Map of proposed Dakota Access pipeline route through South Dakota; see full route map at http://www.energytransfer.com/documents/DAPL_States_Counties.pdf

Map of proposed Dakota Access pipeline route through South Dakota (click to embiggen; see full route map at http://www.energytransfer.com/documents/DAPL_States_Counties.pdf)

Larry Pressler's pipeline plan is already rolling. The Dakota Access oil pipeline would ship Bakken oil from North Dakota to Patokia, Illinois, refineries. Thirty inches wide and moving 450,000 barrels per day, Dakota Access would match the first Keystone pipeline in size, destructive power, and, if our Legislature had the good sense to pass a pipeline tax, $200 million in budget-boosting potential.

Dakota Access, which is one of the heads of energy hydra Energy Transfer Partners, paid Strategic Economics Group of Iowa to write up an economic impact statement for its pipeline. SEG itemizes benefits for South Dakota:

Construction stage (2015-2016):

  • Estimated impact on production and sales: $835.8 Million
  • Estimated impact on labor income: $302.8 Million
  • Estimated number of additional job-years of employment: 7,100
  • Estimated increase in state sales, use, gross receipts and lodging taxes: $35.6 Million
  • Estimated increase in local sales, use, gross receipts and lodging taxes: $2.9 Million

Operations and maintenance stage (annually beginning in 2017):

  • Estimated increase in production and sales: $4.2 Million
  • Estimated increase in labor income: $1.9 Million
  • Estimated increase in full-time jobs: 31
  • Estimated increase in state sales, use, gross receipts and lodging taxes: $135,000
  • Estimated increase in local sales, use, gross receipts and lodging taxes: $62,000
  • Estimated increase in local property taxes: about $13 Million [Strategic Economics Group, "South Dakota Economic & Fiscal Impact Fact Sheet," November 2014]

Iowa State University economist David Swenson, who has not been paid by Dakota Access, is skeptical of this economic impact analysis:

“It’s not worthless, but it’s an industry-sponsored promotion piece designed to get the public to support it,” Swenson said. “Policymaker beware.”

...Swenson said the study uses a deceptive calculation for jobs, called job years. If one job existed for two years, it would be counted as two job years, he said. He said for the $1 billion economic output, a similar duplication by years is used, and he disputed using gross transactions as a measure of economic output [B.A. Morelli, "ISU Economist Doubts Study Touting Economic Benefits of Pipeline," Cedar Rapids Gazette, 2014.11.13].

Orland organic impresario Charlie Johnson won't be swayed by economic abstractions. Dakota Access will cut through 160 acres that he farms organically. If our state's embrace of the Keystone pipeline and Mike Rounds's Big-Oil lies are any indication, Johnson won't get any sympathy from state courts or regulators.

But maybe Johnson can divert Dakota Access by getting creative and copyrighting his land as a work of art, as Alberta artist Peter von Tisenhausen did:

Tiesenhausen made the decision after years of legal battles with oil and gas companies that wanted access to the deposits of natural gas that sit just beneath his 800-acre plot of land. Under federal law, Alberta landowners have the rights only to the surface of their land. The riches that lie beneath are generally owned by the government, which can grant oil and gas producers access so long as the companies agree to compensate landowners. This compensation is usually for lost harvests and inconvenience, but, Tiesenhausen reasoned, what if instead of a field of crops these companies were destroying the life’s work of an acclaimed visual artist? Wouldn’t the compensation have to be exponentially higher?

...In 2003, he presented his copyright argument before the Alberta Energy and Utilities Board, which told him that copyright law was beyond its jurisdiction and he would need to pursue that in the courts. So far that hasn’t been necessary. The oil and gas companies have since backed off, even paying for an expensive rerouting of pipelines, and have yet to bother testing his copyright [Amy Fung, "An Alberta Sculptor Fights Oil Companies to Exhibit Art on His Own Land," 2010.04.22].

Ah, so that's why Dennis Daugaard doesn't want kids majoring in liberal arts.

I invite the legal scholars in our audience to determine whether the land-copyright argument would transfer from Canadian to American law. Lawyer Monica Goyal notes that von Tisenhausen's argument hasn't faced court scrutiny yet; his willingness to lawyer up and press up has simply deterred the pipeliners eying his land from pushing the issue.

But Charlie, we know an artist or two around Lake County who like to work big. Perhaps a few acres of artistic ingenuity could keep that black snake from burrowing through your land. Start an art-protest-pipeline-barrier demo project, and perhaps Dakota Rural Action could collaborate with Christo to come up with a creative state-spanning installation that would keep Big Oil from trampling our property rights.

