PIERRE, S.D. – Governor Larry Rhoden is proposing a flat budget for education—zero percent increase—as South Dakota faces tight revenues and a sluggish economy.

In his first budget address Tuesday, Rhoden said the state’s $7.44 billion proposal reflects limited growth in sales tax revenue, which has dropped for only the third time in 30 years. Planned investments include a new women’s prison in Rapid City and upgrades to state technology systems.

But Rhoden’s plan leaves educators and healthcare providers without pay increases—a move some lawmakers say ignores cost-of-living concerns.

Rhoden defended the decision, noting education funding has exceeded requirements by 6.2% over the past eight years. He also highlighted growth in school choice, with alternative education up more than 200%.

Legislators say that now the focus now should be on strengthening the economy and creating opportunities for families. The 2026 legislative session begins January 13th.