South Dakota Governor Mike Rounds says he won't seek a tax increase to fix state budget problems that are expected to get much worse in the next two years.

The governor says he doubts the South Dakota Legislature would increase taxes, so he is seeking to balance the state budget by searching for budget cuts.

The state is using federal stimulus money to help get through the next two years. Rounds says up to $29 million in state reserves might be needed to get through the current budget year because the recession caused a decline in revenue and an increase in spending on people who lost jobs.

However, Rounds says employment numbers are better than expected, so revenue should be better than expected a couple of months ago.