While Department of Government Efficiency cuts are causing confusion for some, South Dakota Gov. Larry Rhoden said he’s seen open communication from the federal government.
Still others are worried about the impact of cuts in South Dakota.
South Dakota has low state taxes, and a large chunk of the funding in the state’s budget comes from federal dollars and federal matches. Some of the state’s financial experts fear DOGE cuts could spell bad news for future budgets.
So far, South Dakota has seen federal jobs cut and real estate leases terminated — though some cuts were later halted in the courts. The state’s largest economic sector, the ag industry, has also experienced grant freezes.
Democrat Rep. Erick Muckey is on the committee that sets South Dakota’s budget. He said though the future is still uncertain for federal spending cuts, he urges South Dakotans to have caution.
“It’s going to be really dependent on how decisions come down in the next few months. If we see potential cuts, specifically for Medicaid especially, that’s going to put a massive strain on our budget that we’re not prepared for right now," Muckey said. "And, frankly, I’m concerned. I think our outlook federally is coming to roost in South Dakota. I simply hope next session that there aren’t mass-scale cuts to our budget, knowing that South Dakota’s budget is very dependent on those funds."
Muckey said about 43% of the state’s budget is federally funded.
However, some Republicans aren’t as worried, seeing the cuts as necessary and a way to limit the federal bureaucracy.
Gov. Larry Rhoden has spoken in support of President Donald Trump and his efforts to reduce government. He said in terms of DOGE cuts in South Dakota, the federal government has been open and honest with him.
“I was in DC a couple of weeks ago and we met with a number of cabinet secretaries and directors and undersecretaries. And, it was kind of like somebody turned a light on and opened a window. The line of communication we had available to us and the meetings we had direct conversations was just extremely encouraging," Rhoden said. "I came home with literally every cabinet secretary that I talked to or undersecretary, I came home with their personal cell phone numbers. In fact, I’ve already used several of them from time to time, to contact them about things that are going on."
Federal cuts paired with tariffs on Canada, Mexico and China — some of South Dakota’s strongest trade partners — have many wondering the impact on the state’s economic health.
Rhoden said the impact tariffs will have on the ag sector is “high on his radar.”
