The South Dakota Senate on Monday (Feb. 23, 2026) rejected two bills tied to the state’s data center debate: a tax rebate proposal and a backup-generator permitting bill. Both fell short of the 18 “yes” votes needed for final passage, and the prime sponsor signaled he may try again.
Senate Bill 239, introduced by Sen. Kyle Schoenfish, R-Scotland, would have changed the state’s reinvestment payment program for large projects, including data centers. As amended, the bill would have allowed the Board of Economic Development to approve a rebate equal to South Dakota sales and use taxes on a project’s construction costs and later equipment upgrades for up to 30 years.
Supporters said the change would help South Dakota compete for large projects and keep construction and skilled-trades jobs in state.
Opponents said the bill put too much tax policy in the hands of an appointed board and pulled future state revenue away from priorities such as property tax relief and education funding.
The Senate vote was 17-16, with Sen. Beal and Sen. Pischke excused. Under the state Constitution, bills need 18 affirmative votes — a majority of the members-elect — to pass.
Senate Bill 193, sponsored by Sen. Casey Crabtree, would have defined “backup electric generation” as temporary, off-grid generation used when a primary power source is unavailable. The bill also would have required a Public Utilities Commission permit before a backup generation facility could interconnect to the bulk electric system.
Sen. Chris Karr, R-Sioux Falls, said the Public Utilities Commission still opposed the bill and warned the change could weaken protections for adjacent landowners.
The bill failed 17-17. Earlier Monday, senators voted 18-17 to reconsider a prior vote and put the bill back on the calendar. Lt. Gov. Tony Venhuizen cast the deciding vote to reconsider the measure.
By Todd Epp | South Dakota Broadcasters Association.
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