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.
Part I (see here) discussed the first six of the top 12 issues that continue to be debated in the state, 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.
7. Economic Development: Governor’s GOED Fund, TIF Districts, and Incentive Oversight
The Issue: Republican lawmakers have a large appetite for oversight on spending in the Governor’s Office of Economic Development. Simultaneously, legislators are debating possible regulation of tax increment financing districts and refining how economic development tools are used in the state. The 2026 session also saw Republican leaders publicly clash over economic development philosophy — a sign of deep intra-party tensions.
What Happened: Crabtree saw several of his other proposals aimed at economic development and tax reform fail to materialize. TIF reform proposals did not advance to final passage. The broader question of how the GOED fund is replenished, what transparency requirements govern its use, and whether the Legislature has adequate oversight remained largely unresolved.
Tradeoffs: Centralized economic development funds allow the governor to respond quickly to business recruitment opportunities. But they concentrate discretion in the executive without adequate legislative review, raise questions about cronyism, and can result in tax dollars being directed to projects that private markets would not support. TIF districts, similarly, can jump-start development in blighted areas — the legitimate use — or be weaponized to subsidize profitable projects that need no public subsidy.
Conservative Positional Statement: The conservative constitutional position is that economic development decisions should be made by markets, not government officials dispensing funds at executive discretion. If the GOED fund is to exist, it requires robust legislative appropriation authority, transparent reporting of every grant and loan, clawback provisions for failed projects, and regular sunset review. TIF districts should be narrowly confined to genuinely blighted areas and subject to strict timelines. The Legislature’s appetite for oversight is healthy — but appetite must translate into statutory guardrails, not merely hearings.
8. Education Funding, School Choice, and Federal Funding Risk
The Issue: South Dakota’s education debates span K-12 funding adequacy, private school choice/voucher proposals, rural school viability, higher education affordability, and growing vulnerability to federal funding disruptions. South Dakota’s $433 million in federal education funds represented 21.7% of the state’s total K-12 education budget — the second-highest federal dependency ratio in the nation.
What Happened in 2026: The session produced a 1.4% bump for K-12 — below inflation. The state Senate voted 20-14 and the House 46-20 to pass HB 1082, which would use roughly $592,000 in state money each year to pay the amount currently charged to families whose students qualify for reduced-price school meals under federal income guidelines. The school voucher/education savings account debate — a major priority of former Governor Noem — carried forward but failed again to produce enacted legislation.
Tradeoffs: School choice proponents argue parental authority and competition improve outcomes and serve children regardless of zip code. Critics warn that voucher programs would hit rural schools hardest, with no choice but to make devastating cuts or close their doors — a serious concern given South Dakota’s many small rural districts. Cuts to federal education grants could cost South Dakota almost $26 million a year, nearly 11% of all federal education funding received by the state — a Washington-driven risk entirely outside Pierre’s control.
Conservative Positional Statement: The constitutional conservative strongly supports parental rights and school choice — but must simultaneously protect rural school districts that are the social and economic anchors of small communities. Voucher programs designed primarily for urban private schools will hollow out rural public schools without providing any viable alternative. Any choice program must be structured to strengthen, not defund, rural schools. Simultaneously, South Dakota’s extreme dependence on federal education dollars represents a fundamental vulnerability; the Legislature should aggressively pursue replacing federal funding with reliable state sources to preserve educational sovereignty.
9. Demographic Shifts, Rural-Urban Divide, and Workforce Shortages
The Issue: South Dakota’s rural communities face accelerating population loss, school enrollment declines, healthcare provider shortages, and housing deficits — while Sioux Falls and Rapid City grow. These pressures interact with nearly every other policy debate: education, healthcare, corrections, broadband, and economic development.
Context: Teacher shortages are partly filled by international educators on temporary visas. Rural healthcare providers struggle to recruit and retain staff. Governor Rhoden launched the GRIT task force to assess the state’s resilience to disasters, system failures, and cyber threats — but rural infrastructure gaps extend well beyond cybersecurity. Broadband access remains uneven despite federal investment. Mental health funding went unused, connected to a workforce shortage, meaning money appropriated for rural mental health services could not be deployed because there were not enough providers to deliver care.
Tradeoffs: Incentive programs for rural healthcare and rural business location carry costs but address genuine market failures — private markets alone will not provide adequate services to low-density areas at economically sustainable prices. Broadband deployment in rural areas requires either public subsidy or regulated utility requirements. Immigration-based workforce solutions address short-term shortages but raise longer-term questions about community cohesion and wage pressure.
Conservative Positional Statement: A constitutional conservative recognizes that declining rural communities are a failure not of the free market alone but of decades of policy choices — farm consolidation, school consolidation, hospital consolidation — driven by misaligned regulatory and economic incentives. The correct response is not perpetual subsidy but structural reform: tax policy that allows small-scale enterprise to remain viable, broadband deployment as genuine infrastructure (not a carve-out for monopoly providers), and land-use and zoning flexibility that allows rural housing to be built. The state’s fiscal resources should favor rebuilding rural civil society over subsidizing urban corporate campuses.
