Lawmakers hear case to raise Lawrence County cap on mineral severance tax; committee defers action

Representative Mary Fitzgerald, sponsor of House Bill 10 81, asked the House Committee on Appropriations to raise the statutory cap on the portion of the precious‑metals severance tax retained by Lawrence County from $1,000,000 to $3,000,000.

The bill would leave 80% of that severance tax to the state general fund and allow the county where the mine is located to retain the remaining 20% each year until the local cap is reached. "Following a law change in 1989, Lawrence County began receiving mineral severance tax at a rate of 20% with a cap of $1,000,000," Fitzgerald said, and that cap has not been reached since 1994. She said the county has paid over $100 million into the state general fund since that time and asked the committee to "allow us to raise the cap, and we can use that interest for good things in each county that will have that cap."

Proponents, including county officials and economic development representatives from Lead and Deadwood, said the existing cap has not kept pace with inflation and increased mineral revenues. Randy Divert of District 31 said the $1,000,000 principal is co‑managed with the governor's economic development office and county commissioners and is subject to strict "guardrails" on use. Emma Garban, executive director of Deadwood Lead Economic Development Corporation, said the severance dollars were originally intended to support infrastructure and community services in mining communities and that keeping more dollars local would reduce repeated state requests for aid. City staff and long‑time residents described aging water and sewer systems and other infrastructure needs in Lead.

Jim Terwilliger from the Bureau of Finance and Management testified in opposition, saying the bill would reduce state general fund revenue by about $2,000,000 in fiscal year 2026 based on the committee's adopted severance tax estimate. "In a year like this when we're only looking at dollars 30 to 40 million of new ongoing money in 2026," Terwilliger said, the loss would be meaningful to programs funded by the general fund, including K‑12 education and Medicaid. Committee members asked whether the change would be temporary until the higher cap was filled; Terwilliger and proponents agreed that once the proposed $3,000,000 cap was reached, funds would revert to the state as before.

Representative Fitzgerald offered rebuttal, repeating her point that Lawrence County has paid substantial severance revenues to the state for decades and that the county needs updated support for infrastructure. Committee discussion included questions about whether the proposal would apply to mines in neighboring counties and whether a phased approach would be possible. Sponsors said they were open to working with the committee on timing or incremental changes.

The committee deferred action on House Bill 10 81 to a later date.

Ending: The committee said it would consider amendments and follow up; no final vote occurred on the bill during the hearing.