9 comments

Governor Dennis Daugaard deserves all the guff we can give him for reneging on his no-new-taxes promise to consider a gasoline-tax increase. Acknowledging that we don't spend enough on our roads and bridges is an important repudiation of the Republican sloganeering that would have us believe that public goods grow on free-market trees. Roads don't just happen; communities build them with taxes.

But Governor Daugaard deserves credit for screwing up the courage to focus on transportation at a time when Congress appears incapable of getting anything done. The lame-duck session is ticking away with zero accomplishments. Congress stages a cynical political ploy to express its support for one private pipeline that won't help any American drive to work, then goes home for Thanksgiving. But both parties ignore the Highway Trust Fund, which we urgently need to replenish in order to rebuild our crumbling roads and bridges:

Ray LaHood: That's the pot of money that over 50 years helped us create the best interstate system in the world, which is now falling apart.

Steve Kroft: Why? How did it get this way?

Ray LaHood: It's falling apart because we haven't made the investments. We haven't got the money. The last time we raised the gas tax, which is how we built the interstate system, was 1993.

Steve Kroft: What has the resistance been?

Ray LaHood: Politicians in Washington don't have the political courage to say, "This is what we have to do." That's what it takes.

Steve Kroft: They don't want to spend the money? They don't want to raise the taxes?

Ray LaHood: That's right. They don't want to spend the money. They don't want to raise the taxes. They don't really have a vision of America the way that other Congresses have had a vision of America [Steve Kroft, "Falling Apart: America's Neglected Infrastructure," CBS: 60 Minutes, 2014.11.23.

In at least suggesting that he'll set aside his election-year slogans and seek more tax revenue to maintain our roads, Governor Daugaard is showing a little more leadership and vision than our Congressional delegation. Let's hope our Legislature can follow the Governor's (and more importantly, Senator Mike Vehle's) lead, drop the campaign trail baloney, educate the voters as to the proper role of government, and fill some potholes.

35 comments

The Legislature's Ag Land Assessment Task Force gets me to notice a tiny portion of our agricultural land assessment rules that show South Dakota thinking like Earl Butz, telling farmers to get big or get out... of agricultural land classification.

The evaluation of ag land is currently a contorted potential income tax, but the important part here is that ag land is taxed much less per acre than residential land. SDCL 10-6-31.1 says that land must meet two of these three criteria to be taxed at the lower agricultural rate (farmers, legislators, let me know if I'm boiling them down correctly):

  1. A third of the gross family income must come from agricultural activities on the land;
  2. The principal use of the land is agriculture;
  3. The land in question is at least 20 acres (although counties can increase that minimum up to 160 acres).

The interim committee is considering rewording that statute to make the principal-use criterion mandatory and requiring the land additionally meet either the one-third-income or minimum-size requirement.

I understand that some of the angst over ag land assessment comes from Pennington County, where evidently some Black Hills residents have kept taxes on their scenic parcels low by harvesting a little timber and calling themselves tree farmers.

But consider this situation: suppose the Governor gets serious about rural development in his second term and retools Dakota Roots to recruit young families to take up small-scale farming. We encourage young couples to buy small farms, less than ten acres, to grow real food for local sale and consumption. These young farm couples dig in for some local-level garden farming, but at least one member of the family maintains professional employment teaching, lawyering, doctoring, carpenting, what-have-you to ensure some income stability.

Under either version, current or amended, of our tax rules, those intrepid young small farmers get hit with an extra tax burden. It seems odd to tax farmers more just because they have chosen to work on a smaller scale. It seems contradictory for our income-tax-averse Republican Legislature to impose a higher tax rate on farmers based on their income.

Our property tax code should be able to distinguish between farmers engaged in real farming and Black Hills retirees tricking the county by chopping a few trees. But if we can't write a law to recognize that difference, we shouldn't punish small farmers who choose to sell their goods to their neighbors at the farmers' market instead of Smithfield, ADM, and Bel Brands.

We could avoid all this land-evaluation rigamarole if we just replaced our antiquated property tax with an income tax. Short of that, we could write a tax code that encourages young people to get into farming without feeling like they have to commit to the Big-Ag cycle of corporate serfdom and debt.

Related: The Legislature may be inching toward turning the agricultural land assessment into something even closer to an income tax. At their Tuesday meeting, the ag land assessment task force voted unanimously to commission SDSU economists to study the impacts of assessing ag land on actual use instead of ideal use. (Hey, isn't that Rep. Charlie Hoffman's good idea?)

