This morning I explained how Mike Rounds gave up the competitive advantage South Dakota's EB-5 program when he let Joop Bollen privatize his state job.

Funny thing is, as Sibby discovered last October, Joop Bollen agrees with me completely. Or so he told potential investors when he still worked for the state:

South Dakotaʼs Regional Center is truly a state government run regional center where economic development is the reward and not profit for company which manages the regional center!!

...unlike a privately managed program where the company can call it quits and disappear overnight, I can assure you that the State of South Dakota is here to stay!! [Joop Bollen, open letter to potential EB-5 investors, South Dakota International Business Institute, circa 2004–2009]

Don't take my word for it; listen to Mike's man Joop: South Dakota was better off when it directly managed EB-5 investment.

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I don't think Mike Rounds understands competitive advantage. Check out how he rationalizes the privatization of South Dakota's EB-5 program:

South Dakota officials were closely involved with plans to bring in a private company to help run the state's EB-5 program in 2007, two years before the economic development effort was fully privatized.

...Rounds said he was briefed several times in 2007 on plans to reshape South Dakota's EB-5 program, including that there would be private companies involved. At the time, EB-5, which solicited investments from would-be immigrants, was run by the South Dakota International Business Institute, an arm of the South Dakota Board of Regents but under contracts with the Governor's Office of Economic Development.

"What they could not do at the current level through the Board of Regents office was ... set up a separate program where they could offer these partnerships," Rounds said. "The idea was to look more like a regular regional center (like the ones) that they were competing with" [David Montgomery, "Letter Laid out EB-5 Privatization Plans in 2007," that Sioux Falls paper, 2014.09.16].

Separate program... these partnerships... I feel like I do when I'm in the insurance office and my agent isn't making himself clear. Rounds is talking about the scheme under which his man Joop Bollen formed a private company to aggregate EB-5 dollars into loan pools, collect huge fees from the investors, and keep it all off the state books so that when things went south, interested citizens would have a heck of a hard time following the money trail.

But think about the business model. There are two ways to compete in business: offer something cheaper or offer something different. South Dakota got into EB-5 in 2004 to offer something different: to lure foreign dairy investors with the additional benefit of a green card through the then underused EB-5 program. Three years later, that advantage was fading, as more "regional centers" popped up to offer EB-5 investment opportunities.

To compete for more EB-5 money, the Rounds Administration thus needed to offer a different different or offer cost savings. Mike Rounds could have done both. Imagine this alternative-universe pitch from a governor with real competitive ganas:

Hey, EB-5 investors! Tired of being fleeced by all those private regional centers? Want to deal straight up with a state government that will handle your investment with efficiency, integrity, and rigorous public accountability? Sign up for South Dakota's EB-5 program! We are one of the only state-run EB-5 programs in the country.

Private regional centers will charge you fees of $30,000, $40,000, even $50,000 or more on your $500,000 investment. South Dakota will only charge you $1,500.

Private regional centers just want to recruit more investors to pad their pockets. South Dakota wants to help you come to America and ensure that your money supports viable projects that pay off for everyone.

South Dakota EB-5: We're different! We're better! We're cheaper! We're here to help you. [South Dakota Regional Center, promotional video, alternative universe, 2008]

With a pitch like that, South Dakota could have recruited more EB-5 investors than it knew what to do with.

But our Mike Rounds chose to do the opposite: he thought South Dakota could compete by doing the same privatization and charging the same hefty fees as other regional centers. His plan led to some brief profits for his cronies but ultimately to a huge failed project in Northern Beef Packers and corruption that led to dozens of investors losing their money and Governor Daugaard shelving the program in 2013. So much for competitive advantage.

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David Montgomery gets Republican Senate candidate Mike Rounds to come out from hiding and answer a few questions about Joop Bollen, the man who ran the state's EB-5 visa investment program while Rounds was governor. Predictably, Rounds says he "wasn't informed of the specifics" (Montgomery's words) and "was not aware that [Bollen] was signing items on his own behalf" (Rounds's words).

Rounds is thus claiming that he did not know that state employee Bollen signed a contract with his own newly formed corporation, SDRC Inc., on January 15, 2008, the company to which Rounds's Office of Economic Development granted a lucrative no-bid contract on December 22, 2009.

