Legislative leaders from both parties plan to meet this week to talk about ways to attract businesses to South Dakota.
That's because a plan to use a portion of the contractor's excise tax was rejected in November.
South Dakota has been ranked one of the top states in the country to run a business and lawmakers in Pierre want to keep it that way.
"What if we don't do something? How are we going to compete with these other states? Right now, we're at a disadvantage. So for us to maintain our number one rankings, we're going to have to come up with a solution," Senate Majority Leader Russell Olson (R) of Wentworth said.
One reason South Dakota may be at a disadvantage is because of the contractor's excise tax, which taxes the construction costs of a building project.
"Some businesses do see it as a deterrent. For large scale development cost, you have the up-front costs and the contractor's excise tax is an up-front cost," Senate Tax Committee Chairman Ryan Maher (R) of Isabel said.
South Dakota had a plan that would have taken a portion of the contractor's excise tax and put it in a separate fund to use for business incentives. But Democrats took out petitions to put it on the ballot, saying it took money away from other state programs and in November, voters rejected the incentive plan.
South Dakota Governor Dennis Daugaard is now calling on lawmakers to find another way to bring companies here.
South Dakota is one of the few states with a contractor's excise tax and while some businesses may see it as a deterrent, lawmakers say it's a big part of state revenue and the state can't afford to just get rid of the tax.
The tax is the third largest revenue source for the state bringing in more than $80 million this year.
"There's a lot of people out there who don't like it, but the flip side is we have to have it because it is part of our crucial budgeting process. It is a substantial form of revenue for the state," Maher said.
Legislative leaders from both sides of the aisle are now ready to put down their differences and brainstorm new ideas.
"We're going to take our name badges off and we're just going to sit around the table and talk about it as South Dakotans, not as Republicans, not as Democrats, and just say we need to come up with something. Let's all work together towards getting this problem solved," Olson said.
Because state legislators don't want South Dakota to lose out on any business.