South Dakota

House committee squashes half-century tax break for SD data centers

Published

2 months ago

February 4, 2026

House committee squashes half-century tax break for SD data centers

PIERRE — Controversial data centers built in South Dakota won’t get a sales tax break—at least not yet.

The House State Affairs committee met Feb. 4 to weigh House Bill 1005, a bill which would have given owners and operators of qualifying data centers exemptions on the state’s sales and use tax for investments made in computer software and “enterprise information technology equipment”—a wide array of computer hardware, servers, power infrastructure, maintenance and security systems.

The exemption would apply to data centers that are issued a building permit between July 1 and June 30, 2036.

Data centers are physical facilities that house servers and networking equipment, which are typically used to store, manage, process and distribute large amounts of data.

Some of the common types of modern data centers include:

AI data centers, which are specifically designed to support artificial intelligence applications;
Colocation data centers, where third-parties manage the servers and components;
Cloud data centers, where major providers, like AMS, Microsoft and Google, host cloud-based data and applications; and
Enterprise data centers, which are often used for private uses by corporations.

Particularly large data centers are sometimes known as “hyperscalers.” These facilities can cost hundreds of millions to billions of dollars and require hundreds of acres of land to build, with construction at-times occurring in multi-year phases.

The legislation would have required businesses to submit documentation to the secretary of the state Department of Revenue, who would determine if the data center’s eligibility for the tax exemption.

A data center would have been able to receive the break if it could prove the facility’s electrical demands were under a written agreement or rate schedule that avoids shifting electrical costs to other consumers; and notice was given to local water providers that the site’s water consumption was “compatible for the location,” per the bill’s language. Data center owners would have also had to file an annual affidavit that discloses whether the business continues to meet the eligibility criteria.

However, those documents would have been considered confidential under the proposed legislation.

The bill was rejected by the committee, with nine members voting for and three against the legislation. Sioux Falls Republican Bethany Soye was excused from the vote.

Supporters of the legislation told committee members the sales tax break was essential to give data center investors and developers enough incentive to build in the Mount Rushmore state.

State Rep. Kent Roe, R-Hayti, who drafted the legislation, urged the committee to green-light the tax break on the premise that the state would reap a bounty of benefits—from “immense” property tax revenue and the creation of new high-quality jobs, to diversifying the state’s economic makeup.

Roe said other states have already legislated or otherwise implemented sales tax exclusions, and South Dakota needs a similar policy to remain competitive.

“We tax this technology higher than most,” Roe said. “That’s the truth. President Trump has stressed America’s need to lead. Our senators and congressmen highlight AI’s role in health care and national security. This is a national concern.”

Data center lobby uses well-worn revenue pitch

Steve DelBianco, president of NetChoice, a D.C. e-commerce trade group, threw out big numbers to buoy the benefits argument. Over the next 10 years, he projected $333 milllion of new property tax revenue to South Dakota from data centers alone.

For Jay Grabow, chair of the Deuel County Commission, the existential crisis his area faces is real. In 1920, per historical U.S. Census publications, Deuel County once called 8,759 people local inhabitants. Fast-forward to 2024, the county’s population has more-than-halved to 4,335, according to the U.S. Census Bureau.

Some of that Grabow attributes to the farming industry becoming more efficient over time—driving people per acre down—and the loss of at least one 200-employee business.

That means increased taxes over a smaller taxable population, Grabow said. And it also means Dallas-based Applied Digital, which is proposing a 430 megawatt AI data center east of Toronto, South Dakota, is, in the commissioner’s eyes, a means to lowering property taxes.

“We’re merely trying to keep what we had, merely trying to figure out a better way to do property taxes than to burden it on the people,” Grabow said. “If we can spread that across a $400 million billing, we have $1.1 billion of assets today. That’s a nearly-40% increase on our assets that we can spread those taxes across. That’s a 10 to 15% property tax [cut] across the board for those people.”

The economic windfall arguments resembled the debate over carbon pipelines over the last several years, when pipeline companies and some analysts projected an Iowa company’s transmission line could generate billions in the state and lower local taxes, as seen in previous Argus Leader reporting.

