SIOUX FALLS, S.D. (KELO) — The state’s December revenues will be good but Governor Kristi Noem said today that legislators will need to be conservative with spending.

There is no guarantee that the good December revenue will continue in the future as interest rates will increase and inflation continues and residents may have less money to spend, Noem said.

“Energy costs are going up, and remember, South Dakota is a heavily dependent state,” Noem said. “A bigger share of a family budget goes to energy costs.”

State residents need energy when it’s cold in winter and hot in the summer and those increased costs will be noticed, Noem said.

The Governor said the typical average annual revenue growth is 4% to 5%.

“We may see that better revenue growth for the coming budget year. But it would be wise to look two and three years down the road and anticipate the needs we have financially in front of us that we will be responsible and make sure we have the money saved and accounted for to take those on as well,” Noem said.

“We need to make sure we are budgeting appropriately, having a reasonable, typical revenue growth model that we’ve always followed in South Dakota…,” Noem said.

One of the upcoming needs is prison improvement, she said.

The state will need to figure out how to pay for the needed $600 million in prison improvements. She wants lawmakers to start saving for those needed improvements.

Lawmakers may mention that bonding can be used for prison needs but Noem said that is a challenge.

Any money tied up in bonds for a prison ties up the bonding for the state’s colleges and technical colleges, she said.