10. State Budget Priorities: Corrections, Medicaid, and Federal Dependency
The Issue: South Dakota has committed to building two new prisons — a $650 million men’s facility near Sioux Falls and an $87 million women’s prison in Rapid City — while simultaneously absorbing rising Medicaid costs and managing the uncertainty of federal funding reductions under the Trump administration. Falling sales tax revenues and rising Medicaid obligations drove lawmakers to enact targeted spending reductions in the fiscal year 2026 budget.
The Medicaid Dimension: South Dakota Republican lawmakers want voters to allow the legislature to make changes to Medicaid expansion if the Trump administration cuts federal funding below the 90 percent match that voters approved in 2022. “For every percent that we go below the 90 percent, that’s $2 million extra for the taxpayer match,” according to Senator Crabtree. Constitutional Amendment I, placed on the November 2026 ballot, addresses this contingency.
Tradeoffs: The prison investments address a genuine humanitarian and public safety crisis — the existing men’s facility dates partly to 1881. But $700+ million in correctional infrastructure, financed largely from reserves and interest earnings, crowds out other priorities. Medicaid expansion covers roughly 28,000 South Dakotans; rolling it back if federal matching falls would directly harm the most economically vulnerable residents while producing modest state savings relative to the social cost.
Conservative Positional Statement: Fiscal conservatives must insist on honest accounting of correctional costs, including long-term operational expenses that dwarf construction. The prison investments are necessary — but the siting, cost, and financing decisions deserve rigorous legislative scrutiny, which they received only partially. On Medicaid, the constitutional amendment providing flexibility if federal match falls below 90% is prudent federalism — protecting South Dakota taxpayers from an open-ended federal mandate while respecting the voters’ 2022 decision at the originally-promised cost share.
11. Broadband, Rural Infrastructure, and Economic Development Tools
The Issue: Broadband connectivity remains uneven across South Dakota’s vast rural geography, limiting economic development, telemedicine, remote work, and educational access. TIF reform, economic incentive refinement, and rural infrastructure investment were on the 2026 agenda but produced limited legislative output.
Context: Federal broadband funding from the Infrastructure Investment and Jobs Act is flowing to states, but South Dakota’s distribution and prioritization decisions remain in flux. Major policy issues on the 2026 agenda included refining how economic development tools are used in the state, but most TIF reform proposals did not advance. The data center debate intersected with broadband infrastructure, as large tech facilities often build fiber backbones that can be leveraged for rural connectivity — if properly conditioned in siting agreements.
Tradeoffs: Broadband deployment in rural areas is a classic market failure: private providers cannot profit from serving sparse populations without subsidy or regulated obligation. Public investment in middle-mile infrastructure can leverage private last-mile investment. However, without competitive procurement and transparency, broadband subsidies can flow to incumbent monopoly providers rather than expanding genuine access.
Conservative Positional Statement: Broadband connectivity is infrastructure, not a luxury — as fundamental to 21st-century economic participation as rural electrification was in the 20th. The conservative approach is to ensure competitive, technology-neutral procurement of public broadband funds, avoid picking winners among private providers, and condition economic development incentives (including data center siting) on meaningful rural broadband commitments. TIF districts should be reformed to require genuine public benefit conditions, including infrastructure commitments that serve existing residents.
12. Election Process Reform: Ballot Initiative Process, Petition Requirements, and Voter ID
The Issue: South Dakota’s robust ballot initiative process — which voters have used to expand Medicaid, reject carbon pipeline legislation, and pass other measures the Legislature declined — has drawn increasing attention from legislative leaders who view it as circumventing representative government. Meanwhile, tightened voter ID and eligibility verification were enacted in 2026.
What Happened: The Legislature enacted tougher voter identification requirements. 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 AI-generated deepfakes to influence elections. However, significant changes to the ballot initiative process itself — which was identified as a legislative priority at the start of the 100th session — did not materialize into enacted law during the 2025 session and remained on the agenda going into 2026.
Tradeoffs: Stricter voter ID requirements protect ballot integrity and are supported by strong public majorities. Critics note that voter fraud involving non-citizens is essentially non-existent in South Dakota. Restricting the ballot initiative process is more constitutionally fraught: the initiative and referendum are foundational expressions of popular sovereignty in South Dakota, and legislative attempts to raise petition thresholds or restrict subjects eligible for voter consideration risk concentrating power in a Legislature that has at times been misaligned with majority public opinion (as demonstrated by the pipeline referendum results).
Conservative Positional Statement: Voter ID is entirely consistent with constitutional conservatism — verifying citizenship as a condition of voting is reasonable and proportionate. The deepfake prohibition likewise protects the integrity of the democratic process. However, restricting the ballot initiative process to make it harder for citizens to check legislative overreach is not conservatism — it is incumbency protection. The constitutional conservative tradition in South Dakota should celebrate direct democracy as a check on government excess, not seek to erode it. The 2024 pipeline referendum, which overturned a legislative compromise unpopular with landowners, was the democratic process working exactly as designed.
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.
South Dakota’s primary elections will be held on 2 June. South Dakotans may wish to question candidates on these (and other) issues beforehand.
The end.
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This article originally appeared in Stu Cvrk’s Substack. Reprinted here with permission
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