DelBianco said businesses and governments have increased their use of the cloud in recent years. The tech industry is tasked with building 50 data centers a year to keep up with U.S. demand, he added.

But the supply can’t be met if South Dakota doesn’t give developers and businesses a big-enough carrot to offset the significant capital investments they would make, DelBianco said.

Nick Phillips, executive vice-president for external affairs of Digital Applied, said South Dakota has been “unintentionally tax[ing] itself out of this market” under the current tax policy.

“The siting decision is binary,” Phillips said. “A project is built here or it is built somewhere else … Other states are capturing the investment, the jobs, and the long-term tax base.”

“The truth is that it’s just fiscally irresponsible to spend a billion dollars on a data center and have the equipment [that] goes in there, be subject to sales tax, when a billion dollar manufacturing, agricultural, another facility doesn’t pay sales tax on its equipment,” DelBianco added . “There are 40 states that exempt the equipment, so we have to pick the states that welcome through that policy.”

Data center opposition says tech threatens South Dakota’s largest industry

But opponents viewed the Big Tech push as an infringement upon South Dakota’s already No. 1 industry: agriculture.

Michelle Oftedahl, a Toronto, South Dakota, farm owner who lives a few miles away from Applied Digital’s proposed data center, spoke to the “unintended consequences” of boosting data centers. Farmland often out-prices what young farmers can afford to break into the ag industry, Oftedahl said, but it’s not too much for corporations with billions of dollars to spare.

Incentivizing data centers, the fifth-generation farmer added, would give rise to companies “buy[ing] land up cheap, knowing that they can cash in on possible future expansion projects, such as power plants, substations, and transmission lines, things that are needed to support the high amount of energy production required.”

“Encouraging large-scale economic development like data centers risks discouraging many young people from choosing agriculture for their future,” Oftedahl said. “This isn’t simply a vote about a sales tax exemption. It’s a statement about our values. Is South Dakota still first and foremost an ag state, or is large industrial economic [sic] now more important?”

Sara Steever, a retired Lennox resident who formerly led Sioux Falls agri-marketing agency Paulsen, questioned whether companies “worth billions and trillions of dollars” needed the tax breaks.

“Turns out that the fact that we can provide access to the megawatts of energy that is needed is tremendously valu[able],” Steever said as a remote testifier. “These companies don’t need tax breaks. They need connectivity, which we already have.”

Dakota Rural Action Lobbyist Melissa McCauley said the bill would lead to a “huge miss on revenue” for the state, given what she perceived as the broad nature of the proposed exemption.

“We are concerned that nearly everything needed to outfit the data center down to its door locks, security cameras, and even the cost of laying the fiber to the center would be exempt,” McCauley said. She asked openly whether a fiscal note should be added to the bill.

Tax break eligibility would not be public record under Roe bill

The stipulation that a data center’s eligibility documents would not be public record rankled opponents—some lawmakers, too.

Austin Adee, a Deuel County resident, said that section of the bill would create an “NDA-shielded secret court.” House Speaker Jon Hansen, who is running for South Dakota governor in 2026, raked the measure over this.

“This particular measure lacks transparency,” said House Speaker Jon Hansen. “The information goes to the secretary of the Department of Revenue, who can unilaterally decide without real qualification whether or not there’s going to be a tax break or not, whether or not rates are going to pass on, whether rate increases are going to pass on to consumers, and the people aren’t entitled to see any of the documentation that supports that decision. I think that’s wrong.”

The bill split the few Democrats on the committee, with Rosebud State Rep. Eric Emery supporting the legislation and House Minority Leader Erin Healy, of Sioux Falls, against it.

Emery asked Roe if the initiative behind the data center push included any guarantees that they would bring the promised jobs and wage-growth, to which Roe responded, “there’s no guarantees.”

Roe expounded upon this later, though, by pointing to the property tax revenue Applied Digital would likely bring to Deuel County—”north of $5 million” per annum, the Hayti lawmaker said, which is close to half of the county’s total budget.

