The House State Affairs Committee meets tomorrow morning to consider House Bill 1161, an apparently bipartisan measure to provide economic development grants. Prime sponsor and House majority whip Rep. Scott Munsterman (R-7/Brookings) is joined at the top of the bill by House minority leader Rep. Bernie Hunhoff (D-18/Yankton), House majority leader Rep. David Lust (R-34/Rapid City), Senate president pro-tem Sen. Corey Brown (R-23/Gettysburg), Senate minority leader Sen. Jason Frerichs (D-1/Wilmot), and Senate majority leader Sen. Russell Olson (R-8/Wentworth). I assume with the leadership of both parties sponsoring this bill, it will fly through House and Senate to the Governor's desk.
As I'm sure Mr. Sibson will say in some form below, bipartisanship doesn't make crony capitalism right. Is House Bill 1161 any better than Governor Daugaard's ill-fated corporate welfare plan, the Large Project Development Fund that passed the Legislature in 2011 but died at the hands of us voters in 2012?
Let's consider some arguable improvements offered by HB 1161:
- HB 1161 offers economic development grants for the construction of expansion of commercial facilities. There is no minimum size; Governor Daugaard's rejected proposal only offered grants to projects costing more than $5 million. HB 1161 still offers grants to the big corporations who don't need our help, but it offers the same assistance to smaller entrepreneurs.
- HB 1161 spells out the criteria for handing out these economic development grants. The Governor's old plan left writing criteria up to his cronies on the Board of Economic Development.
- HB 1161 caps the grants at a 50% refund of the sales and use tax due on the project. Additionally, if the project happens within a municipality's jurisdiction, the state conditions its grant on the willingness of that municipality to refund some or all of its municipal tax to the project developer. The good-old-boy network still rules in Pierre and most city halls, but at least this bill creates two levels of review, local and state, giving different good old boys a chance to wrestle and maybe check some unwise favoritism.
Free-market fundamentalists should still reject House Bill 1161 as an unwarranted intrusion of government in the marketplace. Existing local businesses may still complain that their new competitors are getting a boost from local and state government that the existing businesses did not get. But HB 1161 appears to be a product of bipartisan cooperation in Pierre. Will that cooperation and the resulting changes to the proposal for economic development grants prevent a voter revolt against corporate welfare? We'll get our first signs tomorrow at House State Affairs.