STATE HOUSE OF REPRESENTATIVES WANTS TO GO AFTER CHINA FOR COVID-19, CALLS ON AG TO SEEK FINANCIAL DAMAGES
PIERRE, S.D. (Austin Goss / SDBA) – The cost of the damage caused by the COVID-19 pandemic in the United States is $100 billion in the eyes of Aberdeen Republican Brandei Schaefbauer.
The Representative’s House Concurrent Resolution 6009 calls on Attorney General Marty Jackley to file a lawsuit against the People’s Republic of China and “related parties” — like the country’s communist party and its military — to the tune of that number in response to the country’s responsibility for unleashing the COVID virus on the world.
If the lawsuit against China were to prove successful, the attorney general would be required to establish a “South Dakota COVID-19 Victims Relief Fund,” from which those impacted in anyway — including death, sickness, medical costs, business closures, or financial hardship — could lay claim to that money up to $250k per person.
Schaefbauer cited a recent report released by the CIA which says that the origin of the virus likely came from a research lab in the Asian country. Her measure blames “irresponsible and dangerous” gain-of-function viral genetic research as the cause of the outbreak.
“Central intelligence now believes COVID-19 was the product of research in a Wuhan lab,” Schaefbauer said on the House floor. “I believe we owe it to South Dakotans to find the truth about the COVID-19 pandemic. To know how and why it happened and to hold accountable those responsible.”
Should the Senate join in on the call to take legal action against China, South Dakota will join Missouri in pursuing legal action for the same reason — they started the stateside call for action in 2020. The Show Me State’s Attorney General, Andrew Bailey, has physically shown up in court to also demand $25 billion, threatening to seize Chinese assets in the state if the country does not comply. The Chinese government has declined to show up in court, promising “resolute and effective measures” unless the district court hearing the matter dismisses it.
In its committee hearing, the resolution received no opposition testimony. But lawmakers on the floor Wednesday afternoon were more skeptical about the move. Democrat Kadyn Wittman questioned whether or not the measure would violate the Foreign Sovereign Immunities Act, which establishes the basis on which Americans can bring civil lawsuits against foreign countries, and if South Dakota courts would have jurisdiction over the country. Wittman, along with 27 others, voted against the idea leading to a 40-28 vote.
“This may seem a shot in the dark, but look at the tobacco settlement,” said Rep. Leslie Heinemann, referring to a state civil suit initiated by former Attorney General and Governor Bill Janklow that has resulted in hundreds of millions of dollars coming to South Dakota. “We will join with other stats in potentially in dealing with a settlement that could be in the billions of dollars.”
Should the Legislature put a request on his desk, Jackley’s office says the state’s top cop is ready to comply.
“The Attorney General will do as the Legislature directs,” a spokesman for the office wrote in a statement.
FINAL DECISION ON NEW PRISON LOOMS AS HOUSE COMMITTEE PASSES OFF FUNDING MEASURE
PIERRE, S.D. (Austin Goss / SDBA) – The latest skirmish in the state’s years long bid to build a new prison pitted opponents and supporters Wednesday, ending in a stalemate.
The House State Affairs Committee voted 12-1 to send House Bill 1025 to the House Appropriations Committee. It did not go with a recommendation on whether the prison should receive funding.
The measure is what would drag the proposed prison site, slated for construction between Harrisburg and Canton, out of the planning stages and into reality. It moves $763 million out of the state’s incarceration construction fund to the facility that is slated to cost roughly $825 million.
“This is not a new conversation,” said Gov. Larry Rhoden’s Senior Policy Advisor Ryan Brunner, defending the decision used to pick the site. “We have had six different bills that have passed funding for this project, and all along the plan has remained the same.”
That plan calls for building a 1,500-bed facility on 160 acres, replacing the current state penitentiary in Sioux Falls about 20 miles to the north. Executive branch officials plan to tap into the Sioux Falls labor market to staff the prison.
Beyond building the facility itself, the project will require other improvements, including road improvements and utility services, like sewer, to the site that is at present a state-owned farm field.
“We get one chance at this. We are building an over 100-year facility,” said Department of Corrections Secretary Kellie Wasko. “Something that is going to last through tornadoes, floods, and earthquakes.”
Lobbyists representing law enforcement agencies, such as the South Dakota Police Chiefs Association, joined the administration’s call for a new facility. Three current employees of the Sioux Falls prison argued for the new building, citing safety concerns in the current arrangement.
Concerns in Pierre have centered around the price tag of the prison, particularly when compared to neighboring states. To the south, Nebraska is building a new prison facility for the comparably low price of $366 million.
Meanwhile, Lincoln County government officials and residents have maintained that the project could all together stunt the development of South Dakota’s fastest growing county by population. Opposition testimony Wednesday morning came from nearby landowners who feel they have been boxed out of the discussion. They fear the ramifications of living near a large prison complex — like sinking property values and overall safety.
Beyond the more than $800 million sticker shock, lawmakers openly wondered how that cost will rise with time. The current site is not close to a major roadway, which will require significant development on that front at significant cost. Wasko said the state’s Department of Transportation will foot that bill, and it is not expected to require another special appropriation. The state is coughing up $10.5 million to the city of Lennox to connect to its sewer line, after the Harrisburg City Council rejected a similar offer.
Operational costs at the new facility compared to the old will rise by about $4.1 million a year.
“They picked a corn field in the middle of Lincoln County,” said local construction company owner Mike Hoffman. “You are going to put basically a city with a population of 2,000 people in the middle of a cornfield. There is no growth structure, there is no infrastructure, there are no roads… There is no natural growth structure to support this. You are going to have to grow everything around this.”
Sarah Ulmer, whose family lives on a farm near the site, contrasted the plans with the women’s prison currently under construction in Rapid City, a project that has received almost no public blowback from residents.
