South Dakota’s 101st session of its state legislature recently completed work and adjourned last month, with a number of unresolved matters carrying forward for further work and deliberation.
The top 12 issues that continue to be debated are discussed below, with the ranking order determined by estimated public interest and salience. Each of the issues presented concludes with a positional statement on the issue from a traditionalist constitutional and fiscal conservative standpoint.
1. Property Tax Relief and Long-Term Reform
The Issue: Property tax relief is a hot topic in Pierre, given that total payments have increased by nearly 60% for residential housing and nearly 50% for commercial property over the past decade in South Dakota. The 2026 session saw multiple competing reform proposals, from county-option sales tax offsets to constitutional caps.
What Happened: Senate Bill 96 gives counties the option to implement a half-cent sales tax increase in exchange for lowering property taxes, and Senate Bill 245 will create an owner-occupied property tax relief fund using revenue generated from the scheduled 0.3% increase in the statewide sales tax due to come into effect July 1. The passage of both bills came after Rhoden negotiated with House Speaker Jon Hansen. More ambitious proposals — including constitutional amendments that would have capped assessed values or reset tax rates upon sale — were deferred or failed.
Tradeoffs: The relief-through-sales-tax approach shifts the burden rather than eliminates it, potentially hitting lower-income South Dakotans who spend a higher share of income on taxable goods. It preserves local government and school district revenue streams. Constitutional caps (like California’s Proposition 13 model) would provide permanent ceiling protection for homeowners, but critics warn they freeze inequities and starve local governments over time. The problem with cutting property taxes, which help fund local school districts and city and county governments, is that typically you need to backfill that lost revenue.
Conservative Positional Statement: From a traditionalist constitutional and fiscal conservative standpoint, the ideal solution is structural: cap or reset assessed valuations to prevent government from harvesting windfall revenue from inflation-driven paper gains without voter approval. The county-option sales tax swap is a pragmatic half-measure that increases one tax to reduce another, leaving the fundamental problem — government growth funded by automatic valuation increases — unresolved. True relief requires a constitutional amendment limiting assessed value growth, as the Legislature’s own deferred proposals recognized. Another possibility is swapping property taxes for a structured transaction tax, but there has been no political appetite to tackle this in Pierre (so far). Property tax relief will almost certainly return in 2027.
2. Private Property Rights vs. Eminent Domain for Private Benefit
The Issue: The multi-year battle over Summit Carbon Solutions’ proposed carbon capture pipeline has made eminent domain the defining populist issue of South Dakota Republican politics. The state Supreme Court ruled last year that Summit had not proven its project is eligible for eminent domain. The high court sent the matter back to a lower court, where the company is trying to prove its case.
What Happened: HB 1052 prohibits carbon pipeline developers from using eminent domain to acquire private land — a major victory for the property rights movement. However, a broader constitutional amendment failed: House Joint Resolution Bill 5001 would have put forth a ballot measure asking voters if the use of eminent domain should not include as justification an increase in tax base, tax revenue, employment or general economic health. However, that bill failed in the Senate 14-19.
Tradeoffs: Restricting eminent domain for private pipelines protects landowners’ foundational rights against forced taking for private profit. Opponents — primarily pro-business Republicans — argue such restrictions could impede infrastructure critical to South Dakota’s corn and ethanol economy. Whether Summit Carbon Solutions qualifies as a “common carrier” under state legal parameters for eminent domain is being litigated in court and will likely play a large role in legislative debates. The defeat of the constitutional amendment means the pipeline question remains in legal limbo, with no permanent voter-ratified standard set.
Conservative Positional Statement: The constitutional conservative position is clear and unambiguous: private property is the cornerstone of ordered liberty, and government power to seize it for the financial benefit of a private corporation is antithetical to both the Fifth Amendment’s “public use” requirement and South Dakota’s agrarian heritage. The pipeline-specific eminent domain ban is correct and necessary. The failure to pass a broader constitutional amendment is a significant missed opportunity — the Legislature should not leave this fundamental protection dependent on statute alone, which can be amended by future legislative majorities under corporate pressure.