Montgomery reports that "Bollen didn't disclose his connections to SDRC, and officials last week said they hadn't known at the time." I don't know the full roster of officials who said that last week, but Bollen did disclose his connections to SDRC Inc. when he formed it. Check out the articles of incorporation for SDRC Inc.,* which Bollen signed on January 3, 2008, and filed with the South Dakota Secretary of State on January 10, 2008. Joop Bollen lists himself as registered agent, incorporator, and president. No one else's name appears on the document, most certainly not James Park of the Hanul Law Firm, who signed the January 15, 2008, contract on behalf of SDRC Inc. On April 7, 2009, the Secretary of State received a statement of change naming Park as SDRC Inc. president and registered agent, but on June 1, 2009, the Secretary of State received articles of amendment from Aberdeen attorney Jeffrey T. Sveen naming Bollen again as the only director of the corporation.

The State of South Dakota knew that Joop Bollen was SDRC Inc. It stretches belief to claim that Mike Rounds had no knowledge of his employee's conflict of interest in 2007 when his administration helped request that the USCIS recognize SDRC Inc. as an integral part of South Dakota's EB-5 program, in 2008 when it started, in 2009 when his office rewarded Bollen with a five-year contract, or in 2010 when he wrote a passel of lame-duck grants to Northern Beef Packers, the pet project that Bollen was keeping alive via SDRC Inc.

But if Rounds wants to confess his inability to root out corruption in his own administration for three years, fine. Let him run on that.

*I'd direct you to the Secretary of State's corporate database, but during the past year, Secretary Gant appears to have scrubbed most of the corporate archives, providing only the last year or two of documents for corporations.

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Blog compatriot Ken Santema is running for State Treasurer as a Libertarian. I could in good conscience vote for Santema. He knows his numbers, and his current effort to produce the most reasonable and original conservative reporting in the state indicates he would approach government with honesty and openness.

Alas, his candidacy may be as illegitimate as ballot-ousted Ryan Gaddy. My friend Elisa Sand points out the surprising origin of Santema's Libertarian nomination:

His nomination as a statewide candidate at the Aug. 9 Libertarian Convention came as a surprise — especially given that he was nominated by newly registered Libertarian Annette Bosworth. He was one of two Libertarians nominated. Santema said, when he accepted the nomination, the other nominee stepped down [Elisa Sand, "Political Blogger Runs for State Office," Aberdeen American News, 2014.09.05].

I'll get you, Ken! Don't think that Democratic shotgun will save you!

I'll get you, Ken! That Democratic shotgun won't do you any good!

A former Republican candidate for U.S. Senate nominated Libertarian Santema. I won't declare him guilty by association. But I will declare his nomination a violation of SDLP by-laws. Article 2, Section 1 declares that voting members must have paid their dues and be registered Libertarians. As far as I know, Annette Bosworth-Haber was a registered Republican up to the time of the Libertarian convention. (Her name doesn't even appear in the current voter registration database.) If she, like Ryan Gaddy, changed her registration the day of the convention, she was not legally a Libertarian when she nominated Santema, Santema's nomination is illegitimate, and Santema's name should be stricken from the ballot.

However, Secretary of State Jason Gant has likely already printed the ballots and called UPS to haul those ballots to 64 courthouses in time for early voting to start on Friday.

I wish Santema no ill will. Part of me wishes he could replace Republican State Treasurer Richard Sattgast. But if Santema's nomination was illegitimate, can we responsibly mark his name on our ballots?

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Larry Kurtz gets me reading this Wallet Hub ranking of the fairness of state tax systems. Wallet Hub asked 1,050 Americans to say what percentage (between 0 and 25) of income households in ten income brackets ought to pay in state and local taxes. Americans are progressive taxers: the ideal fair tax rates bubbling up from this survey rise from 2.5% for households making $5,000 a year to 16.36% for households making $2.5 million a year.