At one point, Emery made a motion to send HB 1005 to the floor without a recommendation from the committee. Assistant Majority Leader of the House Marty Overweg spurned the idea, calling it “bad committee policy.” The motion died on a 5–7 vote.

Healy noted the day’s hearing lacked testimony from Sioux Falls stakeholders, despite a surge of public input in the city.

“I do believe that there is potential economic impact for data centers, but I also believe that economic development should never move faster than public input and transparency and also accountability,” Healy said.

House members will likely have to take up the debate once more during the 101st Legislative Session, as State Sen. Casey Crabtree, a Madison Republican who works for an area energy provider, filed a similar bill in the hours after the committee’s Feb. 4 decision.

The new legislation, a self-titled “Data Center Bill of Rights for Citizens”—akin to Crabtree’s 2024 “Landowner Bill of Rights,” which offered concessions to carbon pipeline opponents in order to ease pipeline development in South Dakota—also intends to exempt data centers from paying a sales and use tax for purchases made in developing a site, while also clarifying regulatory authority and preventing electric rate shifts onto consumers.

Crabtree’s bill does not provide an end-date on the sales and use tax exemption.

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South Dakota

USDA to offer distaster assistance to South Dakota agriculture producers impacted by winter storms

Published

7 hours ago

March 26, 2026

Press Room

USDA to offer distaster assistance to South Dakota agriculture producers impacted by winter storms

SIOUX FALLS, S.D. (Dakota News Now) – The U.S. Department of Agriculture is offering financial and technical assistance to South Dakota farmers and livestock producers who may have been impacted by the recent winter storms.

“I encourage impacted producers to contact their local USDA Service Center to report losses and learn more about program options available to assist in their recovery from crop, land, infrastructure, and livestock losses and damages.” said Richard Fordyce, Production and Conservation Under Secretary.

FSA’s Emergency Conservation Program and Emergency Forest Restoration Program can assist landowners with financial assistance to restore damaged land and conservation structures or forests.

“Our staff will work one-on-one with landowners to make assessments of the damages and develop methods that focus on effective recovery of the land.” said Jessica Michalski, Acting NRCS State Conservationist in South Dakota.

For more information about the disaster assistance program, click here.

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South Dakota

Plaque unveiled at South Dakota Capitol for 100-year-old Medal of Honor recipient

Published

19 hours ago

March 26, 2026

Press Room

Plaque unveiled at South Dakota Capitol for 100-year-old Medal of Honor recipient

South Dakota Gov. Larry Rhoden, left, and Lt. Gov. Tony Venhuizen unveil a plaque for retired U.S. Navy Capt. E. Royce Williams in the Hall of Honor at the Capitol in Pierre on March 25, 2026. (Photo by Meghan O’Brien/South Dakota Searchlight)

By:Meghan O’Brien

PIERRE, S.D. (South Dakota Searchlight) — There’s a new name in the South Dakota Hall of Honor at the state Capitol building.

One-hundred-year-old South Dakota native and retired U.S. Navy Capt. E. Royce Williams was celebrated at a Wednesday ceremony where a plaque honoring him was unveiled, although Williams did not attend.

“In spite of being outnumbered and facing incredible danger, Captain Williams engaged the enemy with courage and skill,” said Republican Gov. Larry Rhoden. “Our state has always had a strong tradition of service, and Captain Williams is the very best of that tradition.”

President Donald Trump awarded Williams the Medal of Honor, the country’s highest military honor, at the State of the Union address earlier this year. The medal honors actions by Williams that had been classified for decades.

“His story was secret for over 50 years, he didn’t even want to tell his wife, but the legend grew and grew,” Trump said during the speech in February. “But tonight, at 100 years old, this brave Navy captain is finally getting the recognition he deserves.”

On Nov. 18, 1952, over Korean coastal waters during the Korean War, then-Lt. Williams, from Wilmot, South Dakota, led three F9F Panthers against seven Soviet MiG-15s. He disabled three enemy jets and damaged a fourth.