3. Data Centers: Economic Development vs. Local Impacts
The Issue: The decision on whether to allow construction of data centers that use extensive electricity and water to store huge amounts of computer data is perhaps the hottest topic in South Dakota right now. The debate pits out-of-state tech giants seeking low-cost power and TIF tax incentives against rural communities concerned about strained water supplies, rising utility rates, and infrastructure costs.
What Happened: The 2026 session produced a mixed outcome. While proponents in favor of data centers touted the potential economic benefits, several bills introduced by lawmakers aimed at providing favorable tax incentives to that industry failed to make it to the governor’s desk. Those skeptical of data centers had several proposals fail to make it past the finish line, but they were successful in the passage of Senate Bill 135. The bill, dubbed the “Data Center Bill of Rights,” was championed by Hansen and Senate President Pro Tempore Chris Karr, which provides guardrails against data center electricity and water usage.
Tradeoffs: Data centers can generate substantial local property tax revenue and bring high-tech jobs. But they are not labor-intensive — a large campus employs relatively few people relative to their resource footprint. They concentrate power demand, potentially raising utility rates for existing rural customers, and their water consumption competes with agricultural needs. TIF financing for data centers redirects future tax increment away from schools and local governments for years. Without guardrails, out-of-state corporations capture the benefit while local ratepayers bear the costs.
Conservative Positional Statement: A fiscal conservative should be deeply skeptical of TIF subsidies and tax exemptions for profitable multinational corporations that do not need taxpayer assistance to locate in South Dakota. The free market should determine site selection. The “Data Center Bill of Rights” establishing resource usage guardrails is sound governance — protecting existing ratepayers and water users from subsidizing corporate infrastructure. Extending further tax preferences to hyperscale data centers is corporate welfare, not economic development. Local control over permitting and resource impacts should be strengthened, not preempted by state incentive packages crafted for out-of-state interests.
4. Election Integrity: Cast Vote Records, Equipment Certification, and Voter Eligibility
The Issue: Grassroots activists have pushed for public access to cast vote records (CVRs) and ballot images, challenged the use of electronic tabulation equipment that has not been fully re-certified under current state law, and sought to ensure only U.S. citizens vote. There is growing interest in allowing county auditors to release cast vote records and ballot images to the public; however, the Office of Hearing Examiners has ruled that CVRs and ballot images are not public records. SB 29 was proposed to provide a new pathway for CVRs and ballot images to be released by county auditors while still protecting voter privacy.
What Happened: Governor Rhoden signed six election integrity bills into law. SB 68 requires individuals to be U.S. citizens to be eligible to vote, with penalties for non-compliance. SB 164 prohibits the use of deepfakes — images or videos manipulated by artificial intelligence — to influence an election. The Legislature enacted tougher voter identification requirements but declined to force businesses to implement stricter immigration verification measures. Lawmakers amended Senate Bill 30 to allow citizens to challenge the eligibility of a voter based on whether they are a U.S. citizen. The question of full public access to CVRs and resolution of the equipment certification controversy remains incompletely addressed.
Tradeoffs: Greater transparency in election records builds public confidence and enables independent auditing — cornerstones of democratic legitimacy. Opponents argue that ballot image release risks voter privacy and could enable vote-buying verification. Equipment certification disputes involve genuine legal complexity: state administrative rules require board approval before modifications, but vendors’ proprietary software claims complicate meaningful independent review.
Conservative Positional Statement: Transparent, verifiable elections are not optional in a constitutional republic. The public has an inherent right to audit the mechanisms by which their consent is recorded. CVR and ballot image release with appropriate privacy protections is simply good governance. The use of proprietary, trade-secret-shielded election equipment for sovereign public functions — without complete public auditability — is constitutionally and philosophically untenable. The Legislature made progress but left the equipment certification and full transparency questions unresolved. These must be addressed in 2027.