Wallet Hub then lined these survey figures up with actual state and local tax burdens calculated by the Institute on Taxation and Economic Policy for each state's five income quintiles. From these calculations, Wallet Hub offers this tax fairness map:

WalletHub

 

Montana comes out with the state and local tax system imposing burdens closest to the ideal rates found in Wallet Hub's survey. South Dakota, ranking 36th nationwide, has the least fair tax system in the region:

State Tax Fairness Rank Rank among Liberals Rank among Conservatives
Montana 1 1 1
Minnesota 7 6 11
North Dakota 15 16 10
Nebraska 23 24 26
Iowa 25 21 27
Wyoming 28 34 22
South Dakota 36 37 31

Wallet Hub breaks respondents by general ideology and finds conservatives and liberals give different ideal tax rates. Conservatives advocate higher tax rates than liberals for the lowest three income categories Wallet hub asked about and lower rates for the upper seven. But conservatives still favor consistently progressive tax rates. Conservatives and liberals rank Montana as the fairest state; conservatives and liberals alike place South Dakota in the bottom half for tax fairness.

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One odd result I noticed in last week's Survey USA poll was the relatively low support for Initiated Measure 18, the minimum-wage increase, among young voters. Statistically minded reader Bill Fleming noted that young voters (the 18–34 set) made up only 16% of Survey USA's 510-voter sample. Poll about 80 voters, and you get a margin of error around 11%, not a bankable result.

Enter the Dakota Poll, which this week releases its second poll of young South Dakota adults' attitudes this year. Dakota Poll had Denver-based RBI Strategies and Research survey 401 South Dakotans aged 18 to 35 between August 20 and 24. Their margin of error is 4.89%, a clearer read of our rising generation's attitudes.

The Dakota Poll didn't ask about the minimum wage in its February poll. They posed that question this time and found results aligning with other poll results: Initiated Measure 18 will pass and pass big:

By a margin of 65% to 21%, young adults support raising the minimum wage in South Dakota from $7.25 to $8.50/hour. Even when asked if they would support a more extreme measure to raise the minimum wage to $10.10/hour, 56% of respondents said that they would support the raise while only 29% said they would oppose it. By a margin of 70% to 17%, young South Dakotans said they favored raising teacher salaries “by at least 20%” [Dakota Poll, press release, 2014.09.15].

The Dakota Poll links this concern about wages with an anxiety identified in both the February and August results:

These results reflect an overwhelming concern among young adults that “jobs, wages and opportunities” are the major reason why they would be forced to leave a state where they would otherwise like to build their lives (Q5-Q6).

...On broad themes of economic development results from the August, 2014 Dakota Poll were consistent with results from February, 2014. Young South Dakotans desire to stay in the state. 33% said that they considered “Family and friends” the primary reason to stay and build their lives in South Dakota. And yet, 54% listed the lack of access to “jobs/wages/opportunities” as the primary reason to leave the state. The next highest reason listed by respondents was “education” at 8% [Dakota Poll, 2014.09.15].

I'm reading the full Dakota Poll results and crosstabs this morning—stay tuned for more analysis on this slice of South Dakota's demographic pie.

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South Dakotans Fighting Animal Cruelty Together has released its "PAWSative" scorecard for the South Dakota Legislature. SD FACT scores legislators on critter-comity based on votes on four bills:

  1. Support for Senate Bill 46, the bill SD FACT championed to make animal cruelty a felony in South Dakota as it is in every other state in the Union.
  2. Support for Senate Bill 75, the ban on pit bull bans.
  3. Opposition to Senate Bill 76, which would have expanded current law to allow people to kill mountain lions when their safety is threatened, not just their lives.
  4. Opposition to House Bill 1068, which would have allowed Rep. Betty Olson to hunt mountain lions across the state with more than one dog.

