When I visited Charlie Hoffman last August, the outgoing state representative and passionate prairie grasser said that the current agricultural land tax formula discourages grassland restoration and preservation and drives turning prairie grassland to row crops. Hoffman suggested our property tax system should look at actual use of ag land instead of potential use.

Toward that end, the interim committee that studied ag land assessment recommended Senate Bill 4, which would have funded research by SDSU economists on the impact of switching to an actual-use formula. SB 4 wouldn't change the tax system; it would just study a possible change.

Landowners, the Farm Bureau, the Cattlemen's Association, Ducks Unlimited, and the Izaak Walton League thought a study on actual-use assessment sounded like a good idea. The Corn Growers did not, and neither did the full Senate. Last Wednesday, the Senate killed SB 4 16–18. That may sound close, but remember that, as a bill planning to spend money (and Senate Appropriations had already one-bucked the original $151K price tag to keep the bill moving), SB 4 required a two-thirds vote, or 24 Senators. All 18 nays came from Republicans, who apparently not only won't implement a better tax system but won't even let us study possible improvements in our tax system.

15 comments

People use county roads to get to town to buy booze. People who do stupid things after drinking that booze then use county jails. Counties do not get to tax sales or alcohol to pay for those roads and jails. Towns do.

Why the Legislature so throttles the counties but not the towns escapes me. As the road funding bill has been pared down to reduce the funding counties get to fix their deteriorating roads and bridges, the Legislature is advancing Senate Bill 135, which would allow the towns to impose an additional sales tax for their needs.

The Legislature's willingness to heed town criers while ignoring destitute county commissions seems odd. By itself, however, SB 135 doesn't seem like a terrible idea. If towns have needs, they ought to be able to meet those needs. Local control, yadda yadda.

But then Pat Powers comes tooling along for the Koch Brothers to shout Oh my Mammon! SB 135 increases taxes $150 million! Aaaaaaaahhh!

Please. The press release Pat reads from Americans for Prosperity lives in the La-La Land in which its Koch-sipping serfs need to make it look like they are busy. "If every city in South Dakota participated, it would mean more than $150 million in new taxes." Sure. And if every city in South Dakota participated, that would mean every city in South Dakota apparently has unmet needs, and a majority of voters in every city in South Dakota agree that their city commissioners are making wise taxation decisions. That's how democracy works... but as we know, Americans for Prosperity has a problem with democracy. They thus must blow up local control as an evil new tax and stand in the way of local governments meeting local needs.

Americans for Prosperity—remember, they're not for the collective prosperity, just the prosperity of the 1%.

15 comments

Yesterday I reviewed the election picks of the participants in the South Dakota Chamber of Commerce Business Caucus. Today, let's look at the media habits and policy leanings revealed by that straw poll.

The Chamber asked Business Caucus participants to name two media they use to follow the Legislative process:

Source Users
Newspaper 58
Television news 31
Public radio and television 26
Internet news sources 66
Blogs and social media 29
Friends—chatting 26

Internet news and newspapers are the top choices. Folks are still tuning in to KELO and KOTA, but blogs and social media are close to both the commercial tubers and public broadcasting (which really does the best legislative coverage in the state with its Statehouse service).

The Webby skew of this group's media preferences may reflect the age groupings. The Business Caucus included 52 GenXers, 42 Millennials, 39 Boomers, and just one really old businessperson.

A quarter of these employers (26 out of 104 responding to this question) said their businesses have policies "about employees' personal websites." I hope these policies do not go beyond reminding employees to keep their business lives separate from their personal online lives. 60% (48 out of 79 responding) say they check social media to screen job applicants (I should apply for more jobs to boost my readership!). But 96% (98 out of 102 responding) said employers should not have the right "to collect passwords from employee's private social media accounts when they aren't under suspicion for a crime." On that issue, the Chamber of Commerce leadership appears to be out of step with its membership: Chamber boss David Owen testified earlier this month against legislation that would have prevented such forcible invasions of job applicants' online privacy.

On transportation issues, only one member out of 127 respondents expressed direct opposition to raising taxes to boost funding for road and bridge repairs. Read that again: in a group of Chamber members, 99% support raising taxes for a practical public purpose. Another 80% (67 out of 84 respondents) support an extra penny sales tax in their cities for local needs.

