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Daugaard’s Anderson “Solyndra” Seeds Failure Says Vote No on Referred Law 14

Referred Law 14, the Large Project Development Fund, grants Governor Daugaard and his Board of Economic Development appointees unchecked power to disburse 22% of all contractors excise tax to their friends in big business.

Sure to figure in the discussion of the wisdom of such corporate welfare power is Governor Dennis Daugaard's very own Solyndra. Check out page 3 of the Winter 2011 Quarterly Economic Development Report from the Governor's Office of Economic Development:

Gov. Dennis Daugaard at first ribbon-cutting, for Anderson Seed, Winter 2011

Governor Daugaard showed up in January 2011 to take credit for the Board of Economic Development's choice to finance Anderson Seed in June 2010. Anderson Seed may already have been in financial distress as that scissors went snip; the company went belly up in little more than one year.

And you want these same characters handing out big economic favors without legislative oversight? If Solyndra bends you out of shape, Anderson Seed and Referred Law 14 definitely should. Keep that money in the general fund and out of an unelected board's hands. Vote No on Referred Law 14.


  1. mhs 2012.07.09

    Amusing post. Without exception, the one constant critique of the REDI fund since its inception from Democrats is that it doesn't take enough risk. (they also try like crazy to claim the jobs are low-wage, but, that's been repudiated so many times its almost Sibby-like in unbelievability).

    BED has always been wiling to push credit standards for an ag processing project as they are capital intensive, low margin, risky business. They took a risk, it didn't work out, that's what development finance is.

    I'm not sure I like the large project fund, but, your analysis is way off. Only huge, well-capitalized corporations will be able to take advantage of it, so there will be little risk. A good liberal argument would be "tax breaks for the wealthy" as opposed to not "taking risk on the public behalf" that the Dems usually argue.

    You're not turning GOP on us are you?

  2. Dougal 2012.07.09

    When the PUC's Anderson Seed Co. scandal broke, my intuition was it had pals in higher places than the GOP-controlled PUC. Was it a case of Governor DD looking for a quick propaganda hit on his corporate welfare program, causing the watchdogs to back off on their responsibilities? When farmers lose more than $2 million of their own money, it deserves an investigation of malfeasance.

    This scandal stinks badly. Chris Nelson and Kristie Fiegen's silly press conference to whitewash the scandal with a press release calling for more legislation only makes it stinkier.

  3. Troy 2012.07.09


    First, while the Governor's Office of Economic Development approved a loan from two loan funds (MHS is correct that are designed to take risk), the loans were never disbursed. Thus, your innuendo this is comparable to Solyndra where the federal government lost hundred's of millions is bogus and misleading.

    Second, the innuendo they had "friends in high places" is bogus as well since the state loans were canceled. However, Solyndra had "friends in high places" so you are right to criticize Obama. Not Daaguard though.

    Finally, you impugn the Governor, Commissioner of GOED and Deputy Commissioner as "these same characters" when they have no voting power on the Board of Economic Development.

    Get your facts straight, remove innuendo, and we can have a discussion.

  4. Mark 2012.07.09

    Looks like there was a big flaw in the Anderson Seed Co. business plan and the state bonding statute. I appreciate mhs's point, but there's risk-taking with sound risk management and then there's rolling the dice.

  5. caheidelberger Post author | 2012.07.09

    MHS, if other Dems have urged riskier use of REDI funds, I evidently disagree with them. Remember, unlike Dakota War College, I'm not writing from Party Central.

    Troy, who picks the Board of Economic Development? At whose pleasure do they serve? And who shows up to take the credit at the ribbon cutting?

  6. Charlie Johnson 2012.07.09

    And the answer is--GDD

  7. Troy 2012.07.09

    The Board of Economic Development is appointed by the Governor. I know there are still original members on it from Mickelson's term, including a Democrat.

    I strongly urge you to be cautious about drawing connection between being a Governor's appointee and it meaning something. The alternative is what? Appointed by interest groups vs. people who can make sound business loans and know/quantify the risks?

    During my time there, I did get "pressure" from the Governor to "find a way to get the loan approved." But, I was always free to tell him I was recommending against approval and he accepted that. But even if I was recommending it, I made it clear I would not hide any of the warts. They would get full and complete information.

    And, I've stayed fairly close since leaving GOED 18 years ago. I've never heard of any undue pressure from a Governor nor of the Board giving in to pressure. Your charge just doesn't hold water in over a quarter century of loans across now five Governors.

    Governor's do and should show up at ribbon cuttings that are big deals for communities. They also show up at prison's when guards are killed, fires, floods, national guard deployments and homecomings, and annual banquets of charitible groups. It is part of the job description of "Head of State."

    Final comment: If you don't think the state should be making "riskier loans" you should be all over the Solyndra fiasco. SBA, REDI Fund, etc. have a mandate in their authorizing legislation to fill the gap from what is not available solely from the private sector. To oppose this is the most extreme Republican/Libertarian/capitalist position.

    Cory, again, you are arguing with yourself just to find a way to criticize the Governor.

