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Why HB 1005 is a Strategic Win for South Dakota: Rebutting the Critics with Facts


Why HB 1005 is a Strategic Win for South Dakota: Rebutting the Critics with Facts


Opposition to House Bill 1005 often portrays it as an unchecked boon for Big Tech that could strain energy and water resources while burdening everyday ratepayers. In reality, the bill incorporates strong, multi-layered safeguard, bolstered by South Dakota's established regulatory bodies, to prevent those risks. KELO: South Dakota bill proposes tax break for data centers This makes HB 1005 a prudent, competitive incentive that attracts billions in private investment and delivers broad economic benefits. Dakota News Now: Data Center Q&A


1. Competing Regionally Without Giving Away the Store


Neighboring and nearby states like Iowa, Nebraska, North Dakota, Minnesota, Wyoming, and Montana all offer various tax incentives for data centers, primarily sales tax exemptions on equipment, with some including property tax relief or abatements, to lure these projects. Stream Data Centers: Tax Incentives Overview SDIA Knowledge Hub: US Tax Incentives by State H5 Data Centers: State Incentives Without comparable terms, projects can face substantially higher costs due to taxable equipment purchases, sending investment elsewhere. Stream on higher costs without incentives HB 1005 levels the playing field, providing the long-term certainty needed for massive commitments.


2. Substantial Economic Benefits That Outweigh Costs


Far from the "minimal jobs" narrative:



Most significantly, data centers pay full property taxes, injecting millions annually per site into local coffers. Insights on property tax revenue This expands the tax base, enabling potential property tax relief for residents, farmers, and small businesses while funding schools, roads, and services. Dakota News Now on economic growth In an agriculture-reliant economy, this diversification strengthens resilience amid the global surge in AI and cloud demand. KELO: Why data centers want SD


3. Multi-Layered Safeguards Effectively Address Resource Concerns


HB 1005 builds in direct protections, reinforced by independent state regulators:

  • Electricity: Requires written utility agreements or rate schedules that explicitly prevent cost-shifting to residential or other customers. The South Dakota Public Utilities Commission (PUC), the elected body overseeing electric utilities, provides critical additional input here, reviewing and approving rate schedules, special contracts, and service agreements for large loads to ensure fairness and protect ratepayers from undue impacts. KELO: Xcel CEO on data centers SD PUC Tariffs

  • Water: Mandates early notice to local providers for compatibility checks, backed by the rigorous water rights permitting process administered by the Department of Agriculture and Natural Resources (DANR). Significant users must secure permits (required if exceeding 25,920 gallons/day or 25 gpm), which include reviews for availability, potential impairments to existing rights, and public input opportunities, serving as a strong gatekeeper against unsustainable demands. Official DANR Water Rights Program DANR Permit Details

  • Focus: Excludes volatile cryptocurrency mining, prioritizing efficient enterprise and AI centers.


South Dakota's inherent advantages, cool climate for natural cooling efficiency and abundant renewable energy, further minimize strain while promoting sustainable designs.


4. A Forward-Looking Choice for All South Dakotans


Targeted incentives aren't contrary to taxpayer interests; they generate new revenue streams that can support broader relief priorities. Dakota News Now on incentives Passing on these opportunities simply hands them to regional competitors.


HB 1005 smartly positions South Dakota in the digital economy: driving investment, opportunity, and growth while relying on bill-specific rules plus robust PUC and DANR oversight to safeguard resources and fairness. South Dakota Searchlight: Other states' incentives 



It's not a giveaway, it's a calculated win. Support HB 1005.

 
 
 

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