How I wish I could be in Aberdeen to join Ken Santema at the Legislative crackerbarrels! My Libertarian blogospheric colleague is providing excellent coverage of Legislative issues. Yesterday he got hold of a useful handout from Senator David Novstrup (R-3/Aberdeen) comparing the costs of the competing road-tax-and-fix bills proposed by Governor Dennis Daugaard and by the interim Highway Needs and Financing Committee:

Comparison of Daugaard and Interim Committee Road Tax Proposals, distributed by Sen. Al Novstrup, published by Kan Santema, SoDakLIberty, 2015.01.24

Click to embiggen—Comparison of Daugaard and Interim Committee Road Tax Proposals, distributed by Sen. Al Novstrup, published by Kan Santema, SoDakLIberty, 2015.01.24

The immediate bottom line shows the Governor's proposal imposes half the tax burden of the committee's plan, $51 million versus $101 million, largely by leaving out the 3% wholesale fuel tax.

But remember, that's just in the first year. The above comparison does not note the increasing revenue that will come on the motor fuel tax line from Daugaard's proposed ongoing annual two-cent increase, which far outpaces the increase proposed by the interim committee. The 3% wholesale tax in the committee proposal may provide more revenue, if gasoline prices do what we'd expect and rise over time. But remember: after the 1986 oil price crash, gasoline prices remained remarkably flat through the 1990s. The wholesale tax doesn't guarantee more revenue; Daugaard's plan does.

Of course, as of this weekend, we still don't have the Governor's exact plan. The interim committee's plan was the first bill filed for the Senate; the Governor's plan has not yet been filed as a formal bill.

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I must give John Tsitrian kudos for catching Governor Dennis Daugaard in a brilliant contradiction. In Tuesday's Rapid City Journal, Governor Daugaard responds to a question about South Dakota's weak regulations on uranium mining by saying, "I don't like the notion that the state duplicates federal regulation. So, to the extent that the Atomic Energy Commission or the EPA is looking at this, I think we should let it run its course."

Tsitrian goes just seven months back and finds the Governor saying pretty much the opposite in a press release warning the feds off using the Clean Air Act to impose more regulations on power plants and calling the feds to recognize states as "co-regulators." Hee hee!

Further verbal chicanery lies in Daugaard's feigned preference for EPA regulations of uranium mining. His pal Senator Mike Rounds wants to eliminate the EPA; where would that leave our uranium mining regulations?

Inspired by Tsitrian to jump on the contradiction bandwagon, I scroll up through the Tuesday RCJ article and find another obvious whopper. Asked by RCJ's Meredith Colias about why he left education out of his State of the State Address and his funding priorities in favor of roads, Governor Daugaard dismissed complaints thus:

Bottom line is, you can’t spend money that you don’t have....

I try to give an increase to education every year … so I’m doing what I can with the resources available [Gov. Dennis Daugaard, interview with Meredith Colias, Rapid City Journal, 2015.01.20].

Um, Dennis? You don't have the money to fix the roads, either. You're proposing a plan that goes and gets more money (and still lets the roads get worse). Tell us again: why can you go get money that we don't have now for roads but not go get money that we don't have now for schools?

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The TIF campaign is on in Meade County. Meade County Taxpayers for Responsible Government gathered over 1,200 signatures (they needed 762) to refer the county's tax increment financing plan for a proposed bypass from the Buffalo Chip Campground to I-90 to a public vote on March 3. The referendum was fueled by a combination of opposition to the road itself and opposition to the funding mechanism, which grabs tax dollars that would otherwise be shared by the county and the school district.

A new website, www.Sturgis131.com, is up to promote a Yes vote in the March 3 referendum. The name comes from 131st Avenue, the name of the road before it was changed by a nicely participatory procedure to Fort Meade Way. The supporters don't say who they are, and they also don't make clear that the vote is about the TIF district designation, not about whether to build or pave Fort Meade Way.

The building and paving of Fort Meade Way does not depend on passage of the TIF. Meade County can still get the job done; it just might take longer through other funding mechanisms.