Asked to name three taxes they would support raising for roads, the gasoline tax, sales/excise tax on cars, and wheel tax were the most popular. Using property tax and a price-based wholesale tax on fuel were the least popular.

Nearly half of the Business Caucus (52 out of 106 responding) support Senator David Novstrup's "youth minimum wage" and admit that they think "young people in first jobs don't have the value of fully adult workers." That's logically and morally wrong.

Chamber members are uneasy about creating a state debt collection office. 50% (43 out of 86 respondents) oppose the concept; the other half are split 29% for a state debt collection office and 21% offering only partial support, saying they can live with "a small state office to track the numbers but use the private sector for heavy lifting." The Daugaard Administration had a heck of a plan that would have garnished wages and seized bank assets to pay off debts owed to the state. The Senate and the private debt collection agencies freaked out and scared the toothless Daugaard regime into tabling that bill and putting its chips on a much weaker bill that now just withholds licenses from deadbeats.

The Business Caucus may not be scientifically representative of the general population of South Dakota businesspeople, but it does represent the voices of those most likely to go to Pierre to participate in the Legislative process.

23 comments

The South Dakota Legislature holds deep respect for the committee process... until it gets a chance to disrespect public education.

While the South Dakota House yesterday insisted on respecting the committee process and refused to resurrect House Bill 1223, the Common Core ban, from its committee failure, the South Dakota Senate said Committee, Schmommittee! dragged Senate Bill 189 back from its committee failure and passed it 23–12.

HB 1223 might at least have improved public education by getting Common Core off teachers' backs. SB 189 harms public education and the state budget by diverting tax dollars to private schools. The convoluted mechanics of the bill allow the state to say it's not writing a check to any religious school (which would be a problem): under SB 189, insurance companies give money to non-profits; those non-profits give money to lower-income families; those families give their money to private schools; the state says to the insurers, "How nice!" and knocks up to 90% of the insurers' private school scholarship contributions off their premium and annuity tax.

As educator/blogger Michael Larson says, SB 189 is a voucher sneak attack. He notes that SB 189 hurts public school districts by removing kids from their rosters money from their state funding without proportionately reducing those public schools' costs... which of course is what Governor Dennis Daugaard*, the GOP majority in Pierre, and the Christian crusaders who testified for SB 189 want to see happen.

SB 189 as several additional problems:

  1. SB 189 starts with scholarships for families who make 150% or less of the income threshold for free or reduced lunch the year before they enter the program. But it allows families to keep claiming that credit if their income exceeds that threshold. Consider: my family could easily have qualified for such a credit based on our low grad school/part-time income last year. Now that my wife has full-time professional employment, and if I gain similar full-time employment in the coming school year, we'll be far above that 150% threshold. We'll have no need of financial assistance to send our child to private school, but SB 189 would require the state to keep handing out that subsidy for three years.
  2. SB 189 caps creditable scholarships at four million dollars. "However," reads SB 189, "if in any fiscal year the total amount of tax credits claimed is equal to or greater than ninety percent of the maximum amount of tax credits allowed for that fiscal year, the maximum amount allowed for the following fiscal year shall increase by twenty-five percent." Wow! Pierre never increases school funding by 25% just because the schools claim more expenses. If we applied SB 189's funding mechanism to determining the per-student allocation, public schools could spend just 95% of the per-student allocation and trigger a 25% for the coming year. SB 189 is giving private schools a funding advantage that public schools never get.
  3. If insurance companies and the private schools play their cards right, that 25% growth rate would lead to SB 189 handing out $133 million in its first ten years and $1.24 billion in its next ten years.
  4. The insurance tax is projected to put $83.4 million in state coffers in FY2016. Those receipts have grown 5% over the last two years. Extrapolate that growth rate, and the insurance tax alone could support SB 189's private school subsidy's explosive through FY2034—seventeen years to wreak havoc on public school finance and the state budget.

If you believe in strong public schools, you vote Senate Bill 189 down. If you believe in separation of church an state, you vote this sneaky voucher plan down. If you believe in a sound state budget, you vote this plan down.

