Data center incentives
Whether to incentivize large data centers in South Dakota is among the hottest state policy debates for 2026. Supporters see economic development; opponents raise concerns about heavy electricity and water use. The issue drew large, emotional crowds at a Sioux Falls City Council meeting and is expected to face robust legislative debate over incentives versus barriers.
Should South Dakota incentivize data centers to locate in the state or put up barriers to them?
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Sources
Mehlhaff (SD News Watch coverage) — https://www.sdnewswatch.org/2026-legislature-property-taxes-data-centers-sd
The decision on whether to allow construction of data centers that use extensive electricity and water to store huge amounts of computer data is perhaps the hottest topic in South Dakota right now. "There’s going to be a robust debate about whether we should incentive data centers to come to South Dakota or put up barriers to them," Mehlhaff said.
Positions on this issue · liberal → conservative
- Strongly oppose data centers; ban or heavily restrict them over water and power use
- Put up clear barriers and deny most tax or utility incentives
- Case-by-case local review with limited incentives and strict resource limits
- Offer targeted incentives if projects meet energy and water efficiency standards
- Actively recruit data centers with strong tax, land, and utility incentives