5. State Budget Priorities and Fiscal Sustainability
The Issue: The main run of the South Dakota Legislature came to a close with lawmakers passing a $7.5 billion budget for fiscal year 2027, which includes a 1.4% increase in resources for the “big three:” state employees, pre-K through 12th grade education, and Medicaid health care providers. Overall, the budget is a 2.4% increase from last year.
The Structural Problem: The difficult task of developing and passing an annual state spending plan followed a year when overall tax revenues fell by 1.4%. Federal dependency is a looming structural risk: South Dakota’s $433 million in federal education funds represented 21.7% of the state’s total K-12 education budget — the second-highest in the nation behind Mississippi. Federal funds overall exceed 40% of the total state budget. Rising prison costs — two new facilities totaling over $700 million — add further long-term pressure.
Tradeoffs: The 1.4% bump for the big three barely keeps pace with, and in real terms likely falls below, inflation. Providers and workers lose purchasing power. Yet the state’s revenue base contracted, and borrowing or deficit spending is constitutionally prohibited. The heavy reliance on federal matching funds for Medicaid creates a fiscal cliff if Washington reduces match rates, which the Legislature partially addressed by placing a Medicaid contingency measure (Constitutional Amendment I) on the November 2026 ballot.
Conservative Positional Statement: A constitutionalist fiscal conservative applauds South Dakota’s balanced budget requirement and its historic record of 136 consecutive balanced budgets. However, the structural dependence on federal dollars — over 40% of the budget — represents a sovereignty risk: Washington can and does attach strings. The Legislature should systematically work to reduce federal dependency, even if that means accepting short-term austerity, rather than serving as a pass-through for federal mandates. Prison cost overruns and Medicaid growth must be addressed through systemic reform, not simply funded through sales tax increases.
6. Energy Infrastructure, Power Grid Reliability, and Small Modular Reactors
The Issue: The explosion of data center interest, combined with existing agricultural and industrial energy demand, is straining South Dakota’s grid and raising questions about long-term power supply. Governor Rhoden expressed interest in nuclear energy — especially the cheaper, small modular reactors gaining interest across the nation — during the Tri-State Governors Conference last summer, when he referenced heightened needs for power in the age of data centers and artificial intelligence.
Status: Rhoden is seeking funding for a nuclear feasibility study proposed by his Governor’s Resilience and Infrastructure Task Force, which recommended the study “to ensure an all-of-the-above energy approach.” South Dakota does not produce any nuclear energy, but 4% of electricity consumed in the state comes from nuclear power produced elsewhere. South Dakota is one of 11 states that has not signed an agreement with the federal Nuclear Regulatory Commission to take over authority of radioactive materials.
Tradeoffs: SMRs offer reliable, dispatchable baseload power that wind and solar cannot provide on demand. It takes two coal or natural gas plants, or three to four renewable resource-based plants, to generate the same amount of electricity as one typical nuclear reactor. However, SMRs carry high upfront capital costs, unresolved waste storage questions, and lengthy regulatory timelines. South Dakota’s existing grid exports surplus renewable energy — the state produces roughly twice the electricity it consumes — but lacks sufficient dispatchable capacity for peak industrial demand.
Conservative Positional Statement: Energy independence and grid reliability are national security and economic sovereignty issues. An all-of-the-above energy strategy grounded in dispatchable power — including next-generation nuclear — is entirely consistent with conservative principles. The SMR feasibility study is a prudent first step. However, the state should resist using public subsidies to underwrite private data center energy needs; the correct model is for data centers to be “interruptible customers” that invest in their own backup power rather than socializing their demand onto existing ratepayers. Nuclear development, if pursued, should be structured to benefit South Dakotans first.
CONCLUDING THOUGHTS
These summaries reflect information through the adjournment of the 101st state legislative session last month, with several bills awaiting Governor Rhoden’s signature and multiple constitutional amendments pending before voters in November 2026.
Here ends Part I of the list of top 12 issues that are being debated in South Dakota. Part II will cover the remaining six.
The end.
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This article originally appeared in Stu Cvrk’s Substack. Reprinted here with permission
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