A legislative look ahead

State of South Dakota Update

Governor Noem’s Budget Address

Governor Kristi Noem delivered her budget address to lawmakers last Tuesday and stated that unlike previous years, this budget promises to be lean and efficient. This budget comes on the heels of reported slowing of income from state sales tax collections. Noem noted there is $44 million available in ongoing funds, $107 million in one-time funds and $229 million in unclaimed property revenue. To offset slower than expected revenue growth, Noem outlined a $7.29 billion spending plan which is a reduction of about $20 million from the current fiscal year budget of $7.31 billion.

Slight increases for the “Big Three”

The Governor has proposed a 1.25% increase in funding for what is commonly referred to as the “big three.” This includes public education, reimbursement for health care providers and state employees. The previous budget address in 2023 called for a 5% increase.

Budget Cuts

Additionally, cuts to the ongoing budget include $72 million in “reductions and discretionary changes” to state departments and programs, including $38 million in combined reductions for the Department of Social Services and the Department of Human Services. Other cuts include funding for maintenance and repair of state property, the Temporary Assistance for Needy Families program, South Dakota Public Broadcasting and the Board of Regents. Governor Noem has also proposed eliminating the sales tax collection allowance for businesses that collect and remit sales taxes to the State. Eliminating this collection allowance can amount to an $840 loss to a business annually.

Spending Priorities

Governor Noem announced the creation of a $4 million education savings account program, which she said would offer $3,000 per student toward a private or alternative education. The bulk of Noem’s proposed spending plan comes from a proposed $182 million addition to the prison construction fund. This addition, with generated interest, is estimated to meet current prison construction costs.

The Governor’s proposed budget also highlighted $86 million in mandatory ongoing spending, mostly attributable to joint federal-state Medicaid funding. Furthermore, Noem proposed $1.2 million in additional ongoing funding for regional mental health facilities, a $1.5 million investment in Department of Health and Human Services programming and $13 million to continue replacing the Richmond Dam near Aberdeen.

2025 Legislative Session

Keep in mind, these are recommendations from the Governor
and her administration. The State Legislature will meet on Jan. 14 and begin discussions on these proposals. They will also certainly have their own priorities for the FY 2026 State Budget and one time spending.

Keep your attention on the State Legislative Session and check in with Chamber Advocate, and the Chamber’s Bill Tracker throughout session for continuous updates.

Federal Update

Corporate Transparency Act Update

The Corporate Transparency Act (CTA) was passed in January 2021 as part of the National Defense Authorization Act. The CTA was in place to combat money laundering, corruption, tax fraud and the financing of terrorist activity. The CTA would require small businesses in the United States to file beneficial ownership information reports to the U.S. Dept. of Treasury by January 1, 2025. Failure to submit this information by the deadline would put small business owners at risk of significant financial penalty, as well as criminal penalties.

Recently, a Federal Court in Texas blocked the implementation of the CTA and its reporting requirements. This will halt the implementation of this act, as well as halt the requirement for small businesses to comply with the law.

The Chamber will continue to monitor this legislation and provide further updates as things progress.

For more information on the Corporate Transparency Act, click here.