The South Dakota Legislature's Government Operations and Audit Committee is evidently so distracted by the GOP primary circus (or perhaps so beholden its frontrunner?) that it forgot that it was supposed to be reviewing the Governor's Office of Economic Development and the EB-5 visa investment program. Here's a draft agenda of GOAC's next interim meeting, May 7, 2014:

Government Operations and Audit Committee draft agenda, received 2014.04.16 (click to enlarge)

Government Operations and Audit Committee draft agenda, received 2014.04.16 (click to enlarge)

Corrections, Governor's office (maybe?), Department of Agriculture... hmm... no explicit mention of EB-5 and Northern Beef Packers. No subpoenaed testimony from Joop Bollen or Jeff Sveen. No apparent fuflillment of House Concurrent Resolution 1010, which the Legislative leadership used to defuse pressure for immediate legislative action on improprieties in the Governor's Office of Economic Development by promising that GOAC would "conduct hearings" (plural!) "on issues related to the Governor's Office of Economic Development, beginning this 89th Legislative Session upon receipt of three independent audits." HCR 1010 authorized GOAC's GOED hearings to "include a review of all available audits and other information, ordering of additional audits, questioning of persons involved in related economic development projects, and opportunities for public testimony."

GOAC held one hearing on GOED on March 7. The May 7 hearing appears not to advance the stated goals of HCR 1010. GOAC currently has no other meeting scheduled before the primary. And if EB-5 promoter Mike Rounds wins the primary, we may not hear another peep from GOAC on the topic.


Today is the deadline for Democratic and Republican candidates to submit their nominating petitions to run for Legislature and other offices. With seven hours to go until the 5 p.m. CDT deadline to hand petitions to Secretary of State Jason Gant, here's the scorecard for the parties on filling Legislative slots, boiled down from the official SOS candidates list:

Senate House
Dem candidates 13 29
Dem primaries 0 2
Dem empty slots 22 43
GOP candidates 32 61
GOP primaries 4 6
GOP empty slots 8 19

So far Republicans have fielded 2.2 times as many candidates as Democrats. They also so far have 5 times more fun—i.e., primaries—than we Dems. Only two races have more Dems than seats:

  • House District 1, with newcomers Dustina Gill and Steven McCleery challenging incumbent Dennis Feickert;
  • House District 26A, one of our two single-seaters, with Joshua Wilson and Shawn Bordeaux, both of Mission, on the ballot.

Democrats have 62% of Legislative slots to fill; Republicans just 26%. Let's see more petitions!

And remember, even if you can't deliver those petitions to Secretary Gant in person today, you can mail them, but they have to be sent registered mail by 5 p.m. today!

Watch Secretary Gant's Twitter feed for down-to-the-wire updates today, as well as the official candidates list, which Sec. Gant updates daily and which should be finalized, barring challenges by the end of the week.

Update 11:47 CDT: Holy balls of liberalism! In the last half hour, Secretary Gant has tweeted the certification of petitions for eight Democratic candidates for Legislature and two Republicans. The Dems include Augustana economics professor Reynold Nesiba for District 13 Senate and Rochelle Hagel, sister of District 9 Rep. Paula Hawks, for District 33 House.

Update 21:40 CDT: Here's the above chart updated with Secretary Gant's approved candidate list as of end of business today:

Senate House Total
D-cand 22 43 65
D-primary 1 2 3
D-empty 14 29 51
R-cand 35 72 107
R-primary 4 8 12
R-empty 5 9 14

Bob Mercer defines watchdog journalism this morning by barking at a vo-tech fee increase the state Board of Education is discussing right now in Sioux Falls. Evidently, after winning a funding increase from the Legislature on the promise that they wouldn't increase tuition this year, the vo-techs want to increase the fees students pay per credit hour by 3%. Under the proposal, the FY2015 total tuition and fees would be 26% higher than they were in FY 2011.

Mr. Mercer seems displeased:

This will be done without any public notice, other than reading the meeting documents, and without an advertised public hearing. Let’s hope the Legislature is paying attention. Last time I checked, the lawmakers return to the Capitol on March 31 for the final day of the 2014 regular session. Maybe it’s time to require public hearings for all fee increases by state boards and commissions [Bob Mercer, "State Board Might Raise Student Fees (in Year of No Tuition Increase…)," Pure Pierre Politics, 2014.03.24].

If I'm reading correctly, House Bill 1142 is the vo-tech funding increase the Legislature approved. It still awaits Governor Dennis Daugaard's signature.