The Soviet jets, according to the U.S. Naval Institute, were “superior to the F9F in almost every fashion.” The mission was the only direct overwater combat between U.S. Navy fighters and Soviet fighters during the Cold War.

Williams, one of 11 Medal of Honor recipients from South Dakota, now lives in California. The Hall of Honor at the South Dakota Capitol is located in the hallway that visitors enter immediately after going through security.

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South Dakota

Red Flag Warnings issued for parts of Wyoming, Nebraska, and South Dakota

Published

1 day ago

March 25, 2026

Press Room

Red Flag Warnings issued for parts of Wyoming, Nebraska, and South Dakota

Red Flag Warnings are in effect across parts of the central High Plains and adjacent Rocky Mountain region on March 25, 2026, as meteorological conditions support critical fire weather across portions of Wyoming, Nebraska, South Dakota, and nearby areas.

The National Weather Service (NWS) offices in Cheyenne, Riverton, North Platte, Rapid City, Billings, Missoula, Grand Junction, and Hastings issued multiple coordinated warnings covering numerous fire weather zones, with the most widespread period of concern from late morning through the evening hours. In several areas of Nebraska and Wyoming, warnings extend into March 26.

Sustained west to southwest winds of 25–65 km/h (15–40 mph), with gusts reaching 65–95 km/h (40–60 mph), are forecast across much of the region. The strongest winds are expected in parts of Wyoming and Montana, including mountainous and foothill areas, where gusts may locally reach 95 km/h (60 mph).

Relative humidity values are forecast to drop to between 10–20% during peak heating, with some locations reporting minimum values near 10–12%.

Temperatures are expected to rise well above seasonal averages, with highs reaching the upper 20s to low 30s °C (upper 70s to lower 90s °F) across parts of Nebraska, Wyoming, and surrounding regions. This combination of warm temperatures and dry fuels significantly enhances the potential for ignition and rapid fire spread.

The Storm Prediction Center (SPC) identified a Critical Fire Weather area in its Day 1 Fire Weather Outlook for parts of central and eastern Wyoming into far western Nebraska and extreme southwest South Dakota, citing a strengthening surface pressure gradient and strong mid-level winds contributing to sustained surface winds of approximately 30–40 km/h (20–25 mph) and relative humidity near 15%.

March 25, 2026, Day 1 Fire Weather Outlook affected area. Credit: NWS

The fire weather threat is forecast to shift southward in the coming days. The SPC Day 2 outlook highlights critical fire weather conditions across central New Mexico into the Texas and Oklahoma Panhandles and northwest Oklahoma, where low relative humidity and strengthening winds are expected to persist.

Additional hazards include the potential for isolated dry lightning, particularly across portions of western Nebraska and surrounding areas during the late afternoon and evening. Any lightning strikes in dry fuels may act as ignition sources, while associated outflow winds could lead to erratic fire behavior.

Mar 25, 2026 Day 2 Fire Weather Outlook — March 25, 2026, Day 2 Fire Weather Outlook affected area. Credit: NWS

A cold front is forecast to move through the region late on March 25 into early March 26, bringing an abrupt wind shift from westerly to northerly directions with continued gusts of 30–70 km/h (20–45 mph). While cooler temperatures and slightly higher humidity may follow the frontal passage, the wind shift could exacerbate fire behavior in ongoing incidents.

Late March marks the beginning of the peak fire weather season across the central High Plains and adjacent regions, when dormant grasses and dry vegetation are highly receptive to ignition. Combined with frequent strong wind events and low humidity, this seasonal pattern increases the likelihood of fast-moving grassland fires.

Authorities advise against outdoor burning during the warning period, as even small ignition sources may lead to rapidly spreading fires under the prevailing conditions.

References:

¹Mar 25, 2026 Day 2 Fire Weather Outlook – NWS – March 25, 2026

² Mar 25, 2026 Day 1 Fire Weather Outlook – NWS – March 25, 2026

³ Day 3-8 Fire Weather Outlook Issued on Mar 24, 2026 – NWS – March 24, 2026

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