PIERRE — By tapping into reserves and higher-than-expected revenue, South Dakota lawmakers are doling out $96 million in one-time state general funds to address a variety of special projects across the state — nearly seven times more than the amount Gov. Larry Rhoden originally left open for special legislative projects in December.

Rhoden laid out $14 million in his recommended budget for special legislative projects, with another $23.3 million for his own projects, in order to decrease the state’s reserve funds to 12.5% of the general fund. 

The reserve funds have ballooned in recent years, due to high end-of-year surpluses. The reserve funds are currently at 16.5%. Since December, lawmakers have debated whether to pull more money from the funds.

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Lawmakers on a budget committee decided on Wednesday — the second-to-last day of the annual legislative session — to decrease the reserve funds to just over 10%. The state maintains reserves of at least 10% for “true emergencies,” Rhoden told lawmakers in December.

Those transfers will decrease the state reserve funds to $255.8 million.

Lawmakers also learned in February that the current fiscal year’s estimated revenue is $16.8 million more than Rhoden projected in December.

Senate Majority Leader Jim Mehlhaff, R-Pierre, told members of the media at Thursday’s Republican leadership press conference that the one-time spending decisions are “investments” into the state.

Most of the bills are still awaiting the governor’s consideration, but are expected to be signed into law pursuant to discussions between the executive and legislative branches.

The money is being used to:

Seed a fund to offset property taxes:

$56 million will be transferred from reserves in July to the newly established homeowner property tax reduction fund, which will be used to buy down general education property tax levies on owner-occupied homes. The money is part of a multifaceted approach to property tax relief adopted by lawmakers that will include putting future annual revenue into the property tax reduction fund from next year’s scheduled increase of the state sales tax rate from 4.2% to 4.5%, and also giving counties the option to impose a half-percent sales tax for property tax credits.

Support surface water protection projects:

$10 million will be given to the state Department of Agriculture, with $2 million funding state-approved wastewater and storm water infrastructure projects and $8 million funding the state’s riparian buffer project, which acts as a barrier between erosion or field runoff and rivers, lakes and streams.

Repair roads near Ellsworth Air Force Base:

$8 million will be transferred from the general fund to the South Dakota Ellsworth Development Authority to help restore roads damaged from construction on the base in anticipation of B-21 Raider stealth bombers soon calling the base home.

Sustain services for victims of sexual abuse and domestic violence:

$5.5 million will be appropriated to the Department of Public Safety to fund grants to nonprofits that provide services to victims of child abuse, domestic violence, sexual assault and trafficking. Federal funding for the programs, which normally sustain the services, has decreased in recent years. The state funded similar appropriations in 2025 and 2024, each at $5 million. 

Help local governments repair and replace bridges and culverts:

$5 million will be given to the state Department of Revenue to deposit into existing rural access infrastructure funds, which help local governments cover costs of repairing and replacing critical small structures. 

Offer personal protective equipment grants to volunteer firefighters:

$5 million will be given to the state Department of Public Safety to offer grants to volunteer fire departments throughout the state. Lawmakers approved $5 million in grant funding in 2023 as well. More than 250 departments applied for those grants, requesting $10 million more than what was available at the time.

Seed money for water infrastructure projects:

$3 million will be transferred from the general fund to a newly established water infrastructure development fund to support the construction, planning and development of water projects in the state.

Build a regional juvenile center:

$2 million will be appropriated to the state Department of Education to fund a grant for a nonprofit to build or buy a building that would serve as an alternative learning option for students with behavioral health concerns. State lawmakers also approved legislation that would allow school boards to temporarily reassign violent or aggressive students to an alternative learning setting. 

Restoring the Capitol building:

$1.1 million will be used to create the Capitol restoration fund. A full restoration of the Capitol could cost at least $150 million, according to the Bureau of Human Resources and Administration. The last full restoration was conducted for the 1989 state centennial.

Help challenged students graduate:

$500,000 will be used to expand the Jobs for America’s Graduates program in South Dakota to more schools and boost private fundraising of the program. JAG-SD, which has 18 programs across 12 school districts, teaches life, leadership and educational skills to students facing barriers to graduation, employment or postsecondary education.

Governor’s projects:

Lawmakers also approved special funding for a number of projects recommended by Gov. Larry Rhoden earlier this year, including:

• $6 million to build an advanced manufacturing center for Southeast Technical College in Sioux Falls.
• $5 million to purchase a new airplane and equipment for law enforcement surveillance.
• $4.2 million to backfill the state emergency and disaster fund.
• $2.7 million to backfill the state fire suppression fund.
• $2.35 million to renovate and expand the Sturgis Readiness Center for the National Guard.
• $1.3 million to pay medical professionals in the Rural Recruitment Assistance Program.
• $682,825 to demolish the Pierre Minimum Center, a portion of the women’s prison complex that is no longer needed due to the additional women’s prison under construction in Rapid City.
• $650,000 to backfill the extraordinary litigation fund.
• $425,000 to increase income qualifications for tax refund programs for elderly and disabled homeowners.

South Dakota Searchlight Reporter Meghan O’Brien contributed to this report.