Balanced budget? What balanced budget? asks Rep. Stace Nelson (R-19/Fulton):

The general appropriations bill SB 187 for this year increased spending from last session’s HB 1185 general appropriations bill by about $169 million and 124 new full time state employees.

...It exceeds the amount of money the governor’s office projects will be available by more than $7 million. This means the budget, as passed, returns to the deficit-spending ways that occurred during the Rounds administration, which created the accumulation of the $127 million deficit that forced the Legislature to make cuts that so adversely affected education in South Dakota. I believe the passage of SB 187 violates Article 12, Section 7, which prohibits spending more money than what is anticipated in revenue, by the Legislature and governor [links added; Rep. Stace Nelson, "Legislature, Gov Increased Spending, Size of SD's Government," Mitchell Daily Republic, 2014.03.21].

U.S. Senate candidate Nelson is giving fodder to challengers of both Mike Rounds and Dennis Daugaard. He also reminds us that South Dakota's balanced-budget ballyhoo is easily turned into a bluff. Review that constitutional amendment that we passed in 2012: "Appropriations by the Legislature may not exceed anticipated revenue"—anticipated by whom? On what basis? And if the Legislature wants to look past the Bureau of Finance and Management's projections and roll the dice on more revenues, who's to stop them? Who brings the lawsuit to put a stop to such deficit spending? Or do we wait until the state coffers run dry, and then... what, arrest the Speaker of the House and the Governor?

We won't arrest Nelson: he voted against the budget, as did just nine other members of the Legislature. Now we'll see if he can make that vote gain traction with the fiscal conservative voters the Republican party expects to show up at its Senate primary in June.


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?

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Last week, Democrats had 12 candidates filed for seats in the South Dakota Legislature. This week, with just six days left until the March 25 deadline, we have sixteen. Eight in the Senate, eight in the House—89 slots left to fill. Nervous yet?

Since last week, the Dems have added one Senate candidate, Aberdeen city councilman Mark Remily challenging GOP chamber-crosser David Novstrup in District 3. Remily made news last summer offering a hard, honest critique of Aberdeen policeman and Rep. Dan Kaiser's effort to exclude same-sex couples from domestic violence protections. (Rep. Kaiser voted for such protection in this year's successful Senate Bill 7.) Remily and District 28's Oren Lesmeister are the only wholly non-incumbent Dems running for Senate so far (incumbent Rep. Scott Parsley is seeking to cross chambers from to Senate in District 8).

In the House, Rep. Kathy Tyler now has Democratic company on the District 4 ticket, thanks to Revillo nurse Peggy Schuelke. District 15 Rep. Karen Soli filed her papers last week for another two years in Pierre, as did District 27 Rep. Kevin Killer.

Meanwhile, the Republicans have candidates for 23 out of 35 Senate seats (including two fighting for District 29's spot! Yay, primaries!) and 38 out of 70 House seats. District 29 has more Republican candidates than seats in both races (Rep. Gary Cammack and Susan Cheshier duking it out for Larry Rhoden's Senate seat; Rep. Dean Wink, Wanda Blair, and Tammy Basel fighting for two House seats), so they get two primary races (what fun!). Republicans have 42% of the Legislative slate to fill, Democrats 85%.

Democrats, if you haven't picked up your petitions yet, you'd better do so. Find the nearest gathering of Dems in your district, find where the Weiland, Robinson, Lowe, and Wismer volunteers are circulating, and double up on petition time!


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.


A quick check of the budget says our Legislature acted like pretty big spenders this year, though just a hair less big than the Governor wanted (decreases in red):

general funds federal funds other funds total
FY 2014 adopted $1,312,583,507 $1,691,241,801 $1,086,806,915 $4,090,632,223
FY 2015 Daugaard proposed $1,390,852,751 $1,692,011,931 $1,183,394,942 $4,266,259,624
FY 2015 adopted $1,388,956,590 $1,686,967,782 $1,183,399,323 $4,259,323,695
2014–2015 change $76,373,083 ($4,274,019) $96,592,408 $168,691,472
  5.8% 0.3% 8.9% 4.1%
Daugaard–Legislature change ($1,896,161) ($5,044,149) $4,381 ($6,935,929)
(0.1%) (0.3%) 0.0% (0.2%)

If I'm reading the budgets correctly, this year's Legislature has approved 4.1% more spending than it approved last year. It countered a 0.3% decrease in federal funding (yay, self-reliance...right?) with a 5.8% increase in general funds and an 8.9% increase in other funds.

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