32 comments

Now that we have some Democratic balls rolling, let's tell Judge Srtska he's wrong.

Last week, retired judge Bill Srtska apparently floated an argument on Facebook that Initiated Measure, the indexed minimum wage increase that South Dakota voters wrote into law, may be unconstitutional. Judge Srtska writes that the automatic annual cost-of-living adjustment may constitute an "unlawful delegation" of legislative power. Srtska apparently sees no constitutional problem with our establishing $8.50 as the minimum wage on January 1, 2015, but once we start letting inflation and math set subsequent minima, "All South Dakotans would be bound by the new wage floor although that rate was never passed by the legislature."

May it please the court: His Honor misreads the law. Initiated Measure 18 goes no further than a number of other statutes through which the Legislature has enacted provisions that operate automatically, without subsequent legislative action.

Consider sunset clauses. South Dakota has passed laws with sunset clauses, providing for repeal of laws without the consent of the sitting Legislature at the time of repeal. One law passed in 2013 imposes a sunset in 2046. That law binds numerous South Dakotans not even born yet to a decision made by likely no one in their Legislature.

For an even stronger parallel, consider the agriculture productivity tax, the Rube-Goldberg income tax we impose on farmers and ranchers. The Legislature does not establish land values. It used its legislative power to hire SDSU economists to cook up a new productivity value each year. That action is as legislative, as mathematical, and as automatic as the cost-of-living increase in the minimum wage. I have not heard anyone suggest that the Legislature fire the SDSU economists and calculate the productivity formula themselves each year (I'm not sure our legislators are that good with math to start with).

The new, indexed South Dakota minimum wage is as constitutional as several other South Dakota laws now on the books. If anyone wants to challenge its constitutionality, they'd better be prepared to unravel a host of other state laws. Judge Srtska, are you sure you want to pull that thread?

74 comments

KELO puts the cart before the horse with this strange headline:

Improved Roads Could Mean More Taxes

Brief review of causality, Mr. Schaffhauser: We pay taxes. Government uses those taxes to improve roads. If we pay more taxes, we can fix more roads. So more taxes mean improved roads.

We can also consider the inverse with some broader context: South Dakota Republicans pride themselves on not raising taxes. Not raising taxes means less money available to government to keep up with road repairs. Not keeping up with road repairs means are roads deteriorate. So electing Republicans could mean crappier roads. Drive around your county for empirical proof.

Republican Senator Mike Vehle (R-20/Mitchell) continues to try to see around his party's fiscal short-sightedness, but it's tough. He figures the bill for catching up with years of neglect of our road and bridge repair needs is $400 million to $500 million. Yet he's only been able to lead his interim Highway Needs and Financing Committee to approve raising maybe a quarter of that revenue:

"What we're trying to do is say we recognize the need. We're not going to be able to fill it all, but we do realize we have to do something," Vehle said.

The committee passed a list of recommendations that would raise close to $100 million for roads and bridges. Some of it would come from proposed license fee increases. Other revenue sources would come from new or increased taxes on products related to driving, such as vehicles and fuel.

"What we tried to do was, everyone felt a little bit of pain. We aren't just going to make one area pay for it all," Vehle said [Erich Schaffhauser, "Improved Roads Could Mean More Taxes," KELOLand.com, 2014.11.09].

We Democrats don't support raising taxes just for the sake of raising taxes. We support raising taxes only when important public projects need the money... just like Republican Senator Vehle does. But Republican prejudices and pigheadedness prevent South Dakota from raising the money it needs to meet basic public needs.

82 comments

As we wait for the South Dakota Division of Banking to determine whether Joop Bollen should have been paying bank franchise tax on the money he made fleecing foreign investors, an eager reader finds a hint that Bollen's boon companion James Park may also have been evading bank franchise tax.

Before Northern Beef Packers, the Veblen dairies were the biggest project in South Dakota's EB-5 program. The Veblen dairies received $13.5 million in EB-5 investment from 27 Korean investors before violating South Dakota environmental rules and going bankrupt in 2010.

Among the creditors listed on the Veblen East Dairy list of unsecured claims was Park's firm Hanul Professional Law Corporation, which claimed to have loaned Veblen East $2 million. Mikkel Pates reported that Hanul had $2.45 million in claims against the associated Dairy Dozen Veblen LLP but received only $248 in the bankruptcy settlement.

