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Daugaard Campaigns to Save His Corporate Welfare Slush Fund from Sensible Voters

Mr. Montgomery brings us Governor Daugaard's first campaign video of 2012. He smiles, walks around the farm with his hands aw-shucks-little-ol'-me in his pockets, leans on a fence in the warm reflective glow of the camera crew's panels, and tells us to trust him with a big corporate welfare slush fund:

The ad is necessarily vague: if the Governor and Rep. Chuck Turbiville and friends told you that Referred Law 14 redistributes millions of dollars from the taxes you pay your local contractor for shingling your roof general fund to a handful of rich industrialists for building big factories, you might not feel like joining the Governor in voting Yes. If Dennis and Chuck told you that they want to give more handouts ($16.2 million) to a handful of corporate cronies than they are willing to invest ($15 million) in thousands of "great teachers," you might question Dennis and Chuck's priorities. If Dennis and Chuck told you that you'll be handing an unelected, unaccountable panel of thirteen gubernatorial appointees millions of dollars to dole out in tax incentives that don't work nearly as well as investment in small local business start-ups, you might find a No vote a no-brainer.

And I have to ask the "Pankratz's" (Mr. Montgomery duly notes MediaOne's apostrophe abuse; it's Pankratzes): what does your support for education have to do with Referred Law 14? Saying "I'm for education; I'm for 14" has the same logical content as saying, "I'm for bunnies; I'm for 14" or "I'm for snuggling; I'm for 14."

Don't fall for Dennis's and Chuck's and the Pankratzes' warm fuzzies: Join me in voting No on Referred Law 14.


  1. mike 2012.10.20

    Can you imagine if 14 and his education bill go down? It would leave a mark on his first 2 years.

  2. Joe 2012.10.20

    I'm not dead against corporate welfare in the economic development sense I just have a problem when the state plays godfather with it. I think it should be done on the local stage not the state stage. If Yankton wants to impose a tax for a fund to support economic development I'm all for that, but I'm just dead against these funds going from Bon Homme (BonHumm) County to be used for a factory in Watertown. I've been involved with economic development and many times when it comes to factories its not South Dakota vs. Nebraska in getting the factory, its Mitchell vs. Yankton or Rapid City vs. Watertown. And I don't think the state should be playing kind maker in these decisions.

  3. Kathy Tyler 2012.10.20

    If we can get rid of the contractor's excise tax and tax the construction w/a sales tax just like any other business, then each municipality would have the money to do just that. I have a plan that will work!

  4. caheidelberger Post author | 2012.10.20

    Joe, you touch on one very good reason that economic development incentives are bad policy. They become a zero-sum game. These factories are going to get built. The jobs are going to happen. It's just a question of where. If incentives ever influence a CEO to build here instead of there, here wins at there's expense... and towns and states end up in a race to the bottom that leaves them with less public revenue than they need to provide necessary services and a bunch of greedy fly-by-night vulture capitalists who exploit labor and the public sector and invest minimally in the community. And the national GDP stays the same.

    At the very least, if this futile fight is going to happen, the state should leave it to the communities to fight each other with their own funds, not pick winners with the losers' money.

  5. caheidelberger Post author | 2012.10.20

    That's an interesting alternative, Kathy! But here's what I'm wondering: what evidence do we have that all these tax incentives produce a net increase in our state GDP and job numbers versus what would happen if we did not offer any such tax breaks? Do we have that data? Or, as is the case with Referred Law 16, are we just shooting from the ideological hip?

  6. Les 2012.10.20

    Kathy, that construction is sales taxed on materials and excise is computed on that total cost including labor. The constructor pays both and the homeowner pays him hopefully profit plus all that.

    There is no sales tax on the labor. ND does not sales tax on any labor(auto mechanic, plumbers labor etc) which makes sense to me.

  7. Kathy Tyler 2012.10.20

    I've done the research; there are no numbers anywhere to indicate that our tax incentives do any good. And there won't be until SD starts evaluating its tax incentives to see what return we get on our investment. (PEW Center on the States, Evidence Counts)

  8. Kathy Tyler 2012.10.20

    Les, I don't know why there isn't a regular sales tax on the labor or why there can't be. I charge sales tax on my services (computer repair) as does my accountant and lawyer. Do you know the history of excise tax?

  9. caheidelberger Post author | 2012.10.20

    Wait a minute, Kathy: are you saying the Governor's Office of Economic Development doesn't evaluate its own incentives?

  10. Kathy Tyler 2012.10.20


  11. Kathy Tyler 2012.10.20

    That was snarky; sorry. According to the above research project, no.

  12. Les 2012.10.20

    There is a sales tax on most labor, not construction where excise is the only state tax.
    Excise is charged on the sales tax paid also.

    How many times do you think it is ok to tax the sweat you produce each day Kathy? Income, sales, excise, FICA, FUTA, much more can we wring out of a dollar?

    I have no idea on the history of excise tax, but can only imagine the rhetoric given to support another tax originally.

  13. Charlie Johnson 2012.10.20

    I will vote no on 14. There is a common thread although perhaps small between 14 and 16. There is this "big brother" approach about handing out money to only those "they" wish to favor--merit pay, incentives,etc. There appears to be this "Santa Claus" approach to every endeavor.

  14. caheidelberger Post author | 2012.10.21

    Good big-picture view, Charlie! Both 14 and 16 expand the ability of the governor to play political favorites.

  15. Shamrock 2012.10.21

    I wonder if Turbiville's endorsement is a great one. LD economic development failed with it's loans to Roo Ranch Hicock's and the grocery store was a colossal blunder.

  16. caheidelberger Post author | 2012.10.21

    That sounds like a good follow-up ad, if we can get voters to pay attention to the connection between Turbiville's endorsement of 14 and his bad track record as an economic development "pro". Again, Daugaard relies on empty labels rather than evidence of achievement.

  17. Troy Ochsner 2012.10.21

    When I pay excise tax, I'm paying tax on tax. I pay sales tax on materials, then I pay another 2% on total cost of job. I'm fine with the way SD taxes contractors. If the state requires a higher tax on labor, the customer is who will get hit with it.

    14 is just another way for politicians to line their friends' pockets and reward political supporters. When I pay excise tax, I don't intend it to be given to huge contractors working on multi million dollar projects. If someone is building a $10 project, do they really need state welfare?

  18. Troy Ochsner 2012.10.21

    I meant a $10 million project.. Lol

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