State Sen. Michael Rohl, R-Aberdeen, speaks on the South Dakota Senate floor on March 3, 2025, at the Capitol in Pierre. (Photo by Makenzie Huber/South Dakota Searchlight)

PIERRE — A South Dakota legislative committee defeated a proposal Wednesday at the Capitol that could have produced more revenue from the state’s taxes on gold mining.

Tax revenue from gold extraction has stayed stagnant in recent years, even as gold prices increased. Sen. Mike Rohl, R-Aberdeen, proposed that the severance tax rate change from $4 per ounce of extracted gold to a half percent of the market value of the gold extracted.

The current tax was set in 1994, when the price of gold was about $400 per ounce. A separate law establishes a sliding scale up to an $8 severance tax if the price of gold reaches $800 per ounce, Rohl said, but the authors of that bill likely didn’t imagine that the price of gold would go far past that.

Gold production increases at mine in South Dakota’s Black Hills

The price of gold is now about $4,800 per ounce. With Rohl’s proposed tax, companies would effectively be paying about $24 per ounce at current prices.

“I think this is actually a pretty modest increase,” Rohl said. “It’s following the actual framed intention of the tax on severance of gold in the state.”

The current severance tax rate generated $784,000 for the state’s general fund last fiscal year, Rohl said. Another state tax of 10% on the net profits from the sale of precious metals mined in the state generated about $9.8 million, he said.

The Wharf Mine near Lead is the only active, large-scale gold mine in the state. The mine is owned by Coeur Mining, which reported selling $228 million worth of gold from the Wharf Mine in 2024.

The first million raised from Rohl’s proposed tax would be added to the state’s general fund. Beyond that, the money would be deposited into a proposed rural water infrastructure fund. Rohl said the state doesn’t have a consistent source of funding for water projects.

“It’s somewhat fitting to trade one resource that has value to the state for another resource that has value for the state,” Rohl said. “I would argue that’s water.”

Opponents of Rohl’s bill worry about disrupting a gold mine that provides jobs and contributes to local businesses and the community.

“Mining is not just a part of our community, but it’s the reason we exist,” said Robin Lucero, the city administrator of Lead. “They are our largest community partner.”

The Senate Taxation Committee voted 7-0 to reject the bill.

The committee also voted 7-0 to defeat one of what will be many property tax proposals this legislative session. Sen. John Carley, R-Piedmont, introduced a bill that would have lowered property tax mill levies to zero.

“This bill is not serious public policy,” Yvonne Taylor of the South Dakota Municipal League told the committee. “It is not worthy of your time.”