A bypass allowing quicker access to the Fort Meade VA, Sturgis Brown High School, and Bear Butte from Rapid City is a good idea for safety and economic development. A TIF district that deprives the school district of its fair share of benefits from new development is not. Meade County residents can support the road and still vote no on March 3.

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John Tsitrian suggest on The Constant Commoner that the competing road tax-and-fix proposals before the South Dakota Legislature may provoke an urban-rural civil war, or at least a constructive statewide conversation. I'm all about South Dakotans with diverse perspectives coming together to identify common interests, balance competing interests, and build practical solutions.

I'm not all about Americans for Prosperity butting into our Legislature and interfering with a practical discussion of real local problems with their ideological hogwash. The Koch brothers' lobbying group, a combination pro-corporate fascist front and jobs program for Republican lackeys, announces that it "will be engaging on the Highway Funding Bill."

What whit do the Koch brothers care about South Dakota's roads as they flit about in their private jets? Americans for Plutocracy Prosperity has no interest in fixing South Dakota's roads or solving any other South Dakota problem. Their immediate goal in "engaging" on South Dakota's highway funding will be to make sure their corporate pals pay as little as possible for the roads that make their businesses possible. They are probably among the "organizations" Governor Dennis Daugaard mentioned in his Tuesday press conference who have pushed him to water down the robust road-funding proposal produced by the interim Highway Needs and Financing committee, which spent months talking with experts on the practical condition of South Dakota roads.

The prosperity these Americans are for is their own, not yours and mine, and not South Dakota's. Their overarching goal is not good policy but no policy, no government or community power that can check their rapacious greed and exploitation.

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Udpate 12:50 CST: My original post ignored a 3% wholesale tax imposed by Senate Bill 1. I have refigured my spreadsheet and adjusted the text here to include that new tax in this explanation.

Wait a minute: did I call Governor Daugaard cheap? His road plan would raise you gasoline tax just as much as the Legislative plan he's rejecting.

We don't have the Governor's formal bill yet, just the points he laid out in his State of the State Address yesterday. The Governor proposes raising the tax on motor fuel two cents per gallon each year, starting this July. He gave no sunset date. He says that hike would raise $13.75 million in the first year.

Governor Daugaard justifies that annual increase by pointing out the failure of our motor fuel tax to keep up with inflation:

The legislature implemented the current $.22 motor fuel tax in 1999. That was 16 years ago, when I was in the State Senate, and Bill Janklow was governor. Gasoline was around $1 per gallon, so the motor fuel tax at the time represented 22% of the total price per gallon. That per-gallon fee of $.22 was fixed in statute and has been the same for the last 16 years. If the legislature had indexed the gas tax to inflation for construction costs, the fuel tax would be $.45 today – more than double [Governor Dennis Daugaard, State of the State Address, as transcribed by that Sioux Falls paper, 2015.01.13].

Two cents more each year won't break 45 cents per gallon until 2027 (Fiscal Year 2028).

Senate Bill 1 raises the motor fuel tax in smaller increments, from 22 cents per gallon now to 28.16 cents per gallon in 2025. SB 1 doesn't start boosting the tax until next year. SB 1 specifies no increases after that.

To keep up with inflation, SB 1 creates a new 3% tax on the wholesale price of motor fuel. That tax starts at 7.5 cents per gallon, which is then established as an ongoing minimum, just in case oil prices miraculously stay cheaper.

You can check out my spreadsheet comparing the Governor's motor fuel tax proposal with Senate Bill 1. I assume constant gasoline demand extrapolated from the Governor's first-year revenue estimate. For the wholesale fuel tax, I assume 3% inflation from this year's levy and further assume that the cost will be passed on fully to consumers at the pump. Your mileage may vary. Here's the fiscal impact by July 1, 2026:

  1. The Daugaard plan would have South Dakotans paying 5.8 cents more per gallon than SB 1.
  2. The SB 1 motor fuel taxes raise more revenue than the Daugaard motor fuel tax for the first five years.
  3. In Fiscal Year 2021, Daugaard's fuel tax raises more revenue than SB 1's motor fuel taxes.
  4. In FY2026, Daugaard's two-cent-per-gallon increases will bring in almost $40 million more than SB 1's smaller retail per-gallon hike and 3% wholesale tax.
  5. A household driving 20,000 miles a year and averaging 30 miles per gallon would pay around $293 in annual fuel tax under the Daugaard plan, versus around $255 under SB 1 and $147 under the current 22-cent tax.
  6. Over the next eleven years, the Daugaard fuel tax raises $907.5 million in additional revenue; the SB 1 fuel tax, $884.6 million. Translation: The Daugaard motor fuel tax takes 2.6% more money out of your pocket at the pump than Senate Bill 1.

