Pierre, South Dakota – In his inaugural budget address as the governor of South Dakota, Larry Rhoden emphasized a conservative fiscal approach for the state’s 137th budget, set to commence on July 1, 2026. Governor Rhoden, who succeeded former Governor Kristi Noem, addressed the legislature from Pierre, focusing on South Dakota’s continued commitment to financial prudence, infrastructure enhancements, and public safety.
Governor Rhoden, who has spent over two decades participating in the budget process in various capacities, underscored the importance of maintaining a structurally balanced budget. This principle has been adhered to for 136 consecutive years. Despite facing a lean revenue cycle, South Dakota’s tradition of not spending beyond its means remains intact.
The governor’s budget highlights, among other initiatives:
- Maintaining reserves: The proposal increases budget reserves from 10% to 12.5% to safeguard against fiscal uncertainties.
- Public safety: A $13.2 million investment is planned for staffing and programming at the new women’s prison in Rapid City.
- Infrastructure: $10 million for IT modernization, focusing on resilience against service outages.
- Healthcare: Pending approval, $500 million in federal funding authority for rural healthcare transformation.
Larry Rhoden
South Dakota’s economic framework, heavily reliant on sales tax revenues, remains a pivotal component of budgetary decisions. The state boomed economically during the pandemic, reaching historically low unemployment rates. This growth, described by the governor as the strongest in state history, has since normalized, prompting cautious revenue projections of a 4.4% increase in sales tax growth.
The agricultural sector, a cornerstone of South Dakota’s economy, influences revenue trends significantly. Governor Rhoden noted the vital role agriculture plays in shaping the state’s fiscal landscape and emphasized the need for ongoing support.
Beyond fiscal measures, the budget addresses societal priorities such as education, which traditionally ranks high among legislative priorities. Although the current budget does not propose increased funding for education, healthcare, or state employees — termed the ‘Big Three’ — due to constrained revenue growth, it reaffirms a longstanding commitment to these sectors. Notably, Medicaid’s budget share has surpassed that of K-12 education for the first time, underscoring shifts in fiscal priorities and needs.
Governor Rhoden’s address highlighted a commitment to infrastructure and public safety, earmarking funds to enhance the state’s readiness. The expansion of the South Dakota National Guard Readiness Center in Sturgis, backed by $2.4 million in state funds and $8 million in federal funds, is a key project, while investments in the Highway Patrol include a $5 million aircraft upgrade.
Additionally, the plan includes investments in modernizing employment systems, enhancing cybersecurity, and improving public broadcasting for governmental transparency.
Governor Rhoden’s prudent fiscal policy aims to keep South Dakota “strong, safe, and free,” maintaining the state’s tradition of responsible governance. His budgetary decisions seek to preserve and strengthen South Dakota’s economic and social fabric, prioritizing stability and growth.
The proposed budget highlights South Dakota’s ongoing commitment to restrained spending, focusing on long-term investments and preserving the state’s high credit rating. Governor Rhoden’s leadership is positioned to navigate challenges while fostering opportunities for South Dakotans, adhering to the state motto: “Under God, the People Rule.”
As South Dakota anticipates the fiscal year beginning in 2026, these budgetary initiatives underscore a vision for sustainable growth and enhanced public welfare.
Kristi Noem