In a pivotal decision on February 23, 2026, the South Dakota Senate rejected two key bills associated with the state’s ongoing data center debate. These pieces of legislation, Senate Bill 239 and Senate Bill 193, sought to address tax rebates for large projects and regulate backup generator permitting for data centers, respectively. The outcomes of these votes shed light on the priorities and challenges facing South Dakota as it navigates a competitive landscape for technological investment and development.
Senate Bill 239, championed by Sen. Kyle Schoenfish, aimed to revise South Dakota’s reinvestment payment program to make the state more attractive to large-scale projects, particularly data centers. The proposal included a provision for the Board of Economic Development to approve sales and use tax rebates on a project’s construction costs and subsequent equipment upgrades for a span of up to 30 years.
Supporters of the bill argued that such changes could bolster South Dakota’s competitive edge in attracting large projects, ultimately retaining valuable construction and skilled-trades jobs within the state. Proponents believe that enhancing the state’s appeal to data centers could catalyze economic growth, aligning with the long-term interests of South Dakota’s labor market.
However, opposition to the bill centered around concerns of centralized power, as critics argued that it placed too much tax policy control in the hands of the appointed Board of Economic Development. There were also worries that the bill could funnel away future state revenues from vital priorities such as property tax relief and education funding—issues that resonate deeply with South Dakota residents.
Ultimately, Senate Bill 239 fell just shy of the required majority, with a close vote of 17-16. Senators Beal and Pischke were excused from the vote, underscoring the razor-thin margins in legislative decision-making that can significantly impact state policies.
Senate Bill 193, sponsored by Sen. Casey Crabtree, sought to properly define “backup electric generation” as temporary, off-grid generation used when primary power sources fail. The bill proposed that any facility intending to interconnect to the bulk electric system should first acquire a permit from the Public Utilities Commission.
While the bill aimed to clarify regulatory requirements, it faced substantial opposition from within the Senate and the Public Utilities Commission, with concerns about protections for adjacent landowners being a primary sticking point. Sen. Chris Karr vocalized his opposition, asserting that the measure could undermine safeguards for neighboring properties.
Initially, Senate Bill 193 resulted in a tied vote of 17-17, leaving its fate hanging in the balance. Earlier that day, the Senate voted 18-17 to reconsider the prior decision, with Lt. Gov. Tony Venhuizen casting the deciding vote to bring it back for consideration—a move highlighting the contentious and dynamic nature of legislative processes.
Despite the reconsideration, the bill ultimately did not secure enough support for passage. The outcomes of these votes signal a critical juncture for South Dakota. As the state grapples with balancing immediate economic interests with long-term fiscal health and accountability, decisions like these underscore the complex interplay of growth, governance, and public welfare.
South Dakota continues to be a state where community values and economic aspirations align, occasionally clash, and ultimately shape its legislative landscape. As the debate over infrastructure and technological progression persists, the voices and votes within the South Dakota Senate reflect the ongoing dialogue regarding the future direction of the state.