MITCHELL, SD (Mitchell Now) — South Dakota Gov. Larry Rhoden has proposed a lean $7.44 billion budget for fiscal year 2027 that would keep state aid flat for K-12 education, Medicaid providers and state employee pay as lawmakers head into the 2026 legislative session.

The proposal includes no across-the-board pay raises for state employees and no increase in per-student state aid for public schools, according to coverage by SDPB and South Dakota News Watch.

Rhoden cited limited “headroom” in state revenues, with South Dakota continuing to rely heavily on sales tax collections. Lawmakers can change the governor’s recommendations during the session, which begins Jan. 13 in Pierre.

Budget decisions could also intersect with ongoing property tax relief debates, which typically require finding replacement dollars for local school funding.