Local governments should have more authority over where data centers are built and how they use local resources, Democratic candidate for South Dakota governor Dan Ahlers said during a debate on Monday.
“We should be asking the people of South Dakota what they want, and what they’ve been telling us is they don’t want these data centers in their communities,” Ahlers said during the debate, co-hosted by South Dakota Public Broadcasting and South Dakota News Watch.
Republican Gov. Larry Rhoden argued that his administration had already responded to public concerns on data centers. He pointed to legislation he signed that requires data centers with peak electrical use of 10 megawatts or more to cover the cost of their power demands, as well as any costs a community might incur if a data center unexpectedly leaves. The same bill bars the state from preempting local laws to limit, ban or regulate data centers. Companies seeking to build data centers also have to tell local water providers how much water they’d need and obtain determinations from local providers that their projects are compatible with the local water supply.
But Rhoden also wants data centers built in the U.S., if they are going to be built. He said it is important to keep “evil foreign governments, like China, from owning our data.”
During their second and last debate of the 2026 election season, the two also clashed on education, health care, taxes and tribal relations, among other issues.
Rhoden, a western South Dakota rancher, became governor in early 2025 after serving as former Gov. Kristi Noem’s lieutenant governor. Ahlers is a small business owner and former Democratic legislator from Dell Rapids.
Affordability and property taxes
Ahlers said the state could reduce the cost of living by putting more state money into education, which he said would reduce the amount local governments need to raise through property taxes. He also said the state could save families $800 per student if it paid for school lunches and proposed a childcare tax credit or rebate, though he did not offer details on the size and scope of such a program.
Rhoden pointed to property tax legislation he signed during the 2026 legislative session as a measure addressing affordability.
“This year we passed the largest property tax cut in the history of the state,” Rhoden said.
One new law diverts an estimated $110 million or more in sales tax revenue into a fund to offset property taxes for education. That revenue will come when a 2023 sales tax reduction from 4.5% to 4.2% sunsets next year. Additionally, $56 million in general budget funds is being used to lower property taxes immediately.
Another bill lets counties add an additional 0.5% sales tax to decrease property taxes for homeowners in those counties.
Rhoden said the new laws will reduce the average homeowners’ property taxes by 36%.
Ahlers said moving from property taxes to sales taxes can leave renters and lower-income residents behind. The state should change how it assesses residential property, he said, and bolster existing property tax relief programs for seniors, veterans and people with disabilities.
“It is a tax shift,” Ahlers said. “It shifts it from property tax to sales tax at the county level.”
Rhoden said the property tax bills would also help renters by making it easier to purchase their first home, and would also shift the tax burden to tourists spending money in the state.
Education funding
Rhoden said state education funding has increased more than what’s required under the state’s funding formula, and said teacher salaries have risen by about $10,000 in recent years.
But teacher retention remains a problem, Ahlers said, pointing to teachers who aren’t just leaving for better pay in other states but “leaving the profession entirely.” The state should prioritize teacher pay, he said.
Economic development
When asked about economic development, both candidates homed in on what’s been done – and what hasn’t – through the state’s Future Fund. The fund was created in 1987 at the request of then-Gov. George Mickelson, a Republican. South Dakota employers pay fees to the fund when they remit unemployment payroll taxes. The fund was placed under the governor’s exclusive control, enabling quick responses when economic opportunities arise.
Economic development programs should emphasize South Dakota-owned businesses rather than large companies often headquartered out of state, Ahlers said. He pointed to a Wakonda-area hemp producer that built a hemp-based concrete facility in Iowa after failing to find sufficient economic incentives in South Dakota.
Rhoden said he’d never heard from that company, and said he agreed with Ahlers on supporting value-added agriculture. He also said his administration had established guardrails for the Future Fund. Rhoden signed a bill into law that defines acceptable uses for the fund, requires more reporting to legislators about awards, stipulates information required of applicants, directs the Governor’s Office of Economic Development to formulate rules on the fund’s use, and requires the office to recommend potential awards to the governor.
Rhoden also cited several large projects as proof of his administration’s wise use of economic development resources, including a soybean crushing plant outside Mitchell, the relocation of Smithfield Foods’ pork processing plant outside of downtown Sioux Falls, and the recruitment of CJ Schwan’s new food packing plant to Sioux Falls.
Tribal relations
Ahlers proposed restoring a tribal relations commission with representatives from all nine South Dakota tribes and giving tribal governments a stronger role in decisions on public safety, education, health care, and economic development.
“They need to have a seat at the table,” Ahlers said.
Rhoden said his administration has already undertaken a “reset” of relations with the state’s tribes. He pointed to expanded participation in law enforcement training and other cooperative efforts.
“I feel really proud of the relationship we’ve built,” Rhoden said.
The general election is Nov. 3.
Joshua Haiar
South Dakota Searchlight