Flood repairs push South Dakota townships to financial brink

Repairing the 2019 flood damage will cost Turner Township five times more than its annual $70,000 budget. 

The flooded Vermillion River wiped out three miles of roadway in the township in the spring of 2019, causing an estimated $250,0000 in damage. Facing a wait to receive money from the Federal Emergency Management Agency, the township took out a $200,000 bank loan to pay for the repairs, said township Supervisor Michael Stevens.

The repaired roads were reopened for about 10 days when flooding hit the township again in the fall, destroying most of the repairs. The total estimate for the township's 2019 flood damage is $350,000. But now the township can't borrow any more money from the bank and there isn't any money yet from FEMA. And the township is anticipating more flooding this coming spring that could further damage the roads.

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"So we closed the roads. They're just going to be closed until we get some money. There just ain't any more that a person can do," Stevens said.

Turner Township isn't alone in its financial woes. Unlike counties and states that can access state and federal programs to fund repairs to major roadways, townships are left to largely rely on their taxpayers to pay for repairs on more than 31,000 miles of roads in South Dakota. The massive nature of last year's disasters has put townships in the position of paying for repairs that far exceed their budgets and taxing capacity while they wait for FEMA reimbursements.

South Dakota townships have received $544,000 from FEMA as of December for disasters that caused about $31.6 million in damages in the townships, according to Dustin Leiseth, president of the South Dakota Towns and Townships Association.

The flood damage is causing more than monetary problems. Terry Sletten, the association's executive director, said townships often don't have paid employees, which puts pressure on township supervisors because they're the only go-to person for upset residents. Supervisors decide to close roads and then have to send cease letters to producers who are further damaging closed roads by driving on them to harvest or feed their cattle. It takes an emotional toll on supervisors, she said.

"It's another complicated challenge that supervisors in rural America find themselves in," she said.

Turning to legislators for help

While taxing their residents is the only way out of the situation, township levies have been frozen since 1996, Leiseth said.

There are more than 900 townships in South Dakota, which borrowed $2.4 million and had $65 million cash on hand in 2018, according to the Legislator Auditor. Leiseth pointed out that cash reserves vary greatly depending on whether the township is more rural or more populated and within close proximity of South Dakota's largest cities.

The 2019 township audit won't be ready for another six months and Leiseth said they already know the cash on hand will decrease and the amount borrowed will increase.

"We have townships that are borrowing hundreds of thousands," he said. 

Leiseth and Sletten made their case to legislators on the Joint Appropriations Committee, which oversees the state budget, in December and Leiseth hopes township residents come together during the upcoming session to support legislative changes that could lessen the financial problems. The association is specifically requesting a bill to reallocate the cost of culvert and small structure repair from the townships and counties to the state.

"This doesn't completely address the disaster issues out in the state and the lack of funds that are out there in the townships now and the amount of borrowing that's gone on," Leiseth told the Argus Leader.

The problems faced by townships, according to Sletten and Leiseth, include:

• Brantford Township had an account balance of $0 in December because of the costs associated with damage repair and the tax revenue it has received since then isn't enough to pay for snow removal;
• Eden Township spent its entire $28,000 budget and borrowed $35,000 from the bank to pay for repairs, which it's now concerned it can't pay back;
• Valley Township has depleted all of its snow removal and graveling funds on flood repairs and is going into winter with no money to pay for snow removal;
• Bryant Township doesn't have any money to raise the roads above the flood stage, and fears any additional flooding in spring will leave several families living on an island and make emergency vehicle travel impossible.

Funding advances

In her budget address in December, Gov. Kristi Noem proposed a new state loan program for cities, counties, townships and tribes to help cover the costs associated with repairing infrastructure damaged during the 2019 natural disasters while the entities wait to receive the money from FEMA.

The state and communities have "suffered greatly" due to the severe weather last year, she said.

"We've experienced the largest natural disaster our state has ever seen, and public infrastructure was among the hardest hit," she said.

Noem's Infrastructure Disaster Recovery Program is being quickly implemented and the South Dakota Office of Emergency Management has begun accepting applications for the loans. 

FEMA reimburses townships for 75 percent of public infrastructure repairs, while the state pays for 10 percent and the township covers the remaining 15 percent of the costs. The new loan program will advance townships money to cover 90 percent of the costs and the state retains 75 percent of the FEMA reimbursement as payment on the loan. The township has seven years to pay back its 15 percent portion at a 2 percent interest rate.

Waiting for FEMA money

Turner Township quickly received funding from FEMA when flooding occurred a few years ago and Stevens thought it would happen that quickly again. At this point, the township isn't close to receiving FEMA funding, he said.

"It's not just our flooding. It's fires and hurricanes. There's flooding from here to Louisiana. They're spread thin," he said.

The township has enough money to pay for snow removal on its roads this winter. If there isn't a lot of flooding in the spring and they receive some FEMA funds, they'll consider repairing the roads in the summer. Township leaders have talked about opting out to raise more tax revenue for either repairs or paying back the bank loan, but they won't see the money until 2021 and it adds an additional tax burden on residents, he said.

Residents have been understanding about the challenges and the closed roads aren't causing any major inconveniences, he said.

"Most everybody we got grew up here. They know things like this happen, and they got to be patient and wait. When we get the opportunity, we'll do the best we can," he said.