LOOKING AHEAD WITH THE SOUTH DAKOTA LEGISLATURE:  PROPERTY TAXES, PIPELINES, PRISONS AND MORE

PIERRE, S.D. (Stu Whitney / South Dakota News Watch) – The 100th session of the South Dakota Legislature in Pierre will be historic not just for its centennial landmark but because of transitions in power.

Gov. Kristi Noem is scheduled to give her State of the State address Jan. 14 and then head to Washington for hearings on her nomination to become secretary of the Department of Homeland Security in the administration of President-elect Donald Trump.

She can’t be officially confirmed until about a week later, when Lt. Gov. Larry Rhoden is expected to be sworn as South Dakota’s 34th governor, just in time for a legislative session rife with Republican power shifts and looming budget battles.

Even with these developments, the 2025 session in Pierre is more about issues than eras. Lawmakers are prepared to tackle the three Ps – property taxes, pipelines and prisons – as well as school vouchers, Medicaid funding and child care programs.

It’s hard to keep up without a scorecard, so here’s a primer on what to watch for as the South Dakota legislative session opens Tuesday.

Raising sales tax to cut property taxes

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 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 with general fund dollars to pay for education and reduce the local effort for school districts.

Rep. Tony Venhuizen (R- Sioux Falls) has floated a proposal to increase the sales tax rate from 4.2% to 5%, which would raise an estimated $280 million in general fund revenue. That money would be used to reduce the levy for owner-occupied homes to fund education at the local level to zero.

“This is meant to start the conversation on property tax relief and to make the point that it costs a lot of money,” said Venhuizen, whose plan is co-sponsored by Sen. Randy Deibert (R-Spearfish). “I’d say that property tax relief is easily the top issue that I hear about from other legislators.”

Raising the sales tax rate, which legislators temporarily lowered from 4.5% to 4.2% in 2023, would require a two-thirds majority vote in both chambers. It could encounter turbulence from limited-government leadership in Pierre, even with the property tax offsets elsewhere.

Proposal sparks school voucher debate

Lively debate is also expected on Noem’s push for “education savings accounts” that would provide state money to help students enroll in private schools or help parents pay for homeschooling outside the traditional public school system.

In her Dec. 3 budget address, the governor proposed spending $4 million in ongoing state dollars to provide about $3,000 per eligible student to offset the cost of private or alternative schools as a way to “prioritize education” in the state.

In her budget explanation, Noem said the funds would initially be eligible for “South Dakota kids who need it most” but added that the program could later expand to make all families in the state eligible for payments.

The proposal was formally introduced on Jan. 8 as House Bill 1020 by House Majority Leader Scott Odenbach (R-Spearfish) and Senate Majority Leader Jim Mehlhaff (R-Pierre).

The so-called school choice bill would allow the money to be used for tuition at private schools and “micro-schools” for materials for homeschooling or for entrance exam or virtual learning fees not covered by a local school district.

Critics of the proposal — including several organizations focused on improving public education — said it is a veiled attempt to begin a school voucher program. Voucher programs in other states have resulted mostly from conservative-led efforts to enable more children to attend private, religious or charter schools or to expand home-schooling.

Anti-pipeline forces target eminent domain

Republican populists are still feeling the energy from the 2024 election defeat of Referred Law 21, a “Landowner Bill of Rights” package that critics decried as more favorable to ethanol producers and carbon pipeline companies.

Groups such as the Freedom Caucus and Dakota First PAC exploited the pipeline issue in GOP primaries by highlighting the votes of incumbent legislators, several of whom were defeated to set up the leadership shift.

Though the fate of Summit Carbon Solutions’ $5.5 billion, 2,500-mile pipeline plan will likely play out in the courts and Public Utilities Commission hearings, expect more fireworks in Pierre.

Jim Eschenbaum of the South Dakota Property Rights and Local Control Alliance told News Watch that the focus will be on tightening restrictions on eminent domain, which involves taking private property for public use while requiring fair compensation.

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.

Legislators take aim at Medicaid expansion

South Dakota voters passed Medicaid expansion in 2022, extending health care coverage to more low-income residents under the Affordable Care Act, with the federal government covering 90 percent of the cost.

