South Dakota Searchlight-John Hult
PIERRE — There is “a real possibility” that South Dakota lawmakers say no to Gov. Larry Rhoden’s request for the final $182 million needed to fund a new men’s prison, a Republican leader said Thursday at the Capitol in Pierre.
The comments were in part a response to questions about how the state intends to meet its constitutional obligation to balance its budget in the face of a significant revenue shortfall.
Republican leaders intend to hit the balanced budget target through spending cuts. Assistant Senate Majority Leader Carl Perry, R-Aberdeen, said he could see some support for a proposed “sin tax” on nicotine products like vape pens and nicotine pouches. But Senate Majority Leader Jim Mehlhaff, R-Pierre, said the general consensus is that cuts are a preferable approach.
House Assistant Majority Leader Marty Overweg, R-New Holland, waved off the nicotine tax as anathema to his party’s DNA.
“I’m a Republican,” said. “I don’t like to raise taxes.”
Former Gov. Kristi Noem’s proposed budget would cut programs and services. Some of her ideas, like a $1 million cut to the State Library, have run into fierce resistance, and none of the cuts have yet to earn either chamber’s full-throated support. One of her budget increases — a $4 million fund to let parents use public money for private education — was dashed early in the legislative session.
Rhoden, who took office when Noem ascended to a cabinet post with the Trump administration, reiterated on Thursday that Noem’s budget is also his, and that budget cuts are his preferred approach, although he’s open to discussing specific cuts.
He also promised a “reset” with lawmakers in some areas where they’d clashed with the former governor. From his first day, however, he’s held fast to Noem’s yearslong commitment to a controversial plan for a new men’s prison, and to the still-more controversial site the state selected south of Sioux Falls.
Lawmaker concerns
Rhoden’s certainty has clashed with the growing concerns of GOP legislative leaders during the 2025 session. Past legislatures signed off on $62 million in preparatory spending for the 1,500-bed facility, meant to replace the 144-year-old state penitentiary in Sioux Falls.
They’ve also opted to fund a new $87 million women’s prison in Rapid City — a project that’s faced no public outcry — and placed nearly $600 million into an interest-bearing “incarceration construction fund” meant to help the state pay for a new men’s prison without bonding.
In November, the Department of Corrections announced it had been handed an $825 million “guaranteed maximum price” for the men’s facility.
Last week, a House panel pondered a Rhoden administration bill that would top off the prison fund with $182 million and clear the DOC to begin using the money. The project would convert the Lincoln County site from a corn field encircled by gravel roads into a sprawling modern correctional campus accessible by paved roadways and serviced by city-level utility infrastructure.
Lawmakers on the committee were lukewarm to the idea.
On Thursday, one day after that House panel sent the prison money request to the House budget committee with a neutral recommendation and a host of questions about ongoing expenses, at least one state GOP leader said the quiet part out loud: The state’s 105 lawmakers might say no to the $182 million prison question.
“That’s a real possibility right now,” Overweg said. “It’s early. I don’t think anything is cast in stone when it comes to the prison. I think we have a lot of conversations to have yet. I think there’s a lot of decisions that need to be made. In the end, it’s going to come down to 105 different votes.”
Three of the four leaders on hand for Thursday’s press conference in the Capitol’s Rushmore Room voiced misgivings of varying degree. Perry, for example, said he’s not especially bothered by the location of the facility, but that “the funding mechanism” troubles him.
“I don’t think that people are saying no to a prison. What they’re saying is maybe no to the financing,” Perry said. ”Instead of taking that $182 million and putting it into the prison right away, maybe we could take $80 million of that and use it for other projects.”
The state could consider bonding for at least part of the prison’s construction bills, he suggested – especially given the tight budget.
House Majority Leader Scott Odenbach, R-Spearfish, said he has concerns about the price of roadways, potential change orders to the prison and ongoing operational costs.
DOC and Rhoden officials said Wednesday that the $825 million guaranteed maximum price — a figure that would make the prison the most expensive taxpayer-funded capital project in state history — doesn’t include every cost.
The state has $24 million set aside for “contingency,” for use in the event of change orders, for example. The price to pave roads is also not included, and the state has yet to produce an estimate for the available options.
“Nobody likes surprises, and those things, when you collectively add them up, can be big surprises,” Odenbach said, adding that he’s worried his grandchildren will be on the hook for the high price of ongoing operations.
In response to Odenbach’s questions the day before, DOC Secretary Kellie Wasko told the House panel on Wednesday that the new facility would cost $21 million more each year to run than the penitentiary.
Taken together with the unknowns on the construction side, Odenbach said, “we have to be very careful as stewards of the taxpayers’ dollars” to make sure all the money questions are answered.
Mehlhaff spoke up on behalf of the lawmakers with fewer lingering concerns. There’s “diversity of opinion” within the caucus, he said.
“I fear that we are falling into analysis paralysis, and that’s going to wind up costing our taxpayers probably $1.2 billion if we continue to twiddle our thumbs.”
Mehlhaff’s higher figure was a nod to the DOC’s assertion that extended delays and redesigns could add up to hundreds of millions of dollars in additional costs.
Governor decries delay suggestions
That was Gov. Rhoden’s starting point in his response to the lawmakers’ comments, which came less than an hour later in the same room. The longer the state waits, he said, the more the prison will cost.
When told of the suggestion that a no vote on the prison funding was a “real possibility,” Rhoden said “I hope that’s not accurate.”
Paying upfront spares the state from interest payments that would accompany bonding, he said. A January budget overview handed to appropriators points out that the use of one-time dollars translates to about $600 million in dodged interest.
He described the site as a “gift from God,” because of its proximity to Sioux Falls and the fact that it was already state property. Before it was chosen as the prison site, the state had leased it as cropland and used the profits for public schools.
The thought of a pause “makes me sick to my stomach,” he said, because finding another site or reworking the current plans would amount to “starting from square one.”
He also repeated something his staffers said on Wednesday: delays would hike the price through inflation by as much as $40 million a year.
The guarantee of an $825 million top-end price expires on March 31.
“I hear stuff being said that there are all these unanswered questions. Well, quite frankly, that is just not the case,” Rhoden said. “There are a lot of questions that have been answered, very thoroughly, and if you haven’t gotten your questions answered, you haven’t been listening.”
The administration, he said, has been “palms up” in the process.
Rhoden toured the existing penitentiary recently and said the pre-statehood facility is unsuited for modern correctional purposes. The time to build is now, he said Thursday.
“We are this close to having this project fully funded,” Rhoden said. “They need to understand the ramifications of not getting this done. We will cost the taxpayers of this state tens of tens of millions of dollars by not getting this across the finish line.”