*Update 16:24 CST: To be clear, the Daugaard Administration did not testify in favor of SB 189. Other actions by the Daugaard Administration (Exhibit #1: 2012's HB 1234; Exhibit #2, ongoing neglect of K-12 funding...) demonstrate a lack of respect for public education, but last week, the Governor sent the Department of Education and the Department of Labor and Regulation to testify against SB 189. The proper read of that testimony is less likely a desire to defend public education and more likely a desire to oppose blasting a four-million-dollar hole in the budget.

26 comments

Last week, District 2 Reps. Lana Greenfield (R-2/Doland) and Burt Tulson (R-2/Lake Norden) both bucked the GOP leadership and voted for House Bill 1216, a measure proposed by Democratic Rep. Dennis Feickert (D-1/Aberdeen) to lift the cap on annual property tax increases. HB 1216 would have wrought a historic change in Janklow-era tax reform. Governor Dennis Daugaard opposed it, and the Republican majority killed it last week Wednesday.

At the Presidents' Day crackerbarrel at the Redfield Depot, Reps. Tulson and Greenfield responded to concerns from Spink County Sheriff Kevin Schurch and a Spink County Commissioner about jail costs by referring to their vote for HB 1216 as an effort to help counties get money to take care of such needs. Both Tulson and Greenfield criticized their Legislature for talking the talk but not walking the walk on local control:

Key comments:

Rep. Tulson: "I was a county commissioner, and many of you here have been there, or township board people. I trust you. You are not going to tax yourself unless you really see a need, not a want, but a need. I trust you, but... I don't know where it comes from, the trust that you guys couldn't do and make that decision yourself doesn't seem to be there in the Legislature."

Rep. Greenfield: "We always are so concerned about saying we need to have you manage it locally, and then we try to micromanage by voting for things that strap you.... I was disappointed that that cap didn't come off. It doesn't show much faith or trust in the local people" [crackerbarrel, Redfield, South Dakota, 2015.02.16].

It's not just me: even faithful Republicans like Reps. Tulson and Greenfield recognize that the talk of local control in the Capitol is a sham. The Republican majority doesn't trust local leaders to spend real money to fund basic government needs.

16 comments

Perry Groten asked Senator Dan Lederman on last night's Inside KELOLand to discuss the significance of the transportation bills before the South Dakota Legislature.

The flauntingly conservative Republican PACker from Dakota Dunes proceeded to destroy every anti-tax, anti-stimulus argument ever:

This is the first time in sixteen years that we've addressed transportation funding, so it's a conversation that's been long in the running, that we need to have. It's a tough decision, because when you're talking about increasing taxes, people's pocketbooks are going to be affected and it's a very serious discussion.

But it also has some good upsides, because we're looking at being able to improve those roads. Even though the tax dollars come out of the economy, they do go back in when we start talking about the contractors, the materials, and the work that will be done over the next few years.

So it's actually a pretty big impact for the economy, and it's a great impact for our farms and for our businesses that need to use those infrastructures to be able to get their product to market [Senator Dan Lederman, Inside KELOLand, 2015.02.15, timestamp 8:30].

Translation: taxes don't make money disappear from the economy. They go right back into the economy to buy things, boost the economy, and invest in the public goods the free market needs to survive.

Barack Obama, Robert Reich, and I couldn't have said it better ourselves. Thanks, Dan! We'll keep that lucid defense of the upsides of increasing taxes for public investment handy for the next time Grover Norquist comes peddling his pledge.

51 comments

Corporate profits peaked under President George W. Bush in 2006 near $1.7 trillion. The recession then plunged corporate profits to $1.0 trillion by the 2008 election. (Check that: during the economy's nadir, corporations were still coming out ahead.) Since the election of radical Marxist redistributionist Barack Obama, corporate profits have more than doubled to $2.2 trillion. Hmmm... so Obama hasn't come for your guns or your profits...

...but wait! President Obama is coming for a chunk of the profits that corporations are hiding overseas. Yesterday the President announced a plan to grab half of the funding for his six-year, $478-billion infrastructure investment plan from a one-time, 14% tax on current overseas corporate profits stashed overseas, plus a 19% tax on future overseas profits that opponents say still helps big corporations dodge their fair share of taxes.