That arrangement will cost South Dakota about $20 million each fiscal year if the matching rate remains the same.

Venhuizen and Sen. Casey Crabtree (R-Madison) have put forth a joint resolution proposing a constitutional amendment that ties Medicaid expansion in South Dakota to the level of federal assistance.

If the federal matching rate drops below 90%, as some have suggested it could as the Trump administration looks to reform spending strategies, the South Dakota Constitution would no longer require the state to continue Medicaid expansion.

“As things stand now, if they cut the match rate from 90% to 80% or 70%, we would have no choice,” said Venhuizen. “We would have to come up with the money and pay it.”

Medicaid is a joint federal and state program that helps cover medical costs for qualified individuals with limited income and resources.

Noem seeks to close prison deal

South Dakota Department of Corrections officials have informed legislators that the guaranteed maximum price for a planned new men’s state prison is $825 million, higher than previous estimates.

That includes $737 million in construction for the 1,500-inmate facility at the proposed site between Harrisburg and Canton in Lincoln County, making it the largest one-time capital investment in state history.

The fact that the prison involves “one time” dollars puts it on a different tier of budget discussion from ongoing expenditures such as health care and education funding, but the governor is looking to close the deal.

Noem’s proposal includes putting $182 million in a prison fund that, combined with interest already accrued, would fully fund the project, a clear priority when it comes to shaping her executive legacy.

 

JACKLEY OPEN TO CONVERSATION ABOUT PUTTING TEN COMMANDMENTS IN CLASSROOMS

PIERRE, S.D. (Austin Goss / SDBA) – Attorney General Marty Jackley is considering supporting legislation to allow the Ten Commandments to be displayed in South Dakota’s public grade schools.

Jackley’s office confirmed Monday morning to South Dakota Broadcasters Association that his decision to join a legal brief defending a Louisiana law requiring K-12 public schools and universities to display the biblical precepts has prompted him to reflect on similar proposals emerging in Pierre.

“He supports the concept, but hasn’t seen specifics on the bill yet,” a spokesman for Jackley said.

Jackley announced in a press release that he, along with 17 other attorneys general from across the country, is backing Louisiana’s efforts to implement the law, which a federal district court had previously blocked.

“The Ten Commandments already are displayed in the U.S. Supreme Court and other public buildings,” Jackley stated. “The Ten Commandments have influenced the creation of our nation and our rule of law.”

Though several federal and state facilities across the country display the Biblical laws, Louisiana was the first state in the union to make such a requirement of its public education facilities.

But if incoming Rep.-elect John Carley has his way, South Dakota would become the second.

His Senate Bill 51 would require local school districts to put a poster or document that is at least 8 inches by 14 inches with the listing in “large, easily readable font” into each classroom.

Though state law currently allows the Commandments — which include guidances urging people not to murder and steal, among other offenses — to be displayed in classrooms at the choice of teachers, Carley believes their fundamental role in the founding of the country should mean they becomes mandatory for students to see.

“This bill is modeled after Louisiana’s,” Carley said of his legislation. “Because of this, a number of states are now considering it… It has an amazing historical signifigance for the founding of America. It is an amazing way to display this along with other founding documents in our schools.”

He noted that the Ten Commandments were previously displayed in public schools, and that he appreciates Jackley’s initial support.

“I am thankful that he weighed in on the lawsuit. I am glad he brings that same level of enthusiasm encouragement to our state,” Carley continued. “He certainly recognizes the impact of this.”

Carley’s legislation, which currently boasts 14 additional co-sponsors, will see opposition from at least one organization in the state. The American Civil Liberties Union (ACLU) says that the measure “blatantly violates” the promise of the first amendment.

“Students already have the right to engage in religious exercise and expression at school under current law,” said Samantha Chapman, the ACLU of South Dakota’s advocacy manager. “America is not a theocracy and South Dakota’s public schools shouldn’t be used to religiously indoctrinate or convert students.”

 

SOUTH DAKOTA CHILDCARE TASK FORCE TO INTRODUCE LEGISLATION BASED ON FINDINGS IN REPORT

PIERRE, S.D. – Lawmakers dedicated to tackling South Dakota child care affordability and sustainability plan to introduce a legislative package this year based on a statewide report released Friday, Jan. 10, 2025, by the South Dakota Early Childhood Task Force.