Seven Senators and twelve Representatives score 100% PAWSative:

  • Sen. Angie Buhl O'Donnell (D-15/Sioux Falls)
  • Sen. R. Blake Curd (R-12/Sioux Falls)
  • Sen. Jean Hunhoff (R-18/Yankton)
  • Sen. Mark Kirkeby (R-35/Rapid City)
  • Sen. Deb Peters (R-9/Hartford)
  • Sen. Deb Soholt (R-14/Sioux Falls)
  • Sen. Alan Solano (R-32/Rapid City)
  • Rep. Dan Dryden (R-34/Rapid City)
  • Rep. Christine Erickson (R-11/Sioux Falls)
  • Rep. Marc Feinstein (D-14/Sioux Falls)
  • Rep. Peggy Gibson (R-22/Huron)
  • Rep. Timothy Johns (R-31/Spearfish)
  • Rep. David Lust (R-34/Rapid City)
  • Rep. Scott Parsley (D-9/Madison)
  • Rep. Dean Schrempp (D-28A/Lantry)
  • Rep. Karen Soli (D-15/Sioux Falls)
  • Rep. Roger Solum (R-5/Watertown)
  • Rep. Kathy Tyler (D-4/Big Stone City)
  • Rep. Susan Wismer (D-1/Britton)

Only two departing Representatives, Republicans Manny Steele (12/Sioux Falls) and Don Kopp (35/Rapid City), are in doghouse with zeroes. Five Senators and twenty Representatives scored just 25%:

  • Sen. Jason Frerichs (D-1/Wilmot)
  • Sen. Tom Jones (D-17/Viborg)
  • Sen. Al Novstrup (R-3/Aberdeen)
  • Sen. Larry Rhoden (R-29/Union Center)
  • Sen. Mike Vehle (R-20/Mitchell)
  • Rep. David Anderson (R-16/Hudson)
  • Rep. Jim Bolin (R-16/Canton)
  • Rep. Gary Cammack (R-29/Union Center)
  • Rep. Scott Craig (R-33/Rapid City)
  • Rep. Brian Gosch (R/32-Rapid City)
  • Rep. Brock Greenfield (R-2/Clark)
  • Rep. Jenna Haggar (R-10/Sioux Falls)
  • Rep. Steve Hickey (R-9/Sioux Falls)
  • Rep. Kris Langer (R-25/Dell Rapids)
  • Rep. Isaac Latterell (R-6/Tea)
  • Rep. Elizabeth May (R-27/Kyle)
  • Rep. Scott Munsterman (R-7/Brookings)
  • Rep. Stace Nelson (R-19/Fulton)
  • Rep. Betty Olson (R-28B/Prairie City)
  • Rep. Herman Otten (R-6/Tea)
  • Rep. Lee Qualm (R-21/Platte)
  • Rep. Nancy Rasmussen (R-17/Hurley)
  • Rep. Lance Russell (R-30/Hot Springs)
  • Rep. Jim Stalzer (R-11/Sioux Falls)
  • Rep. Dick Werner (R-22/Huron)

There's certainly more Democratic flavor in the higher rankings and more arch-conservative flavor down low. But Senate Minority Leader Frerichs is among the low scorers. Among the top dogs, we have House Majority Leader Lust and other prominent Republicans.

I mention this partisan mix because Republican squawkers, Big Ag, and some of the press have misportrayed SD FACT as "out-of-state greenies" working for the vilified HSUS. But SD FACT's legislative agenda apparently is not so foreign or radical that it can't find support from South Dakotans of both parties in Pierre.

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Hey, Republicans! When we ask you questions about Mike Rounds's use of the EB-5 visa investment program for economic development, stop shouting It's a federal program!!! Even Bob Mercer isn't buying that dodge:

Rounds and Weiland have run TV ads lately on the EB-5 matter. Neither of their ads is totally accurate. Rounds’ ad is the bigger dodge. EB-5 was indeed his program. His Cabinet pursued expansions of it hard from the federal agency that oversees it. His Cabinet secretary Richard Benda signed the contract in 2009 privatizing EB-5 administration, with state government to receiving percentages of the fees paid by foreign investors to the private company run by Joop Bollen of Aberdeen [Bob Mercer, "Some Democratic Backlash over Column about Pressler," Pure Pierre Politics, 2014.09.15].

Michael Larson says "EB-5 Is Mike Rounds." Maybe that's a stretch, too: technically, EB-5 is every President since George H. W. Bush, Congress, hundreds of Regional Center operators and hordes of lawyers and finaglers who make bank selling green cards to immigrants who think wealth means never having to wait in line with regular folks. But as Mercer says, in South Dakota, EB-5 is Mike Rounds's program.

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