  8. Joe 2012.07.09

    I don't have a big problem with the big idea of having money available to promote business in the state, to give loans, etc. The problem is how much DD wanted, how little control, who they are giving money to, and how tight some of these companies are to certain political leaders. And the big 1 I always thought, was the picking winning and losing communities in the state of South Dakota. I don't have a huge problem with cities giving a boat load for a business to come because they get to live with them, but if the state is going to spend my bon homme county tax dollars on a company that is going to be built in pennington county I'm going to be a little upset.

    The bonding process for the state of South Dakota for companies is a joke, and that is on the PUC and past legislatures.

  9. Steve Sibson 2012.07.09

    "The alternative is what?"

    Following the South Dakota platform preamble regarding a competitive free market. (Unfortunatley the SDGOP lobbyists did not like enforcing that during the platform committee last month.) That means government loans are not made and instead the money becomes tax cuts to spur economic growth. There goes the true conservative Republican reason to say no to RL14.

  10. Steve Sibson 2012.07.09

    "During my time there"

    Troy, that explains alot. You should have learned from the experience that fascism is wrong.

  11. Mark 2012.07.09

    Democrats and Republicans are for economic development. The devil, as they say, is in the details. But, Steve, what does this have to do with fascism?

  12. caheidelberger Post author | 2012.07.09

    I'm not arguing with myself, Troy. I'm arguing to keep millions of dollars in the general fund under the control of the elected Legislature instead of creating an executive branch slush fund with little accountability.

  13. Troy 2012.07.09

    By law they have to submit an annual report which is audited and available to the public. What more accountability do you expect?

  14. Bernie Hunhoff 2012.07.09

    Troy, it's too bad we have to argue over something as important as economic development and jobs but l) there has been too much mystery and waste (as in Trans Canada), 2) not enough accountablility ... the annual report doesn't have to list specific projects, goals, outcomes, etc., so we can't measure what's happening and if you can't measure it how can the legislature manage it?, and 3) education is the best econ. development, we all know that to be true, and the funds for this new program come right out of the general fund which primarily goes to education and health care. If we need the new program, then provide the accountability and find an appropriate funding source as Gov. Mickelson did for REDI and Gov. Janklow did for railroads. They didn't rob the schools for their new programs.

  15. grudznick 2012.07.09

    Mr. Hunhoff, we need to cut those fat cat administrators in education. Cut them, and make your local school boards pay your teachers more I say. Pass and give extra money to the best teachers to keep them I say.

  16. mhs 2012.07.09

    So, one day Troy and I are sitting around the GOED office looking at loan applications and he says to me "we should begin an insidious underground movement after hours to write facist doctrine into our administrative rules". I say, "for the 19 thousand bucks a year the state is paying me, you only get me 8 to 5".

    I thought that was the end of it. Maybe I was wrong.

  17. Stace Nelson 2012.07.09

    Crony-capitalism is wrong whether there is a (D) behind the name or an (R) behind the name. Government has no place intruding into the free market to pick winners and losers. South Dakotans do not pay taxes in order to have that money given out to ventures that may very well compete with their interests, who have never done anything for this state.

    The point was hammered home locally when I could not be given a straight answer on whether a proposed foreign mega-dairy was given any monies from the state to compete against the best interests of my local community.

    Cut the tax and allow a fair free market approach.

  18. mhs 2012.07.09

    Rep Nelson, I suggest you take the time to familiarize yourself with REDI Fund rules and regs. The act creating the fund, passed by your legislative branch in 1987, specifically prohibits exactly the sort of competition with local business you fear.

    To take your point further: isn't it exactly the very same thing that my house is taxed at a rate up to 4 times higher than comparable farmland? Isn't that the state favoring one industry over my interest? Isn't that the state taking my taxes and, by the vastly lower rates on the same value of real estate, giving it to a farmer?

  19. mhs 2012.07.09

    Sorry, hit the "return" button too quickly.

    My point is that the greatest bit of "crony capitalism" in this state lies with our number one industry: agriculture. Since statehood the legislature has gotten in the farm loan business (oops, that one hurt), offered just about every tax break imaginable, from fuel (despite farm to market roads being DOT's largest single expense) to electricity.

    Are you prepared to go to the farmers in your district and propose equal taxation to them with other industries in SD? If not, then you have some soul - searching to do about your beliefs in the free market in our state.

  20. Dave 2012.07.09

    Wow, Troy, kind of throwing your weight around Madville -- "get your facts straight and we can have a discussion" -- why don't you express yourself at your blog? Oh, wait...

  21. Dougal 2012.07.09

    Exactly what I thought, Dave. Having seen Troy's 'facts' under his pen in the now discredited Dakota War College, I'm not sure the discussion we can have is worth a bucket of Daugaard campaign brochures.

  22. caheidelberger Post author | 2012.07.09

    Hey, Troy's welcome here. Wrong, but welcome.