A lack of affordable and accessible child care — due primarily to unsustainable funding for child care providers — lowers workforce productivity in the state, slows economic growth and costs the state an annual $392 million, according to the report.

The legislative package, which task force leader and Brookings Republican Sen. Tim Reed plans to introduce, includes bills to:

Provide scholarships for higher education students to pursue early education careers.

Provide government-subsidized child care assistance at the “true cost of care” rather than the market rate.

Expand the state’s child care assistance program.

The bills will require state funding, though Reed hasn’t determined an estimate yet. Given a tight budget this year due to lower-than-anticipated state revenues, he anticipates it’ll be a hard sell to lawmakers.

Access to child care allows parents to work instead of leaving the workforce, Reed said, but it also invests in the state’s future.

Research shows early childhood investments improve a child’s potential and provide a return on investment for government spending — as much as $4 to $9 return per $1 invested due to reduced need for special education, welfare support and incarceration in the future.

Kayla Klein, task force leader and CEO of Klein Visioneering Group, said child care reform focused at the local level is ready to go statewide.

“We need to remind ourselves that we are here for the youngest and most vulnerable citizens in South Dakota, which are our children,” Klein said. “They are the future of our state, and their parents and providers need all the support they can get to give the best start to their educational journey and growth.”

Policy recommendations: Improve child care access, affordability & workforce

With more than 50,000 children aged 5 and younger with both parents working in South Dakota, there are 32,670 total licensed child care spaces in the state. That’s a potential child care gap of 35%.

That gap, which grows as child care providers continue to close in the state, is primarily due to the industry’s unsustainable funding model, Klein said. Child care businesses operate on slim to no margins at market rate, according to the task force report and a 2024 cost of care study by the state Department of Social Services.

With thin margins, child care workers have one of the lowest wages in the state at $12.67 an hour on average. Four out of 10 South Dakota early educators quit their jobs in 2021, according to the task force report, and less than 40% of surveyed workers in 2024 said they’re satisfied with pay, according to the department’s workforce study. Fewer workers means fewer child care spaces available or more child care businesses closing.

“We need to be able to pay our child care workforce. If we’re ignoring that — how much we’re able to pay the child care workers — we’re never going to solve the problem of increasing capacity,” Reed said.

But many parents can’t afford to pay more. Infant care at licensed centers costs 10-20% of a median family’s income across the state, according to the report. In-home providers cost 9-12% of a median family’s income. Seven percent of the median family income is considered affordable, the report says, citing the U.S. Department of Health and Human Services.

Where the state can step in, Reed said, is reevaluating how much the state provides families and providers for child care assistance.

The Child Care Assistance Program is a federally funded program for low-income families to pay for child care. South Dakota uses a market rate assessment to reimburse child care providers. But it doesn’t reflect the actual cost of care, according to the report, given that most businesses don’t make enough money to pay their staff salaries comparable to other teaching professions.

“If you’re not able to provide the true cost of care, you’re not going to have capacity,” Reed said. “If you don’t have capacity, you don’t have people working.”

The state spends most of the federal money allocated to the program each year, Reed said, even with just 7% of eligible infants and toddlers receiving the benefit. The state financially supported an average of 2,985 children per month in fiscal year 2024, with an average monthly payment of $892.51 per case, according to the governor’s proposed budget.

An increase in assistance would be on the state’s dime. Reed’s hope is that the increased subsidies would allow child care providers to lower their tuition costs for families who don’t rely on the assistance program.

“It’s only a start,” Reed said. “I think there’s a lot more work to be done.”

Reed also plans to introduce a bill that would expand the state’s child care assistance program to include a parent who exceeds the program’s income limits but works in the child care industry. The proposal aims to mirror a Kentucky program started in 2022. About a dozen states have implemented or are considering implementing similar policies since then.

A family is currently eligible for the Child Care Assistance Program if they earn less than 209% of the federal poverty level, or less than $54,000 a year for a family of three.

