Budget committee approves $100 million of federal money for water projects

PIERRE – A bill that would allocate $100 million of federal money for water projects in South Dakota has passed the Legislature’s Joint Appropriations Committee. 

In March 2021, Congress passed and the president signed the American Rescue Plan Act, which provided $1.9 trillion in economic relief to address the impacts of the COVID-19 pandemic around the nation. In South Dakota, $600 million of the state’s ARPA funding has already been allocated to support water and wastewater projects.

In a bill hearing Friday at the Capitol, the state Department of Agriculture and Natural Resource and the Bureau of Finance Management spoke against earmarking more ARPA money for water projects. The departments said much of the money allocated last year has not been spent, and inflation could drive the costs of those projects higher. 

“I think it’s premature to do this today,” said Jim Terwilliger, commissioner of the Bureau of Finance and Management. “What do you think is going to happen next year and the year after when these projects come in higher and higher and higher? They’re going to be coming to this committee saying, ‘We’re short, we need more money.’”

The bill’s sponsor, Sen. Helene Duhamel, R-Rapid City, wants to make funding available for water projects including a potential water pipeline from the Missouri River to West River communities. Duhamel called it a “big, transformational” project that “would have an impact for generations.” The pipeline would cost up to an estimated $2 billion and likely take decades to accomplish. 

Duhamel argued the bill is necessary because ARPA funds, which can be spent on a variety of things, must be allocated by the end of 2024 and spent by 2026 – otherwise, the remaining funds return to the federal government. Given the opportunity of ARPA dollars, she said, the project backers could quickly finish a feasibility study and work on easements and other issues. 

A representative of DANR said the bill would create additional work for a department already stretched thin. DANR also noted the funds could still be allocated during next year’s legislative session, when the department will have a better idea of the status of currently funded projects.

Water system managers from around the state also testified in favor of the bill.