Governor Kristi Noem delivered her budget recommendations to a joint session of the South Dakota Legislature for fiscal year 2026. Governor Noem reminding those in attendance, “During my time as Governor, I have always kept my budget proposal focused on our people, not government programs. After all, this is the people’s money. They entrust it to us and expect us to spend it wisely and responsibly.”
South Dakota’s economy remains the strongest in the nation, with the lowest unemployment rate in the country according to Noem. However, even with good news, lawmakers were told revenue numbers are tighter than they have been in previous years. In short, lawmakers will be focused on revenues, projections and potential cuts to programs during this upcoming session.
Overview:
- $44 Million in ongoing revenue
- $175 million one-time revenue, mainly from a large infusion of unclaimed property receipts.
- 1.25% increase for the “Big Three” (schools, state employees, healthcare providers)
- $12.8 million schools / teachers
- $6.8 million state workforce
- $10.4 million healthcare providers
- $86 million in mandatory NEW ongoing expenditures for Medicaid
- $71.9 million in budget reductions and discretionary changes.
What does this mean for healthcare?
Currently there is $86 million in mandatory ongoing spending increases, in this year’s budget (FY 2024/2025), which according to the Governor are tied to Medicaid. This includes the remaining $33.7 million to fully fund the cost of Medicaid Expansion. The Governor thanked lawmakers for their decisions regarding Medicaid Expansion funding. “That smart planning will help us afford this total in the years to come. Because our state’s economy has done so well, we have to take on a higher share of Medicaid costs. This will cost us another $27.8 million.”
“I am proud of the work that we have done to support the public health of South Dakotans. Every citizen in our state should have the Freedom to live where they want and the opportunity to have good health outcomes – even if they choose a rural lifestyle.” Said Noem. The Governor applauded the healthcare community for their successful innovations in rural healthcare, emergency medical services, and the support of regional health facilities across South Dakota. “Innovative efforts like Telemedicine in Motion are setting an example for the nation. And we’ve put modern LifePaks in the back of ambulances across the state to save lives.”
South Dakota leads the nation with the largest drop in overdoses of any state, according to Noem. Regional mental health facilities can now be utilized across the state, to assist individuals experiencing a mental health crisis, which is keeping people out of jail or emergency rooms and closer to their homes. Because of these efforts, the Governor’s budget proposal also includes $1.2 million in additional ongoing funding for these regional facilities.
The SD Department of Human Services may also see a $1.5 million investment for Agency with Choice. This will allow families who use the Family Support 360 services to choose who is providing services in their homes, and they can do so without an arbitrary cap on the hours of service that can be provided. “This investment will provide greater care for South Dakotans utilizing our developmental disability services.”, said Noem.
The South Dakota Department of Social Services and Human Services will face budget cuts, as they have been reverting funds to the state in recent years. The governor plans to cut funding for Temporary Assistance for Needy Families, citing a strong economy and high employment rates in South Dakota.
To read the Governor’s Speech in its entirety, click here.
To see the slides from the Governor’s speech, click here.
To view the Governor’s Speech on SDPB’s YouTube Channel, click here.