  23. Testor15 2012.07.09

    The answer is not always fascism or whatever catch phrase of the day maybe. Stupidity is a better word.
    I have worked with small businesses for over 30 years organizing and reorganizing them. The loan processes these businesses are put through are of little relevance to how the business will succeed.
    The projects have been frustrated by irrationals needs set out by most South Dakota bankers for data and promises based on data pulled out of someones butt. 5 year growth projects, BS. this butt has more hair on it the the other.
    To these bankers, if you get a CPA to sign-off on the numbers you now have a viable project. Almost never will you find a SD banker willing to stick their neck out for a promising person with a great idea.
    Then there are some venture capital firms. The actual firms promising to do venture capital funding are Richie Rich and wannabes giving lip service to helping people get started. What a joke. These people could not start a business if they had Warren Buffett's money. The y could spend it but actually figure out how to build it to earn it, forget it.
    Then you have this special loan program setup to help friends of friends. A complete waste of time and money. Notice how the explanations are made to say the state's money was never released or something to the effect. You allowed this business to operate but did not allow them to have the capital financing to make it work. I don't know very many details on this particular issue but it appears the company was used for headlines and then as soon as no longer needed by DD, step back. Some farmers get hurt? Who cares, the fund is safe for our friends of friends. Let's bleed some more naive suckers.
    The REDI fund was run this way so why should this be run differently especially if we still have Mickelson and Janklow appointees running it?

  24. Les 2012.07.09

    mhs, though I'm a ranch owner and have spent most of my life there, I dislike the fact our segment has such an impact on our precious roads.

    I proposed to DOT a similar law as our neighbors to the east have. Truckers tell me that in MN, any truck overweight will not be offloaded without penalty to the commercial facility doing the unloading. Our DOT stated in a somewhat confusing manner that in SD our scale operators were not able to determine legal units, goodbye Les.

    So much for me thinking we are as smart as my Norsk friends in the far east.

    Like I tell Rep Hickey on fuel, I love it when they throw the fees on Granny and let me by with no fuel or road tax increase. Gee it feels good to be at the top..... if only I could grow corn... :-(

  25. Troy Jones 2012.07.10

    1). There are good reasons for a discussion about this problem. But if the best argument you can raise is cronyism, you are making a great argument against Obama since he is doing it in spades. This program will be run by an independent board of SD citizens whose personal integrity is unquestionable.

    2). If you want to argue this is distorting the market, I get that. But as MHS says, you better be prepared for a much broader argument on both taxation and spending.

    Bernie, I am not sure I agree with the accountability issue. The Board of Economic Development is required to submit an annual report that details where the invested money. If this is a inadvertent loophole, I would support fixing it. It doesn't argue against the merits of the program. Regarding source of funds, I don't get the distinction between a new tax or allocation of an existing. All programs depend on a tax and all spending competes against other spending for funds. And finally just because education may be the "best", it doesn't mean we shouldn't pursue other avenues. Again, there may be good reasons to oppose this legislation but I'm not hearing anything here very convincing.

  26. Charlie Hoffman 2012.07.10

    Les we did increase the license fees on farmers two years ago and we are still way under what other states pay in terms of weight and age class payments. It just so happens that in SD we do have a tremendous amount of county highways which are basically covered only with license fees and some state and federal grants. Where we are way off base though and the cause of our State highway budget woes is on the fuel tax as we are paying nearly the same amount of tax per gallon now with $3+ fuel costs as we were when fuel cost only $1+. You get the problem, most do not.

  27. Steve Sibson 2012.07.10

    "This program will be run by an independent board of SD citizens whose personal integrity is unquestionable."

    And what makes them more of an expert on what "I and fellow consumers" would want to purchase in a truly fair competitive market system?

  28. Jana 2012.07.10

    Oh for crying out loud.

    The Republicans that have run this state into the rut of being just "almost good enough" are killing us. Rounds/Daugaard (and his 20 something ALEC worshiping ideologues) Gant, Jackley make "Chicago Style" politics look like the Girl Scouts.

    We are so inbred and infested with cronyism that we are losing sight of what it actually is. Sadly, to most of South Dakota, it is starting to look like business as usual.

    There in lies the problem. Too many people have just come to accept cronyism and corruption as the way things are and don't even know that it hurts them or that they can even fight back.

    Republicans, Daugaard, Gant, Jackley = Chicago style politics.

    The only difference is we're more inbred than the Daley's and have less big league credibility than the Cubs.

    Troy, tell us the story about accountability again...

  29. interested party 2013.12.06

    "The 80 percent payout on the credit sale contracts came from the North Dakota Credit Sales Contract Indemnity Fund. This is a fund created by the 2003 Legislature after the failure of Wimbledon (N.D.) Grain Co. The self-funded account reached its $6 million cap on July 1, 2008. Assessments would resume only if the fund should drop below $3 million."

    "South Dakota's Public Utilities Commission last year got a judge's approval to use a $100,000 bond posted by Anderson Seed to give partial payments to farmers in that state who lost about $2.6 million. Some farmers criticized regulators and called for reform in bonding laws."

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