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South Dakota Republicans criticize federal funding but won’t return money

SD News Watch / Argus Leader
South Dakota Rep. Dusty Johnson, Sen. Mike Rounds and Sen. John Thune greet former President Donald Trump in Sioux Falls in 2018.

WASHINGTON, D.C. – South Dakota’s Republican congressional delegation and GOP Gov. Kristi Noem supported funding measures signed by President Donald Trump that provided more than $10 billion in federal funding to the state to battle and recover from the COVID-19 pandemic.

But they’re not so willing to praise a program approved by Democratic President Joe Biden that’s pumping nearly $4 billion more in pandemic relief money into the state and its communities, paying for projects as diverse as water and sewer systems, workforce housing infrastructure and programs to aid Native American tribes.

In congressional funding packages passed on a bipartisan basis between March and December 2020, South Dakota was allocated about $10.1 billion in coronavirus stimulus funding that helped keep state residents and the economy alive. Some of the money went directly to state government, while the majority was used to support businesses, individuals, health care providers and schools and universities during the pandemic.

But when it comes to the American Rescue Plan Act (ARPA) enacted by Biden and congressional Democrats in March 2021, Republicans from South Dakota have been extremely critical of the program, even though it will provide an estimated $3.8 billion to the state through December 2026.

Of that total, about $1.4 billion in ARPA money is being given directly to the state, cities and counties for a wide range of programs to “support households, small businesses, impacted industries, essential workers and hardest-hit communities,” according to a state fiscal report obtained exclusively by South Dakota News Watch. The report also indicates that “these funds can also be used to make necessary investments in water, sewer and broadband infrastructure.”

Significant funding from the American Rescue Plan Act also went to help South Dakota municipalities improve their sewer and water systems. Photo: News Watch file

Sen. Rounds called ARPA funding a ‘liberal wish list’

U.S. Sen. Mike Rounds, R-S.D., voted against the $1.9 trillion ARPA program, at the time calling it a “liberal wish list” and asserting that the spending program included “many giveaways to left-wing causes.”

Rounds told News Watch in a recent interview that ARPA, which included some funding for extended unemployment benefits as well as funding capital projects and numerous other government programs, led to an “overheating of the economy” that set the stage for increases in the national inflation rate. “Money went directly into bank accounts,” Rounds said.

U.S. Rep. Dusty Johnson, R-S.D., also voted against ARPA and said in an email to News Watch that the measure was enacted after the major impacts of the pandemic had subsided, and that money provided to citizens was “put into savings accounts or spent on non-essentials.”

“The American Rescue Plan was passed when our economy was already recovering well and American families had record savings,” he wrote.

More SD News Watch: How South Dakota spent $14 billion of pandemic relief

Republican Gov. Kristi Noem blasted the ARPA program as “wasteful spending” that was falsely described as aid to states to fight COVID-19.

“Gov. Noem absolutely believes that the federal government’s wasteful spending, much of it at the behest of President Biden, was not necessary to combat the COVID-19 pandemic and is the single largest cause of the inflation that our nation now finds itself in,” Noem spokesman Ian Fury wrote to News Watch in an email in late February.

Fury went on to praise Noem’s decision to not lock down the state during the height of the pandemic.

“Who knows where our nation would be without South Dakota as the counter-example,” Fury wrote. “The federal government bailed out other states for their unconstitutional decisions, and the American people are paying the price every day at the grocery store, at the gas pump and with every purchase they make.”

States have to use federal funding or lose it

ARPA included a state-driven funding mechanism that allowed for significant local control over how the money was spent, Rounds said. However, if states reject the funding or don’t spend it prior to the deadline, the money will be returned to the U.S. Treasury and reallocated to other states.

The Idaho Legislature did that in early March when appropriators cut $28 million in ARPA funds from a program aimed at stabilizing economically challenged child-care centers. Lawmakers said they had questions about the state agency that was distributing the funds to day care providers; the funding was ultimately approved.

In South Dakota, ARPA funds continue to pay for a wide range of projects and programs. According to the state fiscal report, direct ARPA funds available through 2026 will pay for nearly $1 billion in program costs by the state, $172 million by counties, $38 million by Sioux Falls and Rapid City, $65 million by other cities, $275 million in other local projects and $115 million in other capital projects statewide.

ARPA funds are being used in part to help build a new 48,000-square-foot Lincoln Hall building on the campus of Northern State University. Illustration: Northern State University

Federal documents also show that ARPA provides up to $2 billion to be divided among eligible tribal governments across the country, including in South Dakota, with the Treasury calling it the “single largest infusion of federal funding into Indian Country.”

State Sen. Reynold Nesiba, D-Sioux Falls, minority leader in the Senate, said the state has been able to make “once-in-a-generation investments” in a number of projects due to the ARPA funding. In an email to News Watch, Nesiba pointed out that ARPA funds are being used in part to build a new $70 million state health lab in Pierre, a new 48,000-square-foot Lincoln Hall building on the campus of Northern State University and multiple sewer and water projects across the state.

“None of these major investments would have been possible without President Biden’s American Rescue Plan Act,” Nesiba wrote.

He pointed out that no Democrat was invited to a bill-signing ceremony held by Noem when she gave final approval to a $200 million loan and grant fund to build infrastructure for new workforce housing projects in the state, $50 million of which came from ARPA funding.

“She failed to invite any Democratic legislators, although one quarter of the funds were from Biden’s ARPA, and every Democratic legislator in both houses voted for it,” Nesiba wrote. “The only opposition to this housing bill was from Republicans.”

While some politicians opposed ARPA, they don’t want to return funds 

Rounds said he does not think it’s wise for South Dakota to return any ARPA funding, as congressional approval of the funding is now a matter of “water under the bridge.”

Instead, Rounds told News Watch that the state and other government entities should now focus on spending the billions of dollars on projects that will aid the overall state economy in a long-term context.

“Once the decision was made on a partisan basis that they were going to do it, then it’s a matter of each state responsibly spending the money they do have,” Rounds said. “You want to be able to use it to build your economy long-term. … If you invest it into South Dakota’s infrastructure, you’re probably helping do something that will help build the economy.”

Round said sensible uses of the money would be for internet accessibility, roads and bridges, and electric and water projects.

State Sen. Helene Duhamel, R-Rapid City, said she hopes to use ARPA funds to pay for millions of dollars in projects to enhance distribution of water to communities across the state.

She was the lead sponsor of Senate Bill 156, which began as an effort to use $100 million in ARPA funding to help build a pipeline from the Missouri River to the fast-growing Rapid City area. That bill was later amended to make funding available for water projects statewide and to reduce funding to $50 million, but the measure died on a close House vote on the final day of the legislative session.

“I’m in the camp that if we don’t use this money and send it back, it’s not going to lower the federal debt, it will just go to other states,” Duhamel said. “You may agree or disagree whether we should have all this money out there. But it’s out there now, so South Dakota needs to take this golden opportunity to do everything we can to get our house in order because going forward, it could be a rocky road.”

U.S. Sen. John Thune, R-S.D., the second-highest ranking Republican, said Congress needs to maintain a close eye on how ARPA and other COVID-19 relief funds are being spent.

“As we continue the important oversight of these tax dollars at the federal level, Republicans in Congress will continue to root out waste, fraud and abuse throughout the various COVID-19 programs to ensure Americans know exactly where their hard-earned dollars have been spent,” Thune wrote to News Watch in late February.

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