After House State Affairs rejected a 50-year sales tax exemption for data centers earlier this month, Senate State Affairs this week approved a complicated plan for more unnecessary corporate welfare lasting 30 years for Big Tech.
Senator Casey Crabtree (R-8/Madison) pushed a hoghoused Senate Bill 239 through Senate State Affairs Wednesday to create different rules for tax breaks for data centers and other big projects:
Under the bill, the state Board of Economic Development would set a new minimum project cost every two years. A qualifying company’s agreement could last 30 years for equipment upgrades and four years for construction costs.
Companies would receive a “reinvestment payment” equal to or less than the state sales taxes paid by the project, as they do now, but state Governor’s Office of Economic Development Deputy Commissioner Joe Fiala told lawmakers that companies on this proposed “new track” would not have to pay sales taxes that qualify for a rebate.
“We’d do an analysis of the sales tax they would pay,” Fiala said. “We’d track that, and at the end of the project, we would have the ability to say, ‘You’ve done what you said. That sales tax you were going to pay, you do not have to pay it at the end of the project.’”
If companies don’t keep up their end of the bargain or show signs that they can’t meet the requirements while the agreement is still in place, the state could call in the owed sales taxes, Fiala said [Makenzie Huber, “Data Center Restrictions Earn Lawmaker Endorsement as Fight Continues over Tax Incentives,” South Dakota Searchlight, 2026.02.18].
As written, SB 239 would have run afoul of SB 135, a measure also approved Wednesday by Senate State Affairs, which would have banned tax exemptions of any sort to data centers. The Senate amended that ban out of SB 135 (as well as weakening language requiring data centers to pay full freight for their electricity) but left in place SB 135’s regulation of data centers’ water usage and protection of local governments’ authority to regulate or prohibit data centers. The Senate passed the amended SB 135 unanimously, leaving the door open for SB 239’s tax breaks.
On the bright side, SB 239 now includes a prohibition on giving tax breaks to cryptocurrency operations. SB 239 adds to the definition of “project cost” a line excluding “any amount paid as part of a new or expanded facility or equipment upgrades attributable to the processing, storage, retrieval, or communication of data related to cryptocurrency.” So while SB 239 still subsidizes the data centers that build the artificial intelligence that inherently destroys our civic institutions, SB 239 at least spares us the shame of subsidizing the fake money that supports human trafficking, Hamas, and other scourges.
Turning nimbys into yimbys? Why not just pick a few poor counties and that by itself is most of them and let them have it. No noise abatement just the sweet hum of money. Better than the Chinese pork slaughterhouse by Sioux Falls. That is the smell of death. Just making the case for the AI that will rule everyone. Don’t you want free handouts, who needs to work for a living. Just follow Elon. Spend your vacation on the moon. Its a retreat from Mars of course but still out there.
That entire Senate State Affairs Committee hearing was a travesty. Let’s not forget that the 2 data center bills Crabtree had initially introduced – 234 & 235 – had used the sales tax language from the defeated HB 1005 & changed it to gross recepts tax. But they were red herrings! Crabtree hoghoused all three bills (234, 235 & 239) and then asked the committee to switch the order of the agenda to hear 239 first. This amendment was only dropped about 30 minutes before the hearing & it was totally new language delving into GOED’s RPP program. Data center & economic development lobbyists knew ahead of time. GOED knew to be on hand for the meeting. The general public didn’t know. And then folks who had waited hours to testify were blindsided by the late changes and then disparaged because they couldn’t testify as to the meat of the new 239 because no-one was an expert in GOED. It was ugly. We should call out that underhanded behavior.