PIERRE, S.D. – The fate of a bill tied to one of the most contentious subjects in the South Dakota Legislature this year – data centers – ended up in the hands of a senator that couldn't be located.

Senate Bill 239 would have provided relief for companies such as those operating data centers by allowing them to write off a certain percentage of the cost of purchasing large equipment. It failed its vote to be reconsidered 16-17 a day after it lost its first vote by the same margin.

The Feb. 24 vote was held up for nearly 40 minutes after the Senate voted to wait until they could find Republican Sen. John Carley of Piedmont, who could have potentially given the tying vote and leave Lt. Gov. Tony Venhuizen with the task of casting a tiebreaker. The bill, spearheaded by Republican Sen. Casey Crabtree of Madison, underscores the division within the chamber between those who favor giving data center companies additional economic incentives to move to the state and those who believe more guardrails should be put in place and greater fiscal restraint exercised.

As the bill was presented to the Senate floor Feb. 23, Crabtree and other supporters argued the measures were a necessary step to bring South Dakota in line with other states. Detractors, headed by Republicans Senate Pro Tempore Chris Karr of Sioux Falls and Sen. Taffy Howard of Rapid City, said it would create government overreach and allow Pierre to essentially pick winners and losers.

Ryan Budmayr, CEO and president of the South Dakota Chamber of Commerce and Industry, believes the concerns over the bill are misguided, pointing out South Dakota is one of eight states that tax manufacturing equipment and that each project would still face scrutiny from the South Dakota Governor's Office of Economic Development (GOED).

'What the bill would basically allow is for GOED to look at each one of these projects on a case-by-case basis and grant a rebate of zero to 100% on the purchases of equipment up to 30 years,' Budmayr told News Watch. 'The truth is these projects, one of the largest areas of investment we've ever seen across the country, are popping up everywhere but ... they will not come to South Dakota unless we are competitive.'

Budmayr, along with other proponents of data centers, have made the case that, when it comes to data centers, South Dakota is missing out on a large source of tax revenue, just as complaints on property taxes in the state have risen in recent years.

'(We've) got to be smart and strategic to make sure we have the proper safeguards in place. But $500 billion of investment went into these projects last year alone, and South Dakota didn't see a dime of it,' Budmayr said.

As an example of the potential benefit, he pointed to a bitcoin mining operation north of Pierre, which provided more than $800,000 of tax revenue to the local school district last year.

However, for Liz Tiger of Dakota Rural Action, a conservation group, the promise of data center riches comes with significant drawbacks, even for those communities that may be inclined to welcome data centers with open arms. “I think what you're hearing from communities is we want to see thoughtful economic development,' she said. 'You want to bring revenue into the state, but you want to balance it with community needs.'

The events in the Legislature the past few days reflect a larger battle going on over what action, if any, lawmakers should take in regulating and incentivizing an industry that could prove to be financially beneficial for the state.

In addition to questions over what sort of economic and tax benefits South Dakota should offer large data center companies, residents have raised concerns over potential air and noise pollution, increases in utility bills and the erosion of property rights.

At the moment, it appears neither supporters nor skeptics of data centers have gotten what they wanted, with the vast majority of the proposals put forth in this year's legislative session being defeated.

Only two bills – one related to assessing the cost of data centers and another aimed at protecting residents from an increase in utility prices – have made it out of either chamber thus far.

South Dakota News Watch is an independent nonprofit. Read, donate and subscribe for free at sdnewswatch.org. Contact politics and statehouse reporter Alexander Rifaat: 605-736- 4396/alexander.rifaat@ sdnewswatch.org.