Bill would raise local cap on mineral severance tax revenue for Lawrence County; committee defers action

House Appropriations heard testimony on House Bill 1081 on behalf of Representative Mary Fitzgerald of District 31, a bill that would revise how revenue from the precious minerals severance tax is distributed so counties hosting mining operations retain more local revenue.

Supporters told the committee the proposed change would raise the per-county cap on funds retained locally from $1,000,000 to $3,000,000 and clarify that the local retention applies per mining operation rather than to a single operation in a county. “We ask you to allow us to raise the cap, and we can use that interest for good things in each county that will have that cap,” Representative Mary Fitzgerald said in opening testimony.

Proponents described decades‑long local needs in Lawrence County and the city of Lead, citing infrastructure and community services left underfunded after the Homestake mine closed. Randy Deibert (District 31) told the committee the 1989 law and its $1,000,000 cap are outdated and that raising the cap reflects inflation and increased gold prices. Emma Garban, executive director of the Deadwood‑Lead Economic Development Corporation, said the county has relied on state general‑fund requests to pay for infrastructure repairs and that “by making this increase, it'll keep the dollars local and allow us to be able to utilize that where we need it most.”

Officials described how the current statutory structure worked: Lawrence County holds a $1,000,000 principal account whose interest the county uses for projects, and the account is co‑managed with state economic development officials. Several local officials and longtime residents described the inherited water and sewer needs left when the Homestake mine closed, and urged consideration of the bill as a correction for inflation since 1989.

Opponents from the Bureau of Finance and Management warned the committee the bill would reduce general‑fund severance tax revenue by about $2,000,000 in fiscal year 2026 under the bill as drafted and that this is a tight budget year. “We have to make sure that when these types of issues come before the legislature … that we take care of needs at the state level,” Jim Terwilliger of the Bureau said, noting the adopted severance tax estimate for FY2026 and statewide spending pressures.

Committee members questioned timing, whether the cap change would be temporary until the county reached the higher cap, and whether nearby counties would be affected if new operations are developed in Pennington or Custer counties. BFM staff explained that, under the bill's drafting, once a county’s cap increased to $3,000,000 the additional retained dollars would be temporary until the cap balance is reached and then revenues would begin reverting to the state general fund.

After testimony and questions, the committee deferred action on House Bill 1081 to a later date.

Ending: The sponsor and proponents said they are willing to work on phased or incremental approaches and will report back; no vote on the bill was taken at the hearing.