John Hult, South Dakota Searchlight
PIERRE — A legislative maneuver meant to secure funding and continue discussion on an $825 million men’s prison failed by two votes Friday in the South Dakota House of Representatives.
The vote on House Bill 1025 was 34-35, with one member absent and a majority of 36 votes required for passage. The House could vote on whether to reopen debate when lawmakers return to Pierre next week.
The vote throws the future of the massive prison project into question, and could chart a path to easing some of the state’s financial strain in a year where lawmakers are pondering cuts and swatting back funding requests.
House Speaker Pro Tempore Karla Lems, R-Canton, said after the vote that some of the money could go to a trust fund lawmakers want to establish for revenue from unclaimed property. That money comes from abandoned assets that revert to the state.
“We don’t want to just blow that money,” Lems said. “We’d like to see it possibly go into an unclaimed property trust fund, or at least part of it. Maybe there would still be some dollars this year to do some other things.”
Lems voted against HB 1025 on Friday.
In its original form, the bill would’ve sent $182 million toward the proposed 1,500-bed prison in Lincoln County. It also would have cleared the Department of Corrections to tap into a prison fund worth more than $600 million, set aside by legislators in prior years, to begin building it.
To build the prison that’s been designed, mapped out and bid for, its funding package would need support from two-thirds of lawmakers in both the House and Senate, a chamber where it has yet to appear.
Debate fails to sway critics
On Friday in the House, Sioux Falls Republican Rep. Jack Kolbeck moved an amendment designed to keep the bill alive with a simple majority. It stripped the bill of everything but a provision moving $148.1 million into the prison construction fund. The original proposal also sought to spend $33.9 million from the state’s budget reserves.
Since the amendment bill would’ve moved money, rather than spend it, it could’ve side-stepped the state’s constitutional requirement that spending bills need two-thirds support.
“I’ve heard a lot of people say we need to build a new prison,” Kolbeck said. “This amendment allows that discussion to continue.”
The amendment passed 37-32.
Lems was the first to speak against the amended version of the bill. She rattled off questions about the prison’s rural location and a pending lawsuit over that location, unknown costs for roads and ongoing operations, and on a price tag she sees as too high.
She called the prison “Plan A” for dealing with overcrowded conditions in the state’s correctional system. There could be other, cheaper options or alternative locations, Lems said, and there’s a bill circulating that would force correctional officials to consider them.
“Before I vote to put any more money into a savings account, I want to know what the plan is,” Lems said.
Rep. Taylor Rehfeldt, R-Sioux Falls, supports the prison project as envisioned by the state’s executive branch. She pointed out that the Legislature balked at a $38 million funding bill for a women’s prison in 2022. The following year, it passed a bill to spend $60 million on the same project. Now under construction, the maximum price for that Rapid City facility came in at $87 million.
With a guaranteed maximum price for the men’s prison set to expire if work doesn’t commence by March 31, Rehfeldt questioned what could happen to the price tag after that.
“What will that be in the future? Probably more. Almost certainly more,” Rehfeldt said.
Rep. Will Mortenson, R-Fort Pierre, said even if the unanswered questions lead the state down a path toward a different kind of prison, that shouldn’t prevent the state from adding money to the construction fund in preparation. Paying cash instead of interest – this year or in the future – will save hundreds of millions of dollars.
The state needs space, Mortenson said, and “it is fiscally conservative to set it aside in a fund.”
He also said most of the objections relate to location, but those objections are likely to dog the project wherever it lands.
“I’d love to build the prison in Montana or Mars or somewhere else,” Mortenson said. “Unfortunately, that’s not how these things work.”
But Rep. Logan Manhart, R-Aberdeen, said it’s not about location. It’s about size and design, which he said is more than the state needs.
“When we’re going to spend this kind of money on a Ritz-Carlton prison, I have some questions,” Manhart said.
Rapid City Democratic Rep. Peri Pourier pleaded with her fellow lawmakers to think about the root causes of crime, like poverty, drug abuse, family violence and a lack of state-supported services to address them.