The proposed expansion aims to incentivize parents who leave the workforce to stay with their children at home to take a job as an early childhood worker instead — making child care more affordable for those families, and increasing the workforce needed to stabilize the industry.

Reed hopes creating state-supported scholarships for early childhood education could alleviate workforce concerns as well by drawing more workers into the profession.

Aside from the task force’s planned bills, the report recommends creating “braided funding streams” to supplement child care revenue. That effort should be carried out at the local level because the state “just doesn’t have the funding available,” Reed said.

Some communities are already using braided funding. Rapid City is piloting a tri-share model, where public, business and family partners share a third of child care costs. In Rapid City’s case, the nonprofit John T. Vucurevich Foundation, a plumbing company and the family each pay a third of tuition for 13 children whose families exceed eligibility for child care assistance but can’t afford child care completely.

“All communities,” Reed said, “need to take a look at what they can do for braided funding.”

2024 Child Care Workforce Study

The early childhood task force report released Friday references data from a workforce study completed by the state Department of Social Services in late 2024.

According to the department report:

52% of child care center directors reported that hiring staff is difficult; of those who expressed concern, nearly three-fourths cited no or too few applicants and 65% said jobs were turned down due to pay.

Over 83% of center directors were worried that teachers would quit due to low compensation. About 36% of center staff surveyed said they were satisfied with their pay.

To deal with staffing challenges, 78% of center directors asked existing staff to work longer hours and 68% said they hired staff with less experience and qualifications. Nearly 72% of directors said they raised wages.

About 58% of center directors have “turned families away” due to staffing challenges, and 38% have reduced the number of classrooms.

 

LAWSUIT AGAINST NEBRASKA MEDICAL CANNABIS EXTENDED TO REGULATORY BOARD, STATE AGENCIES

LINCOLN, Neb. (Nebraska Examiner) – The targets of a legal effort arguing that Nebraska’s voter-initiated legalization of medical cannabis is federally unconstitutional have been expanded to include a new regulatory commission, the state treasurer and two state agencies.

Attorneys for John Kuehn, a former state senator, a former member of the State Board of Health and a longtime marijuana opponent, amended his December lawsuit on Friday to include broader swaths of state government overseeing implementation of the new medical cannabis laws.

The lawsuit first targeted Gov. Jim Pillen and Secretary of State Bob Evnen for allowing the measures to go into law, as well as the three ballot sponsors of the effort.

The amended complaint now adds:

The three commissioners of the Nebraska Liquor Control Commission, who, by virtue of the voter initiatives, will compose a new Nebraska Medical Cannabis Commission.State Treasurer Tom Briese and Tax Commissioner Jim Kamm of the Nebraska Department of Revenue, who will oversee the new collection of sales taxes on medical cannabis. CEO Steve Corsi of the Nebraska Department of Health and Human Services, whose department handles oversight of medical practitioners.

“In November 2024, taxpayers paid for two statewide votes which together sought to obtain an objective that was unconstitutional, unlawful and impossible: the legalization of the manufacturing, dispensing, and profiting from marijuana products for so-called medical purposes,” the amended complaint states.

Initiative Measure 437, to legalize up to 5 ounces of medical marijuana with a doctor’s written recommendation, passed with 71% of voter support. Initiative Measure 438, to create the state regulatory commission, passed with 67% voter approval.

Laws took effect Dec. 12

Kuehn’s lawsuit argues that the “activist-drafted initiative measures,” whose sponsors include two of Kuehn’s former colleagues in the Legislature, had evaded any judicial review by the time of the vote.

This is the second complaint from Kuehn. His first is being appealed to the Nebraska Supreme Court. Lancaster County District Judge Susan Strong in November rejected arguments that the measures were placed on the ballot illegally. A hearing on the appeal has not yet been scheduled.

Strong is presiding over Kuehn’s latest lawsuit. She was the same judge who rejected his last-minute attempt to block the measures from becoming law. The laws took effect Dec. 12.

Pillen and Attorney General Mike Hilgers have said “serious issues” remain whether the measures are legal under federal law or the Nebraska Constitution.

The core of Kuehn’s argument in the second case remains that no state can legalize marijuana because it remains listed as a federal Schedule I drug, which is defined as having no currently accepted medical use and having a high potential for abuse. Examples include heroin, ecstasy or LSD.

