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“Building South Dakota” Breakdown: Reading the First Public Draft

Last updated on 2014.02.26

Ask and ye shall receive... sometimes! I gripe and moan about not getting to see the highly-touted "Building South Dakota" economic development plan before the Legislature's Republican and Democratic leaders spring it on us in committee Monday, and within a couple hours, Bob Mercer gets the goods for us. Agreeing that shaping important public policy largely out of public view isn't the greatest idea, Mercer posts a draft of the proposed hoghouse amendment to SB 235 for all to read.

Warning: there is no guarantee that this text is the exact text that Rep. Cronin will lay on the desk of House State Affairs on Monday morning. Senator Corey Brown assures David Montgomery that the legislators won't change it much, but we may spend our weekend dissecting and debating these 40 sections and 6000 words, only to find someone from the second floor of the Capitol marches over to strike and insert and blow up the deal (but Dennis wouldn't do that, would he?).

But because we enjoy this kind of thing, here's my summary of what this new economic development plan may look like:

  1. "Building South Dakota" gets all contractors excise tax from new projects receiving tax refunds under this plan, plus half of the unclaimed property deposited into the general fund.
  2. 25% of the BSD money goes to a new local infrastructure improvement fund, which gives money to local governments to build roads, bridges, etc. for "economic development projects." That's broader and fairer than the Big Ag road subsidy proposed in SB 155 and suggests SB 155 may no longer be necessary.
  3. 15% goes to matching funds for local economic development staff, equipment, and projects.
  4. 30% goes to "workforce education," which includes secondary and post-secondary career and technical education.
  5. The workforce education provision funds a new limited English proficiency (LEP) adjustment to the formula for state aid to education. This provision does the work of Senate Bill 159 and then some: where SB 159 would add 1% to the state money schools receive for each LEP student, this amendment 25% more per LEP student. Multiply 4,768 LEP students statewide by 25% of the current per student allocation, and that's $5.2 million for more for education.
  6. By current LEP student counts, 70% of that LEP money would go to four districts: Sioux Falls, Todd County, Huron, and Shannon County.
  7. 25% goes to a new housing fund targeting low-income folks—i.e., anyone making 80% or less of the median income in their area. (Better get someone from Habitat on that board!)
  8. Sioux Falls and Rapid City get 30% of the housing money; the rest of South Dakota gets 70%.
  9. 5% goes to the REDI fund for grants and loans for small projects—i.e., under $20 million).
  10. Check #1 on gubernatorial authority: The Senate gets to confirm the Governor's appointees to the Board of Economic Development.
  11. Check #2: The Legislative leadership gets to appoint four more members to the Board of Economic Development. (I like checks! So should you!)
  12. The Large Project Development Fund we voters killed last year in Referred Law 14 comes back, but "large" now means new construction worth more than $20 million or equipment replacement worth more than $2 million.
  13. Instead of grants from the Governor's slush fund, large projects get "reinvestment payments"—i.e., refunds of sales and use tax paid on construction.
  14. Applicants for reinvestment payments must meet specific criteria laid out by this bill and by the Board of Economic Development.
  15. Pipelines don't get tax refunds!
  16. We publish the names of anyone receiving these refunds, along with a list of all other state and local economic development help their project receives; the jobs, wages, and property taxes they're supposed to generate; and "a statement of why the project would not have occurred in South Dakota without the reinvestment payment" (I really like that!).

I'm looking at that draft and seeing good things. We get more money for clear educational needs. We still have corporate welfare, but we get more accountability for said welfare. We block Keystone XL from taking a bigger slurp of our tax dollars and focus a little more on smaller business and local needs.

If no one monkeys with that bill much before Monday, and unless I hear some reasonable arguments to the contrary, I could support this draft bill.

But we need to see the real text on Monday.

8 Comments

  1. joelie hicks 2013.03.02

    You may like it and they may pass it. But the people of SD will not forget their reps just did everything they could to take something that was voted down soundly and force it on the state.

  2. caheidelberger 2013.03.02

    Mr. Montgomery notes that the 1% figure in SB159 is a placeholder figure; this plan's 25% better reflects SB159's intent.

    Joelie, I'm open to that debate. Is the above plan too much like Referred Law 14 to pass muster with voters? Is it still too much corporate welfare and government interference in the marketplace?

  3. Roger Elgersma 2013.03.02

    Amazing that something good could come out of Pierre. The parts I like best is that it seems balanced in that it makes a difference on a wide variety of situations. Not every town or county has the same business opportunities and therefore this will help many in a balanced way rather than just a few rich guys. If you do not want government involved in business at all then you would not like it. But I do believe that government can make a good difference. The proof that it actually did make a difference twards the end is good.

  4. Roger Elgersma 2013.03.02

    Oh, and it took a bipartisan group to do something this good.

  5. grudznick 2013.03.03

    No money for Habitat Humanity or English Language as A Second Language Learners!

  6. caheidelberger Post author | 2013.03.03

    Roger, the bipartisan nature of this bill is really important to keep in mind.

    Grudz, I know you're probably just being a contrarian... but do you really think you can make a rational case for not teaching kids English?

  7. Linda McIntyre 2013.03.03

    The extra ESL money in SB 159 would only go to those who "scored below level four on the state-administered language proficiency assessment as required in the state's consolidated state application..." Just what is level four, and how many of the ESL students would this apply to?

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