“Yes, we need a new prison, but do we need that big of a prison? And if we do, we need to ask ourselves why we need that big of a prison,” Pourier said.
She nearly wept as she recounted her recent struggle to gain traction for state dollars to support Court Appointed Special Advocates (CASA) in Rapid City. Children involved in abuse and neglect proceedings can be assigned CASA representatives to look out for their interests in court.
“West River has the highest child abuse and neglect rates in the state, and these kids are going to court with no one looking out for them,” Pourier said. “Do you know how hard it was to fight for a minuscule $5 million to help them?”
Pourier challenged representatives to imagine what their grandchildren would think years from now about their investment in such a large prison.
“This is what we’re going to bet on. We’re going to bet that they’re going to get locked up,” Pourier said.
Failed vote not end of discussion
Rehfeldt moved immediately following the vote to reconsider the bill. The House will decide next week whether to take up the bill a second time.
Howard Republican Rep. Tim Reisch, a former Department of Corrections secretary, was absent for Friday’s vote. Reisch has voted for prison funding each time it’s come up during his tenure in Pierre.
It will take some work to find support and flip votes, Mortenson said, but flipping votes “is what we do around here.”
“I think a lot of people came here ginned up to vote no on building the prison in Lincoln County in that spot,” Mortenson said. “I don’t think it really sank in to most of the members that that isn’t what this does. This just sets aside money for ‘a’ prison. It doesn’t have to be ‘the’ prison.”
Republican Gov. Larry Rhoden has called the new prison – in the Lincoln County location – his top priority. The prison would largely replace the Sioux Falls penitentiary.
After Friday’s vote, a spokeswoman for Rhoden told South Dakota Searchlight that “we look forward to continuing the conversation.”
Prison money could be reinvested
If House Bill 1025 ultimately fails, lawmakers would have $182 million more to work with in a tight budget year. If it passes in its amended form and moves $148.1 million into the prison fund, they’d have $33.9 million.
Lems was one of several lawmakers to suggest that some of the money could go into an unclaimed property trust fund. A proposal to set up such a fund, meant to earn interest on unclaimed money handed over to the state after three years of dormancy, is moving through the Legislature this session. A sister proposal aims to ask voters in 2026 to let the South Dakota Investment Council manage the fund.
House Speaker Jon Hansen, R-Dell Rapids, said some of the unspent prison money could ultimately be placed into the prison fund, where it earns interest. If voters let the investment council manage an unclaimed property fund, though, starting that off with a chunk of the $182 million earmarked for the Lincoln County site would mean bigger returns in the long run.
The interest from the unclaimed property trust fund could, at some point, be used to offset high property taxes, Hansen said.
“I’ve always been open to that idea,” he said.
House Assistant Majority Leader Marty Overweg, R-New Holland, also mentioned a trust fund, but said nothing is final with the prison funding proposal. As a Republican caucus, he said, “we’ve had discussions on what we’ll do if it gets killed, not where it goes.”
“It’s pretty hard to do much with one-time money, except put it into a savings account,” Overweg said.
Senate Pro Tempore Chris Karr, R-Sioux Falls, also trumpeted talks of an unclaimed property fund.
The budget reserve funds could wind up funding immediate needs if they aren’t used for prison funding.
“The budget reserve typically just gets used for one-time dollars,” Karr said. “So those would be open to go to some of the other projects that are in the one-time bills out there.”
Pourier saw other avenues worth exploring with the extra dollars, either immediately or paid for with interest: mental health services and substance abuse services and aftercare programming, particularly in rural areas, and expanding access to trauma-informed care.
She pointed to testimony from Corrections Secretary Kellie Wasko, who’s repeatedly said that the majority of offenders struggle with mental health and substance abuse, and to Attorney General Marty Jackley, who’s spent years talking about how drug abuse can become the fuel for violent crime.
“These guys, girls, everybody, the people who struggle with substance abuse disorders, they have a chemical imbalance in their brain and they’re self-medicating,” Pourier said.