCapitol Lake Master PlanSioux Falls National Guard Readiness CenterTax Refunds for the Elderly and DisabledNational Guard Cold Storage ReplacementTotal Emergency Special AppropriationsGeneral Funds 750,000 500,000 500,000 450,000 225,000 271,843,73719

FY2022 Recommendation DetailFY2022 Revenue AvailableGeneral Funds 215,543,686FY2022 Expenditure TransfersFY2022 Emergency Special AppropriationsFY2022 Continuous Appropriation AdjustmentBottom Line( 9,138,000)( 271,843,737)( 63,000) 0FY2022 General Bill ReductionsFY2022 General Bill Increases 98,915,841( 33,414,790)20

FY2023EXPENSES21

Ongoing Revenue AvailableFY2023Current Year Revised Ongoing Revenue Growth 129.3MFY2021 Revenue Growth (Actual Above Adopted) 57.9MFY2022 Ongoing Revenue Growth 71.4MProjected Ongoing Revenue Growth 13.2MOngoing Revenue Left on Bottom Line (FY2022) 15.0MTotal FY2023 Revenue Available 157.6M*Totals may not sum due to rounding22

Ongoing Expense Overview 6.0% increase for medical provider reimbursement rates CPI-U inflationary rate is 2.0%6.0% increase to target teacher salaries CPI-W inflationary rate is 2.6%6.0% increase for technical colleges per student allocation andinstructor salary support pool CPI-W inflationary rate is 2.6% 6.0% increase in salaries for state employees, plus targeted increasesfor specific job classes Rebase special education disability reimbursement rates23

Ongoing Expense Overview 6.0% increase for medical provider reimbursement rates 6.0% increase to target teacher salaries 6.0% increase for technical colleges per student allocation andinstructor salary support pool 6.0% increase in salaries for state employees, plus targetedincreases for specific job classes Rebase special education disability reimbursement rates24

FY2023 Recommended Expense SummaryFY20236% Inflation for Education, Healthcare Providers, State EmployeesMandatory IncreasesDiscretionary IncreasesContinuous AppropriationTotal FY2023 General Fund Expense Summary 104,312,967 48,834,523 4,191,805 216,190 157,555,48525

FY2023 Recommended Expense Summary6% InflationState Aid to K-12 EducationHealthcare Provider InflationState Employee Salary PolicyTechnical Colleges FormulaMandatory IncreasesChanges in Eligibles, Utilization and CostsFederal Medical Assistance Percentage (FMAP)Mandatory InflationState Aid to K-12 (Expansion and Rebase)Maintenance & RepairUtilitiesPay Changes (Judge Pay and Legislator Salaries)Various Increases/DecreasesGeneral Funds 104,312,967 42,597,281 32,243,213 27,963,326 1,509,147 48,834,523 18,094,618 13,940,040 6,476,068 4,818,019 2,358,167 1,061,202 596,701 1,489,708*List continued on next slide26

FY2023 Recommended Expense SummaryDiscretionary IncreasesDOH: EMS Telehealth, Bright Start ExpansionDOE: Tourism Promotion Tax DistributionDLR: Adult Education and Literacy RebaseBOR: NSU E-Learning, USD Coyote Business Consulting, SDSDHarrisburg ContractATG: Various Positions, Medicaid Fraud SystemBFM: Deputy CommissionerSPL: Land AgentDOR: Property Tax SpecialistDHS: SDDC Personal ServicesContinuous AppropriationTotal FY2023 General Fund IncreasesGeneral Funds 4,191,805 2,184,783 846,697 495,420 429,050 267,432 149,381 99,497 70,046( 350,501) 216,190 157,555,48527

Bottom LineRevenue AvailableMid-Year Expense ReductionsMid-Year Expense Increases and TransfersEmergency Special AppropriationsOngoing Expense AdjustmentsContinuous Appropriation AdjustmentsBottom LineFY2022 215,543,686 98,915,841( 42,552,790)( 271,843,737) 0( 63,000) 0FY2023 157,555,485 0 0 0( 157,339,295)( 216,190) 028

One-Time Federal Authority RecommendationsOne-Time Federal AuthorityARPA State Fiscal Recovery Funds & Capital Project FundsPandemic Related Federal Grants10% FMAP Federal Authority6.2% Enhanced FMAP Federal AuthorityCRF Public Health & Public Safety PayrollVarious Federal Authority IncreasesTotal FY2022 Federal Authority RecommendationsFederal Authority 895,712,722 622,719,163 80,700,000 47,361,286 39,061,505 59,613,979 1,745,168,655* ARPA American Rescue Plan Act of 2021** CRF Coronavirus Relief Funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act29

ARPA One-Time State Fiscal Recovery FundsARPA One-Time State Fiscal Recovery FundsEnvironmental Funding Projects (Local)Environmental Funding Projects (State)Workforce Housing InfrastructureBroadbandLIFEPAK Replacement InitiativeReemployment Assistance System UpgradeCapitol Lake Master PlanEmergency Medical Services Telehealth ServicesTotal One-Time ARPA State Fiscal Recovery FundsFederal Authority 600,000,000 60,000,000 50,000,000 50,000,000 11,610,222 6,500,000 3,000,000 1,737,500 782,847,72230

ARPA One-Time Capital Projects FundsARPA One-Time Capital Projects FundsSD Public Health Lab Expansion and RemodelNSU Lincoln Hall Renovations and ExpansionBHSU West River Nursing Renovation and ExpansionWomen's Prison Healthcare ImprovementsTotal One-Time Capital Projects FundsFederal Authority 69,615,000 29,500,000 8,000,000 5,750,000 112,865,00031

No economic recession included in the state or national forecast US real GDP growth forecast: 5.5% in 2021 and 4.3% in 202