The rejection of Referred Law 14 denies the establishment of a state fund to grant money to large construction projects.
KSFY News spoke with supporters on both sides of Referred Law 14 to get their reaction.
Opponents of the law are celebrating tonight.
They say the law would take millions away from the general fund for education and healthcare
But supporters are disappointed.
They say the law was a benefit to the economic development of the state.
Wind energy, power plants, power lines, along with laboratories and facilities for testing are some of the large scale construction projects which would benefit from the fund.
Supporters and opponents of the law disagree on the economic benefits of a large development fund.
Ben Nesselhuf, chair of the South Dakota Democratic Party said "it means south Dakotans have decided it's more important to invest in our kids and our seniors instead of corporations. I think it's a very good sign that South Dakotans know that the best economic development is to invest in our people.
David Owen, President of the South Dakota Chamber of Commerce, said "even the opponents said they believe in economic development. I don't think we're debating whether we do economic development, we're debating how we best go about that."
"After a period of reflection about what voters are actually saying, we need to sit down with a large group and either go back to refund policy of the past or do something to make sure south Dakota continues to be competitive for the largest investments as we compete with other states so they don't steal our own industries. It was a great debate and a great conversation. We look forward to forming a very workable policy in the future," Owen added.
Nesselhuf says he's not surprised it looks like it won't pass.
While Owen tells me the law was misunderstood.
He says it's possible they didn't get the message of the benefits of the law across to the voters.