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Deadwood seeks larger share of gaming proceeds; committee defers bill amid fiscal concerns
Summary
House Bill 1159 would alter the distribution of gaming revenues so the city of Deadwood receives 70% of the post‑cap balance instead of 10%, shifting a larger share to the city and reducing the state general fund share. Committee deferred action after testimony from Deadwood officials and the Bureau of Finance and Management.
The House Appropriations Committee heard testimony on House Bill 1159, a sponsor‑backed proposal to change how net municipal gaming proceeds tied to Deadwood are distributed so the city receives a larger share of the balance after mandated allocations.
Representative Scott Odenbach of Spearfish, joined by local officials and economic development advocates, said Deadwood is a statewide tourism engine that requires ongoing investment in infrastructure and historic preservation. Kevin Kukenbecker, Deadwood planning and historic preservation officer, walked the committee through the existing distribution formula and said that a 1995 cap — a fixed $6.8 million municipal floor — has not kept pace with 30 years of growth and inflation. “Deadwood is built on cut and fills. Retaining walls are stacked up and needing repair,” Kukenbecker said, arguing that a larger municipal share is an investment in tourism that benefits the state.
Under current law the 8% gaming tax and device fees are distributed through a multi‑step formula: a portion goes to the state tourism fund, the Gaming Commission and administrative costs, then a capped municipal floor goes to Deadwood (roughly $6.8 million in recent years); the remaining balance is currently split 70% to the state general fund, 10% to other municipalities in Lawrence County, 10% to school districts in Lawrence County and 10% to Deadwood. HB 1159 would swap that final distribution so Deadwood would receive 70% of the remaining balance and the state general fund 10%.
Proponents said the change would allow Deadwood to maintain and repair critical infrastructure and to continue funding preservation projects that draw tourists statewide. Deadwood and nearby Lead officials emphasized the economic linkage across the Black Hills and noted that Deadwood-generated tourism supports statewide agencies and programs. “Let's help the golden goose of South Dakota lay just a few more eggs,” Representative Odenbach said.
The Bureau of Finance and Management opposed the bill, saying the proposed change would reduce ongoing state general‑fund revenues (staff estimated roughly $1.8 million in FY2024 figures) and cautioning that the general fund supports K‑12 education, Medicaid and other statewide services. BFM also noted Deadwood’s sales and use and gross receipts taxes have risen substantially in recent years and that the city already receives substantial municipal revenue from tourism.
Committee members discussed phased approaches and whether any change would unduly harm the general fund. Proponents said they would consider phased implementation. The committee deferred action to a later date and asked sponsors to continue discussions with BFM and affected agencies.