The plan Governor Daugaard laid out yesterday raises the vehicle excise tax from 3% to 4%, just like SB 1. Daugaard raises vehicle registration fees 10%, just like SB 1. We'll see where the Daugaard plans gets its savings over SB 1 in its final draft when it hits the hopper.

But as it stands right now, over the next eleven years, Governor Daugaard's plan would hit you as hard as Senate Bill 1 when you buy, register, and gas up your car.

Related Reading:

  1. John Tsitrian calls Governor Daugaard for reneging on his 2010 no-new-taxes pledge after ignoring obvious shortfalls in road funding throughout his first term.
  2. Bob Mercer lists the new revenue Governor Daugaard would get from his various tax and fee increases in the first year of the plan.
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One man's efficiency is another man's absurdity. Check out these three slides from Governor Dennis Daugaard's 2015 State of the State Address.

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 9)

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 9)

Governor Daugaard told the Legislature that we don't want all of our roads to be in the best shape. Apparently there some actuarial calculation that tells us that we get the most bang for our highway buck if we maintain 30% of our roads in "excellent" condition and 50% in "good" condition while letting 15% slip into "fair" condition and 5% into "poor."

I can see the sense in this 80% sub-ideal. You can paint your house every year, but you're not getting much added value for your expense over the guy next door who settles for one good coat that maybe fades a touch but sticks for seven years.

Governor Daugaard reports that our roads actually exceed this 80% sub-ideal:

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 17)

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 17)

Governor Daugaard's translation of this slide: "Because of the stimulus, pavements today are a little better than we need them to be." Yes, the 2009 stimulus made South Dakota's roads too good. Blame Obama.

The seemingly crazy conclusion one could draw from this chart is that we could adopt neither Governor Daugaard's highway funding proposal or the interim Highway Needs and Financing Committee's Senate Bill 1, maintain the status quo, and cruise through 2018 before our roads would drop below that optimal 80% excellent/good ratio. Contrary to the opinion of your keester as you ride the washboard to Ramona, this slide says, There is no roads crisis.

Asserting foresight and frugality, Governor Daugaard says we should nonetheless act. He says his road-tax-and-fix proposal will bump those bars thus:

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 18)

(Governor Dennis Daugaard, South Dakota State of the State Address, 2015.01.13, slide 18)

Compared to the status quo projections for 2024, Governor Daugaard's road expenditures would...

  • boost "excellent" roads from 25% to close to 50%;
  • boost the excellent/good percentage from 48% to just under 75%;
  • reduce "fair" roads from 27% to around 20%;
  • reduce "poor" roads from 25% to under 10%.

But but but but but: look where we end up. Governor Daugaard isn't living up to his own 80% standard. Under his action projections, he appears to squander the advantage the stimulus spotted us and lets South Dakota's roads decay to less than 75% excellent/good. Under Daugaard's plan, in 2024, our roads will be in worse shape than they are now.

Maybe those suboptimal outcomes are why Senator Mike Vehle (R-20/Mitchell) says the Governor's proposal is "a little too frugal." Maybe Governor Daugaard is afraid that letting anything in South Dakota remain "better than we need them to be" will degrade our self-reliant pioneer hardiness.

This much is certain: Governor Daugaard's road plan is no moonshot. The headline initiative that dominated his State of the State Address is really a low-aiming stopgap plan that lets slip quality that we enjoy now.

