My post on the reformulation of the rules for funding the "Building South Dakota" economic development fund brought some instructive commentary from a couple of political figures in the know.
First, Rep. Bernie Hunhoff (D-18/Yankton), a critic of the changed funding formula, notes that the problem is not that economic development is taking away from basic government responsibilities in the budget (and I am pleased to see the House Minority Leader use language that says corporate welfare is not a basic government responsibility). Rep. Hunhoff says the real problem with Senate Bill 158, the funding formula revision, is that it hitches the Building South Dakota Fund to a currently spiking but historically unreliable funding source, our unpredictable reserves. "It's a non-funding source," says Rep. Hunhoff, "so in effect they've unfunded Building South Dakota."
Another political insider notes that Senate Bill 158 removes BSDF from competition with K-12 education, Medicaid, and state employee salaries in the budget process. Instead of taking up oxygen in the general appropriations debates, BSDF waits until the fiscal year is done and takes its share from the remaining reserves. "This was a good deal for K-12, Medicaid, and state employees," says the observer, "because it freed up $15.9 m in ongoing money, which allowed increases of 3.0% rather than 1.6%."
But here's my sticking point: if we have any gravy left on the plate at the end of the fiscal year, should an economic development fund be the only piece of bread that gets to sop that gravy up? Why not maintain the leeway to direct any excess reserves to bonuses for teachers and state employees who may have contributed to those surpluses by keeping expenses down?