Hmm... so Hanul was a law firm, but they were lending at least $2 million to the Veblen dairies. As with Bollen's EB-5 shop SDRC Inc., Hanul appears neither to have obtained a lending license nor paid bank franchise tax on any proceeds from loans nor even an official exemption like the one the Banking Commission granted to shady offshore lender Epoch Star to save Northern Beef Packers.

The more we investigate South Dakota's EB-5 program, the more we find EB-5 players Joop Bollen and James Park trying to avoid the rules by which honest South Dakotans play.

3 comments

One more detail sneaks out of Denise Ross's report on Joop Bollen's inept management of Northern Beef Packers. The South Dakota Banking Commission may have exempted an honest-to-goodness bank from our bank franchise tax:

Kang said once it became clear that Chinese Development Industrial Bank out of Taiwan was willing to loan Northern Beef $30 million through its subsidiary, Anvil Asia Partners, Hanul and Bollen began working directly with bank officials [Denise Ross, "Source: Bollen, Lawyer in Control of Northern Beef Operations, Finances," Mitchell Daily Republic, 2014.10.17].

Remember: Northern Beef Packers got a $30 million loan from Epoch Star Limited, which was a subsidiary of Pine Street Special Opportunity Fund, which was a subsidiary of Anvil Asia Partners, which Kang says was a subsidiary of the Chinese Development Industrial Bank.

Under pressure from the Governor's Office of Economic Development, the South Dakota Banking Commission said Epoch Star didn't have to pay bank franchise tax on that loan.

Cut out the middle words, and we see the South Dakota Banking Commission saying a bank making a loan wasn't really a bank making a loan.

Gee, Republicans, I think calling that a "special tax break to a shady offshore corporation" is putting it mildly.

6 comments

District 28 Senate candidate Rep. Betty Olson (R-Prairie City) earned herself some media attention this week. It seems only fair that we give her opponent in the Senate race, Parade Democrat Oren Lesmeister, a little air time.

Hat, cattle, and mustache—Oren Lesmeister, Democratic candidate for District 28 Senate

Hat, cattle, and mustache—Oren Lesmeister, Democratic candidate for District 28 Senate

Lesmeister runs Fox Ridge Ag Supply in Parade, Dewey County, on the Cheyenne River Indian Reservation east of Eagle Butte. He also raises wheat, sunflowers, corn and cattle on his patch of the high plains. He spoke to me Thursday from a motel room in Belle Fourche, about 150 miles from home. District 28 covers more territory than any other legislative district in the state: all of Dewey, Ziebach, Corson, Perkins, and Harding counties, most of Butte, and the northeast corner of Meade—14,700 square miles, almost a fifth of South Dakota, with about 3% of the state's population. He drove 235 miles just the preceding evening

That's sparse country to be out rustling up votes, but Lesmeister says campaigning is an "absolute blast," even for a Democrat campaigning in what Betty Olson's representation makes clear is hard right Republican country. Lesmeister reminds us that he comes from the eastern, reservation side of District 28, which leans Democrat. But even on the western side, where he says he gets skunk eye over that D in front of his name "every day," Lesmeister says he has great conversations with very "receptive" voters.

What do they talk about? Education funding comes up. Lesmeister says his school district, Eagle Butte, comes out better than others, since it receives a fair amount of impact aid from the federal government to make up for tribal land that doesn't pay property tax. But he looks around at the sprawling, far-flung school districts of District 28 and sees the state's "broken" funding formula failing to meet their needs. Lesmeister says we need more money for schools, but he's not proposing new taxes. He first wants to look at the hundreds of millions in sales tax exemptions as well as economic development handouts to corporations as sources of revenue to bolster our schools.

Lesmeister does talk taxes with his neighbors, particularly the agriculture productivity tax. In 2008, South Dakota revised its property tax to assess ag land not on the basis of land sale and rental values but an Olympic average (eight years, drop high and low) of crop prices and yields for comparable land. Lesmeister says that taxing ag land based on the corn or hay it could have produced according to past averages of neighbors' activity is like taxing a 40-story building for 200-stories: you could have built a taller skyscraper, so we're going to tax you as if you had!

Replacing that tax methodology is tricky, and Lesmeister wants to have more conversations with experts, but he'd rather return to assessing land on sale and rental value than keep the current system. At least with land sale prices, says Lesmeister, we're dealing with real numbers.