Meanwhile, Senator Bernie Hunhoff (D-18/Yankton) would like us South Dakota voters to talk about taxing corporations to fund education. Senate Joint Resolution 2 would place this brief, straightforward proposal for a constitutional amendment on the 2016 general election ballot:

The Legislature shall impose an education franchise tax by imposing a tax on the profits of corporations doing business in South Dakota. However, this section does not apply to any insurance company subject to a tax on gross premiums or financial institution subject to the bank franchise tax. The revenue and interest generated by the tax, less the cost of administration, is dedicated to improving the salaries of elementary and secondary public school teachers. The Legislature shall establish the rate of taxation.

Senator Hunhoff's proposal recognizes that South Dakota already imposes income taxes on bankers and insurers (which taxes have yet to lead to an exodus of bankers and insurers). SJR 2 gives the Legislature control over the tax, allowing it to set the rate based on the economy, the needs of the school districts, whatever may come up each session. SJR 2 goes and gets money that President Obama won't be taking, since U.S. Senators John Thune and Mike Rounds will surely work their darnedest to prevent that federal tax from happening. As is Bernie's wont, SJR 2 comes from a bipartisan team of sponsors, including Senator Hunhoff's Highway 50 neighbor Rep. Ray Ring (D-17/Vermillion) and veteran West River legislators Sen. Bruce Rampelberg (R-30/Rapid City) and Rep. Thomas Brunner (R-29/Nisland). These Republicans can sponsor this bill without saying they are advocating a new tax; they could vote for it and contend that they just want the people to decide if a corporate tax is an appropriate way to raise teacher salaries (which would be a nice counter to the impression their Gettysburg colleague Senator Corey Brown is creating that Republicans don't trust voters).

As I noted Saturday, the richest South Dakotans have been surfing that wave of corporate profits to claim more than 50% of our state's post-recession income growth. The average one-percenter in South Dakota makes 31.7 times as much as the average teacher in South Dakota, a disparity that is higher only in Wyoming, North Dakota, and Connecticut. Don't count the top 1% or earners, and South Dakota teachers still make 21.2% less than the average individual income.

Moving some income from the corporate tier, where profits have doubled since the recession, to the teachers who build the corporate workforce seems just. Let's put SJR 2 on the ballot and debate a corporate profits tax in 2016.

7 comments

I'm scratching my head over a comment reported by Ken Santema from Saturday's crackerbarrel in Aberdeen. Evidently a citizen asked the legislators about a proposal to increase funding for K-12 education through a 1% tourism tax. From Santema's phrasing, it appears the questioner opposed this use of a tourism tax because tourism and education are not connected. Senator Brock Greenfield (R-2/Clark) mentioned his agreement that there is no link between tourism and education in the context of declaring a tourism tax for education a plan unlikely to pass.

Um...

  1. Isn't everything connected to education? Don't visitors benefit from an educated workforce who can count their change, give them directions, and have job opportunities that keep them from burgling RVs?
  2. Imagine you're a tourist enjoying a stay in South Dakota and we give you a choice on how you want your tourism tax dollar spent. Either you can send your dollar to the state to support K-12 education, or you can send your dollar to Pierre to pay for more tourism advertisements. Which would you pick?
  3. Just how "connected" does a thing or activity or industry have to be for us to justify taxing that thing or activity or industry to support some specific public good or service?
  4. If a thing/activity/industry we tax has to be connected in some direct way to the public good/service it pays for, should we end the use of dollars from the sales tax on food for anything other than funding the SDSU College of Agriculture?
  5. Similarly, just what public good or service is property connected to?
  6. Federally, what is income connected to?
  7. What connection does video lottery have to non-playing property owners whose taxes those video gamblers reduce?
  8. Is Senator Greenfield saying he will go to Pierre and demand a budget that funnels every tax dollar from sales, contractors, gambling, etc. into strict budget lines connected exclusively to "connected" public goods and services? Or did he just need an excuse to shoot down a reasonable plan that would raise revenue for K-12 education and give us a chance to prove his dear old mom wrong?
  9. Does this thinking turn every government function to a fee-for-service model?

Crackerbarrels do raise some good questions. They also provoke Republicans to raise some odd objections to raising revenues to help our schools.

16 comments

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