Legislative Update with Kenley

​Policy updates impacting Dakota credit unions and a preview of South Dakota Credit Union Legislative Day.

By Kenley Lamberty, DakCU Director of Political Strategy and Engagement

Governor Rhoden Unveils $7.44 Billion Budget, Warns of Flat Revenues and Rising Medicaid Costs
Governor Larry Rhoden recently proposed a $7.44 billion budget for FY2027, citing flat revenue growth and economic volatility tied to agriculture and trade. Medicaid spending will surpass K-12 education for the first time, signaling rising healthcare costs that could strain household budgets and affect lending trends. Sales and use tax collections a major revenue source dipped in FY2025 but are rebounding, with modest growth projected. Rhoden plans to increase state reserves to 12.5%, leaving $14 million for lawmakers to allocate. No state employee raises are budgeted, though health plan adjustments are expected. For credit unions, slower economic growth, farm sector uncertainty, and higher healthcare costs could influence member financial stability, loan demand, and savings behavior.

Trump Accounts
The Treasury Department’s new Trump Accounts program, set to launch in 2026, will allow parents to open tax-advantaged savings accounts for children born between 2025 and 2028. Each account starts with a $1,000 federal deposit and permits annual contributions up to $5,000, with funds invested in low-cost U.S. equity index funds until age 18. The Dakota Credit Union Association (DakCU) is monitoring the program and evaluating support to ensure Dakota credit unions can offer these accounts.

Treasury Halts Penny Production, Citing Rising Costs; Coins Remain Legal Tender
The U.S. Treasury stopped minting pennies on November 12, saying the one-cent coin now costs nearly four times its face value to produce. Officials estimate the move will save $56 million annually, though billions of pennies remain in circulation and will continue to be accepted for purchases and deposits.

Congress is weighing the Common Cents Act to standardize rounding cash transactions to the nearest nickel, but no federal mandate has been issued. Financial institutions are adjusting as the Federal Reserve ends penny orders and some locations stop accepting deposits, prompting credit unions to update cash-handling procedures and prepare for increased nickel demand.

DakCU and America’s Credit Unions are looking over the legislation as well and seeing what the best solution for our Dakota credit unions is.
 
Event Reminder: South Dakota Credit Union Legislative Day – February 11
Join us in Pierre on February 11 for South Dakota Credit Union Legislative Day! We’ll start the morning at the Capitol with coffee and donuts for legislators, followed by the SD GAC annual meeting, a group photo in the Rotunda, and formal introductions on the House and Senate floors. Later in the day, we’ll host a Legislative Leadership Panel and wrap up with a networking social to strengthen relationships with lawmakers and fellow credit union advocates. This is a free event for DakCU members, but we do ask you to kindly register in advance so we can plan accordingly. Rooms are available at the ClubHouse Hotel and Suites under the DakCU block—call to reserve 1-833-372-9713.

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For more information or to share your perspectives, feel free to contact me.