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Governor Dennis Daugaard addressed several important topics in his State of the State Address to open the 2015 Session of the South Dakota Legislature this afternoon. He made up for a glaring omission from his December budget address by focusing the first half of his speech on roads and bridges. The Governor needed to do that to jump out in front of Senate Bill 1, a massive proposal from the Interim Highway Needs and Financing Committee. Governor Daugaard made clear that he "appreciates" the committee's efforts, but by gum, if taxes are going to get raised and roads get fixed, it's going to be done the way he says so. The Governor says he will be submitting his own bill on road repairs.

To justify the coming tax increases—and among the highlights, Governor Daugaard proposes outdoing Senate Bill 1 by raising the motor fuel tax two cents every year, starting now—the Governor emphasized that our economy and "our entire well-being" depend on good roads, and "our roads are underfunded. Governor Daugaard said nothing about how our economy and statewide well-being depend on K-12 education, and he said nothing about how our K-12 system is underfunded.

The Governor took time to promote his juvenile justice reform plan, which is apparently supported by everybody and requires little salesmanship. He took no time to mention how improvements in K-12 education would keep kids from ever falling into the juvenile justice system in the first place.

The Governor discussed his workforce development plans address the shortage of workers in certain technical fields and in health care. The Governor said nothing about the widely recognized K-12 teacher shortage.

The Governor talked up his rural agricultural development programs. He said the state has won an award for its innovative site-analysis program designed to help counties determine where they can put CAFOs and other big ag businesses. The Governor did not mention that good teacher pay is crucial to sustaining rural communities where the public schools are often the largest employers.

The Governor praised the state's investment in parks and pheasant habitat. The Governor said we need to spend money to preserve grasslands so pheasants have places to live and sustain our hunting our industry. The Governor said nothing about the need to make South Dakota  friendly habitat for teachers.

The Governor led a rousing ovation for the South Dakota National Guard, which for the first time in ten years has not one soldier deployed overseas. The Governor did not call for any such ovation for the teachers, firefighters, construction crews, ranchers, stay-at-home moms, or other groups who serve the Republic.

The Governor's only acknowledgement of K-12 education came in praising high school vo-tech classes (which Governor Daugaard's own budget austerity has cut) and dual-credit courses (which are a really good idea, helping kids get a jump on college and save money and helping South Dakota universities recruit South Dakota students).

The bad news from the State of the State Address is that Governor Daugaard does not appear to have any plans to do anything for South Dakota's public school teachers. The good news may be that he doesn't plan to do much to us, either. (Whew—maybe that means we can focus on fixing that really bad House Bill 1044, the Teacher Inquisition bill.)

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The Department of Transportation is proposing a couple bills to make South Dakota's roads safer for non-motorized travelers.

For cyclists, SD-DOT offers House Bill 1030. HB 1030 seeks to codify the three-foot separation that cars and trucks should give to bicycles. That three feet is measured from your mirrors and the 2x4 sticking out the side of your trailer, not just your wheels. DOn't give that wide berth, and HB 1030 will give you a Class 2 misdemeanor.

HB 1030 also inserts a provision for stupid bicyclists:

No driver of a bicycle may overtake another vehicle on the right if the overtaken vehicle is signaling to make a right turn.

If you need the law to tell you that maneuver is a bad idea... well, I'll just let Darwinian selection handle that problem.

For folks on foot, SD-DOT recommends House Bill 1032, which clarifies crosswalk rules. Right now, SDCL 32-27-1 says drivers "within a business or residence district shall yield the right-of-way to a pedestrian crossing the highway within any clearly marked crosswalk or any regular pedestrian crossing...." HB 1032 gets rid of the qualifier "within a business or residence district," making clear that drivers must yield to pedestrians at crossings on any road. HB 1030 strikes "yield the right-of-way to" and inserts "bring the vehicle to a complete stop for." Under HB 1032, you can't keep creeping up on those walkers; you need to stand on those brakes. HB 1032 extends the reach of the law by adding "entering or" between "highway" and "within." I'll be curious to see the exact definition and geometry of "entering," but I'd say that if I'm driving and I see a pedestrian on the sidewalk with feet in motion breaking the plane of the curb, HB 1032 says I must stop.

Finally, HB 1032 nicely clarifies that if you're driving toward a crosswalk, and a vehicle in front of you has stopped to let a pedestrian cross, you also need to stop. I guess we need to spell things out for some people.

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