The Building South Dakota Fund, the new economic development fund created in closed negotiations and a rush of last-minute Legislative action, had safeguards to ensure that, in tight budget times, education, health care, and pay for state workers would take priority over economic development handouts.

Last week, the Governor got that changed. Governor Dennis Daugaard asked for and got Senate Bill 158, which strikes from SDCL 1-16G-47, the statute enacting the Building South Dakota Fund, this key restriction:

Notwithstanding the provisions of this section, no deposit or transfer to the building South Dakota fund may be made by the commissioner of the Bureau of Finance and Management if the projected ongoing revenues adopted by the Legislature for the prospective fiscal year are insufficient to accommodate:

  1. The statutory increases for state aid to K-12 general education, special education, and the technical institutes;
  2. Projected Title XIX and the Title XXI spending adjusted for increased provider payments, increased utilization, or enrollment growth, and as affected by any reduction in the Federal medical assistance percentage; and
  3. The state employee salary policy increase, commensurate with the K-12 inflationary increase, in addition to funds necessary to meet actuarially projected increases in health insurance costs [excerpt from SDCL 1-16G-47, enacted 2013; clause to be stricken effective July 1, 2014].

That restriction was important to passing the bill last year. House Minority Leader Bernie Hunhoff, who was instrumental in levering the BSDF into something some Democrats (though not all!) could tolerate, disagrees with decoupling BSDF from behind the Ed/Med/Worker car of the budget train:

“Well last year we passed Building South Dakota. It was a good bipartisan effort to expand economic development, recognizing that education is critical, that affordable housing is really a big part of it and that we need more grassroots economic development. And now, just a year later, we’re stripping out or defunding a lot of those really good parts of it by a really complicated mechanism that’ll allow the administration to play budget games. They’re leaving it intact, but they’re just leaving lots of opportunities to spend down reserves,” Hunhoff says [Cassie Bartlett, "Changes to Building South Dakota's Funding Raise Concerns," SDPB Radio, 2014.03.13].

Senate Bill 158 further bolsters the over-prioritization of economic development in South Dakota government. Even if we can't fulfill our obligations to our children, the sick and injured, and the folks who work for the state, Senate Bill 158 ensures that the Governor will still have plenty of money to hand out to well-to-do corporations.