The federal government has been in the process of changing the classification of marijuana to a Schedule III drug, defined as drugs with a moderate to low potential for abuse that can be accessed with a prescription. Examples include ketamine, anabolic steroids, testosterone and Tylenol with codeine.

Expanded constitutional argument

The new lawsuit argues that once the laws are fully implemented, the State Treasurer’s Office, Department of Revenue and Department of Health and Human Services would need to unconstitutionally expend public funds and employee time to carry out the laws.

The AG’s Office, which typically defends state officials in lawsuits, declined to comment. None of the new defendants had any immediate comment.

Briese and Kamm, the lawsuit alleges, would need to violate federal money laundering laws because marijuana would be subject to sales taxes, similar to over-the-counter drugs.

And Corsi’s department would need to investigate possible disciplinary complaints against health care practitioners who recommend cannabis to Nebraskans, the lawsuit alleges, to see whether the practitioners followed their scope of practice or professional conduct, which Kuehn argues includes following federal laws. DHHS also would need to expend taxpayer dollars to issue guidance for the measures.

The Nebraska Medical Cannabis Commission — consisting of Commissioners Bruce Bailey, Harry Hoch, Jr., and Kim Lowe and up to two more members as appointed by Pillen — is required to develop regulations for allowing medical cannabis sales in the state.

By July 1, the new commission must establish criteria to accept or deny applications to license establishments to possess, manufacture, distribute, deliver or dispense medical marijuana. By Oct. 1, the commission must begin granting those registrations.

Until that time, it is illegal to purchase marijuana in Nebraska, and multiple advocates of the measures have expressed displeasure with many doctors refusing to recommend the drug. Advocates have argued the drug could help with seizures, chronic pain and other drug-resistant medical conditions.

The licensing framework is similar to that of the Liquor Control Commission.

The delegation to the Medical Cannabis Commission is similar to voter-approved gambling initiatives in 2020, which created the Nebraska Gaming Commission. Lawmakers merged that group with the existing Nebraska Racing Commission in 2021.

Briese, a former lawmaker, oversaw legislative efforts to implement voters’ wishes of three gambling-related ballot initiatives as chair of the Legislature’s General Affairs Committee.

Possible legislative tweaks coming

That legislative committee, now led by State Sen. Rick Holdcroft of Bellevue, is expected to consider any legislation to tweak the medical cannabis measures, if introduced this year.

No such proposals have been introduced so far. Bill introductions continue through Jan. 22.

“While we understand and support reasonable rules and regulations – we will NOT support legislative attempts to subvert the will of the people, such as interfering with a health care practitioner’s ability to make a recommendation for alleviation of a patient’s medical condition, its symptoms or side effects of the condition’s treatment,” the Nebraskans for Medical Marijuana campaign said Sunday in a statement.

Kuehn’s attorneys argue that the delegation of legislative authority to the unelected medical cannabis commission effectively freezes out “all other legislative or executive efforts to ensure the public’s health, safety and welfare.”

On Thursday, Kuehn’s attorneys sent letters to the regulatory commission members, Briese and the state department directors demanding that they refuse to implement the laws. The move was similar to the December push urging that Pillen not issue proclamations making the measures law.

“No matter is of greater public concern than preventing the government from burdening the taxpayer with the administrative costs of violating federal law,” the amended lawsuit states.

The public officials did not respond to the requests from Kuehn’s attorney based in Kansas City, Missouri.

10th Amendment of U.S. Constitution

Crista Eggers, one of three sponsors for the marijuana ballot measures, said in December that the assertion the laws violate the U.S. Constitution “disregards decades of state-led independence and innovation.”

“Under the 10th Amendment of the Constitution, states have the right to address the unique needs of their citizens without undue interference,” Eggers, the campaign manager, said then. “The campaign remains committed to defending Nebraska’s medical cannabis laws to ensure patients and families have access to the care they deserve.”

Nebraska became the 39th state to authorize some form of medical cannabis. Nearly every state has now legalized some form of cannabis or its derivatives. About two dozen states allow recreational marijuana sales and distribution.