In general, Lesmeister says, the best tax reform would allow everybody to pay less. But he recognizes that we've got to pay for what we need. Nowhere is that tension more apparent than in road funding. He admires the efforts of Senator Mike Vehle (R-20/Mitchell) to find money to improve our roads. He praises Senator Vehle for pushing people to get beyond griping and propose real solutions. Lesmeister says the ugly reality is that federal funding will dwindle and that state and county governments will have to pick up more of the tab for getting from Buffalo to Timber Lake.

Lesmeister says we could take some of the pressure off our highways by expanding railroads. He doesn't favor state ownership, but he would support incentives for private industry to build more rail shipping capacity.

Lesmeister does not support the Keystone XL pipeline. He says laying pipe across South Dakota to ship North American oil out to the global export market doesn't do South Dakota a bit of good. He challenges the assertion that running against Keystone XL will do in Democrats; in his district, the tribes are strongly opposed to the pipeline, and folks in Bison and elsewhere along the Keystone XL route don't say much nice about the pipeline to Lesmeister. (Remember: Betty Olson thinks Keystone XL is just peachy, as do far too many other South Dakota legislators.) At the very least, Lesmeister says we should learn from examples in Wyoming and North Dakota and not let Big Oil walk all over us.

Lesmeister also talks Medicaid expansion with his District 28 neighbors. He says South Dakota will eventually accept the money being offered under the Affordable Care Act to cover low-income South Dakotans. We have to, says Lesmeister, in part to make up for the $14 million he says we'll lose in the coming year as our increasing state income lowers the federal aid we qualify for under existing Medicaid rules.

Lesmeister recognizes the need for economic development in his big corner of the state, on reservation and off. He says the major challenge to creating jobs in District 28 is not lack of workers or skills; contrary to certain prejudgments, Lesmeister says his neighbors on the Cheyenne River Reservation want to work. Simple geography makes it hard to lure businesses: Eagle Butte and Lemmon are a long way to ship inputs and outputs. Economic development needs to focus on improving and maintaining the infrastructure necessary to connect West River businesses to their suppliers and customers. Lesmeister says Northern Beef Packers would have been a great project to build in his neighborhood, given that it could have relied on local supply. (Hmm... EB-5 to benefit the reservations... don't forget that idea!)

I mention women's issues to Lesmeister, and he focuses on legal protections against domestic abuse and sex trafficking, an issue of particular concern for reservations near the proposed Keystone XL construction camps and the man camps of the Bakken oil fields in North Dakota. He doesn't propose new laws; he says we can protect women sufficiently by stepping up our enforcement of laws already on the books.

As for abortion rights, Lesmeister says he as a legislator should never decide such issues. He says he would resist legislative efforts to further curtail women's reproductive rights. "It's too big of an issue" for the Legislature to decide, says Lesmeister; any abortion legislation should go straight to the ballot so all South Dakotans can vote.

Lesmeister wants to talk about these issues and everything else on voters' minds right through Election Day. He invites his neighbors to give him a shout via his Facebook campaign page and his campaign phone (605-365-6856—yup, he said I could publish that). Ping him, ring him... Oren wants your thoughts and your vote on November 4!

4 comments

Recent Comments

  • caheidelberger on "Barth Campaigning fo...": Fleming for chair?...
  • larry kurtz on "Even in Violence, Se...": Troy's apology for selective enforcement is hardly...
  • leslie on "Meade Dems Advocatin...": les, working for two party system by voting for pr...
  • caheidelberger on "DSU Presidential Sea...": Let's not go there, Rich. Mike B, I do not disa...
  • Wayne Pauli on "DSU Presidential Sea...": The mission change at DSU is now well over 30 year...
  • larry kurtz on "Even in Violence, Se...": It's time for executive clemency for Leonard Pelti...
  • larry kurtz on "Even in Violence, Se...": Rev. Hickey is at DWC calling for a 'truth and rec...
  • Rich on "DSU Presidential Sea...": Seeing the name Julie Gross reminds me of that imp...
  • Bill Fleming on "Barth Campaigning fo...": Sheldon, I have a couple of goals that don't have ...
  • caheidelberger on "Barth Campaigning fo...": Hey, South Dacola! Who's Huether's dog in this fig...

Support Your Local Blogger!

  • Click the Tip Jar to send your donation to the Madville Times via PayPal, and support local alternative news and commentary!

Hot off the Press

Subscribe

Enter your email to subscribe to future updates

South Dakota Political Blogs

Greater SD Blogosphere

Visit These Sponsors

Conversation and Lunch with Democrats!
Join Stan Adelstein's conversation about South Dakota's past and future

SD Mostly Political Blogroll

South Dakota Media

Madville Monthly

Meta