“Doesn’t that speak volumes?” Ulmer asked. “It was properly placed… Not only is it right off I-90, it is being built in a commercially zoned area, east of large shopping, warehouses, and storage units… The answer is commercially zoned and a proper fit.”
The decision to offer a neutral recommendation to the House Appropriations Committee came after a futile attempt to send it on with a favorable recommendation. That failed on an 8-5 vote.
HB 1025 will end up on the House floor before “crossover day” on Feb. 25, when bills originating in one chamber are required to move to the opposite one or otherwise be considered dead. Because HB 1025 is an appropriations bill, it will require a two-thirds vote to move it to the Senate, or 46 members.
It will be an uphill climb for a hotly contested project that Rhoden has deemed a priority of his young administration. The Republican caucus met for hours in a closed-door meeting Tuesday night to debate the project among themselves. According to sources, that meeting concluded with at least 25 holdouts opposed to the current Lincoln County site, enough to kill it on the floor before any Democrats can join in to block it.
One of those “nays” will be Rep. Spencer Gosch. He was the lone member to vote “nay” on moving the project to appropriations with no recommendation.
“It stands against everything I stand for,” Gosch told South Dakota Broadcasters Association after his vote. “The project clearly displays reckless planning, reckless spending, and complete disregard for the people of South Dakota.”
PROJECTED STATE REVENUE APPEARS STRONG
PIERRE, S.D. (Todd Epp / SDBA) – South Dakota’s financial outlook remains strong through 2026.
According to new state data, steady economic growth is projected in key areas like consumer spending and investment earnings.
However, in her proposed FY 2026 budget she presented to legislators in December, then Gov. Kristi Noem recommended over $100 million in targeted spending reductions across state government to address a $240 million revenue decline.
The legislature’s Joint Appropriations Committee members heard revenue projections Wednesday from Derek Johnson, the state economist with the Bureau of Finance and Management, and Jeff Mehlhaff, deputy director and fiscal chief for the Legislative Research Council.
The BFM’s revenue report shows the state expects total revenue to reach $2.686 billion in fiscal year 2025, driven by ongoing economic expansion and consistent consumer spending. State officials forecast FY 2026 revenue at $2.446 billion.
State officials say this is primarily attributed to the expiration of one-time receipts rather than underlying economic issues.
Officials say South Dakota’s economy continues to show remarkable resilience and growth potential and points to a favorable outlook driven by strong consumer activity and strategic policy decisions.
Sales and use tax, South Dakota’s primary revenue source, is projected to bring in $1.433 billion in 2025. The BFM report also highlighted surprisingly robust investment earnings, with a projected 96% increase in fiscal year 2025.
Appropriations members heard that two key policy changes will impact South Dakota’s finances in the coming years: repealing a tax collection credit, which adds an estimated $6.8 million to state funds in 2026, and reducing the Tobacco Prevention Trust Fund allocation from $5 million to $2 million annually.
For 2026, the state projects $2.446 billion in total revenue, primarily due to expiring one-time receipts rather than underlying economic issues. Core revenue sources show resilience despite workforce and infrastructure challenges.
State forecasters anticipate two Federal Reserve interest rate cuts in 2025, which could lead to increased consumer spending. Inflation is projected at 2.9% in 2025 and 3.3% in 2026.
The report’s findings will inform ongoing policy discussions and budget decisions. Tomorrow (Thursday) is the last day for the Joint Appropriations Committee to select the basis for general revenue targets as they work on the general appropriations bill. The legislature typically passes the state budget on the last day of the regular session.
MCCOOK LAKE FLOOD RECOVERY BILL ADVANCES TO HOUSE APPROPRIATIONS COMMITTEE
PIERRE, S.D. (Josh Haiar / South Dakota Searchlight) – State lawmakers advanced a bill 12-1 on Tuesday at the Capitol in Pierre to establish a fund for the cleanup and restoration of McCook Lake, the site of devastating flooding in June.
The amount of funding is to be determined by lawmakers serving on a separate budget committee. The funds would support repairs to the lake’s pumping system, debris removal and future flood mitigation planning. The money would not be available to the owners of 103 homes along the lake that were damaged or destroyed. Some of those homeowners have received federal disaster aid.
Rep. Chris Kassin, R-Vermillion, is the bill’s main sponsor. He said the flood is “one of the worst things I’ve ever seen in my life.” The lake remains filled with sediment, fallen trees and debris.
McCook Lake Association President Dirk Lohry said the group has spent about $20 million maintaining and improving the lake in the last 20 years. He said that without state funding, the lake will remain unusable due to the sheer volume of debris — estimated at 160,000 cubic yards.
The lake was used as a flood diversion channel to protect the nearby and larger communities of North Sioux City and Dakota Dunes, which intensified damage to the lake from the record amount of water that came down the Big Sioux River.
“The lake was sacrificed,” Lohry said, “to be able to protect the business district and Dakota Dunes from those floods.”
The diversion plan was developed in 1977 when there was less development around the lake and the record crest of the Big Sioux was lower.
The state Bureau of Finance and Management opposed the bill. Duncan Koch, representing the bureau, said the state’s emergency and disaster fund and federal assistance should be the primary sources of aid. He said the state has spent about $3.4 million on flood preparations and recovery. The Federal Emergency Management Agency gave victims in Union County, which includes McCook Lake, $3.5 million to cover portions of their losses.
Koch cautioned that creating a fund for McCook Lake would set a precedent for other communities affected by natural disasters to seek direct state appropriations.
The debate over the bill occurs as the state anticipates a potential lawsuit. Some McCook Lake residents have formally notified the state of their intent to sue, claiming the flood diversion decisions worsened their damage.
