South Dakota Gov. Larry Rhoden presents his 2025 budget address to lawmakers at the Capitol in Pierre on Dec. 2, 2025. (Photo by Makenzie Huber/South Dakota Searchlight)
There was nothing under the tree this Christmas for South Dakota’s schools, state employees and health care providers.
Republican Gov. Larry Rhoden proposed no funding increase for them in the next state budget.
“Because our revenues haven’t grown much, we have to keep them flat this year,” Rhoden said during his annual December budget address.
Hearing that news so close to the holidays, I was reminded of the climactic movie scene in “National Lampoon’s Christmas Vacation,” when a wife takes her husband to task for eliminating his company’s Christmas bonuses.
“You didn’t!” she exclaims. “Well, of all the cheap, lousy ways to save a buck!”
Governor proposes ‘limited budget’ for SD that avoids big cuts but keeps school funding flat
Rhoden’s plan looks even cheaper and lousier in light of the revenue our state government has surrendered, the money it’s wasted, and the questions that have arisen about its spending on economic development.
Three years ago, lawmakers and then-Gov. Kristi Noem decided to reduce the state sales tax rate from 4.5% to 4.2% until 2027. It was an ill-considered attempt to distract homeowners from their property tax complaints by giving them a sales tax holiday they didn’t ask for, and it cost the state more than $100 million in annual revenue. Most consumers, meanwhile, aren’t noticing the penny they’re saving every time they spend $3.33.
Noem’s administration also squandered $20 million developing a prison site that ultimately had to be abandoned.
That fiasco began four years ago. The state was flush with cash from federal COVID-19 relief and stimulus funding, so Noem and legislators started stuffing money into a prison construction account. They wanted to replace the oldest parts of the Sioux Falls penitentiary, which dates to 1881.
Noem’s Department of Corrections selected a site in rural Lincoln County, and a lawsuit quickly arose from landowners who hadn’t been told that a prison might pop up in their neighborhood.
Years of contention boiled over last winter after Noem bolted to run the federal Department of Homeland Security. An insurgent group of legislators led a revolt against the Lincoln County location, and Rhoden — who was elevated from lieutenant governor upon Noem’s departure — surrendered to reality. He pushed the reset button and appointed a task force that selected a different site in Sioux Falls.
By that time, the state had already spent an unrecoverable $20 million on the abandoned land, for myriad expenses including design work, sewer pipes, herbicide application and geothermal test wells.
More recently, questions have arisen about the combined $69 million of grants, loans and tax rebates that the administrations of Noem and Rhoden have showered on CJ Schwan’s. The money is helping the company build a $550 million frozen food production plant in northern Sioux Falls that will employ 650 people (the math works out to about $106,000 of state aid per employee, for jobs that will pay an average of $40,000 per year).
CJ Schwan’s employs Noem’s former state economic development commissioner, Steve Westra, who pledged the first state grant to the company five years ago before leaving his state job. The company also has the chairman of the state’s Board of Economic Development, Jeff Erickson, on its corporate board, while Erickson is involved with a corporation that rents space to CJ Schwan’s in a downtown Sioux Falls office building.
CJ Schwan’s is part of CJ Group, a South Korean conglomerate that had $30 billion in revenue in 2024. That’s an amount four times larger than South Dakota’s annual state budget.
Now, after flushing so many dollars, Rhoden wants lawmakers to pinch pennies. He’s offering schools, state employees and Medicaid-funded health care providers the equivalent of the jelly-of-the-month subscription that Clark Griswold’s boss substituted for bonuses in “Christmas Vacation.”
Clark called that “the biggest bag-over-the-head, punch-in-the-face I ever got.”
South Dakotans might feel the same way if lawmakers adopt Rhoden’s budget plan.
