I'd really like to pick apart the big new "Building South Dakota" economic development plan partially unveiled by the GOP and Dem leaders of our Legislature yesterday. But I can't, because the bill that is supposed to carry it to fruition, Senate Bill 235, remains as of this morning an empty hoghouse vehicle.
Now the press tells us that the plan only uses tax dollars from new projects that wouldn't otherwise come to South Dakota. The SD Dems' press release assures us that the plan invests those dollars in K-12 schools, infrastructure, affordable housing, renewable energy, and "community-based growth," which I am given to understand means supporting small-town, homegrown entrepreneurs with the money we get from playing the Toyota lottery.
That sounds better than nothing, and it sounds better than the top-down Governor's corporate-welfare slush fund that we voters nixed in the form of Referred Law 14 last November. But I can't say for sure until I can read the bill, and you and I and anyone else not hanging around the Capitol can't read the bill until Monday, when the promised hoghouse amendment will be posted online after it is moved and likely approved in committee.
There are numerous such empty hoghouse bills waiting to receive and publish their great ideas during the hectic last week of the Legislative session. Especially on an initiative as significant as this economic development proposal, and especially when the legislators apparently have the details in their pockets, ready to go, the Legislature should require the publication of full bills at least 24 hours if not longer before their first hearing in committee. To publicly air specific bill text at the hearing where it will receive its first formal testimony and votes deprives the vast majority of South Dakotans of the opportunity to study, question, and informedly advocate or oppose the legislation that will affect them.
Short of that, I'd like Senator Russell Olson or Rep. Bernie Hunhoff to post the bill text to their Facebook pages today so we can all review it over the weekend and submit our input to our legislators.
How do we determine if a company won't come here without tax incentives? Because they say so?
To me, all this sounds like it will do is make sure no development money will go to South Dakotans that want to invest in their own state.
Cory, I agree with you, but they don't listen to us anyway. The attitude directed at me by the Secretary of Education when I tesified on HB1204 yesterday is an example of their elitist mindset.
Maybe they are finally doing their research and going to recommend an income tax.
http://www.huffingtonpost.com/2013/02/28/state-income-tax_n_2784028.html
Our legislature has long had a systemic problem of failing to keep the citizens of the state informed in sufficient time to respond to events near the end of a legislative session.
I fully appreciate and understand the lack of trust. If I had a digital copy I would post it for you but I don't. There's a fairly thorough report on my Facebook page today and it's open to the public as always, plus I'd be happy to answer any questions there as i get time today because this is a big deal (but i also have a little magazine work to do).
This has been the legislative session from hell. Quite a few times this session our representatives have voted 'yes' on bills that when exposed to the light of day, are shown to be toxic to the average South Dakotan. Good for Monsanto/DuPont et al, good for big ag, good for corporations, but not for the citizen. So now we have a stack of bills with titles and nothing in them. The first to be written is a long and complex thing that we can't read on line. And we must hurry, hurry, hurry because the session is nearly over. Pardon me for not trusting this bill in advance. My advice is to take your bill and toss it in the circular file. Then roll up your sleeves over the next year, do something that includes input from the citizens, write a bill that can be read in advance and see what happens in 2014. Businesses will still be around and SD won't shrivel up and die in the meantime.
Joelie -- I do pardon you for not trusting the process.
But I would say that most of the elements of this bill have been heard in committees and even on floor debate over the last two months, some in previous years also, so it's not such new territory. More a work in progress.
Bernie, based on the two referred laws voted down by the citizens, I don't think more of the same is reassuring. How do we get the legislature to stop voting for what special interests want (including the executive and judicial branches) and start representing the people?
The goals for me in the compromise are l) more selective, accountable use of incentives, 2) a higher value on creating good jobs, 3) investments in education and housing for the poor, 4) more grassroots, community development, and 5) more transparency in the process. There will be plenty of reasons for all of us to like or not like portions of it, but those are the goals and we have a compromise package for you to look at BECAUSE we took a hard line on past proposals that fell short of each and every one of those goals.
Bernie Hunhoff has a history of working effectively with the other party and getting some kind of resolution that reflects an upward, inclusive agenda for South Dakota’s economic future. An impressive example is in his earliest days in the legislature with the Rural Renaissance effort which held hearings with Democrat and Republican legislators to determine a bold direction and focus on innovative programs that would dramatically increase value-added industries and opportunities without undermining the stability of South Dakota’s family farm community.
Resolution, however, is not the same as results. Egocentric and arrogant administrative officials have and could still undermine legislative resolutions like this because they want their brand on any evidence of progress, not a bunch of bipartisan legislators, especially when the administration is on the upcoming ballot.
Bernie is a visionary and a pragmatic politician who has a wise, grassroots sensibility of what is good for South Dakota. I wish there were a lot more people like him in Pierre … and maybe there are. It’s a marvel in this age of ALEC-manipulated mania in legislatures and in Congress that this bipartisan committee was able to develop and support a united an inspired resolution for future economic development efforts.
I'd like to think this marks a turning point in how the legislature and the administration behaves from this point going forward.
The first 4 are actually economic "undevelopment". I explained my argument during the Senate State Affairs committee hearing on what became RL14. Those 4 goals violate the principles of a Lassez Faire free market. When the government interferes, the economic system is less efficient and instead more political. That explains one of the root causes to the huge federal debt.
"It’s a marvel in this age of ALEC-manipulated mania in legislatures"
There is also the problem of CSG/NGA/NCSL manipulated mania in legislatures. Then we have the UNESCO-manipulated mania in public education which supports the ALEC/CSG/NGA/NCSL manipulations. How is that for a bipartisan analysis Dougal?
Did you notice it's available now?
http://my605.com/pierrereview/wp-content/uploads/2013/03/800_Building_SD_Fund_-_Feb._271.pdf
No matter what gloss Bernie puts on this sow's ear of legislation, it is still a sow's ear. This is crony capitalism and the bill should be killed no matter how much transparency or control. We do not need jobs in South Dakota based on industry so fragile or crooked that they need bribes to build in this purported Eden for low tax development.
No matter what the content of these late session boondoggle bills, we should make sure they are referred for a vote and urge citizens to kill all of the hog house crap legislation to send a message to the arrogant legislative desk sitters.
This "process" is another set of reasons for a unicameral with split sessions or, two houses, one based on proportional representation the other on single-member direct election.
Doug, it is a great pleasure to agree with you. Honest. How about 1 per county House of Reps?
Good on ya Bernie!
When you were crafting this bill, tell us what kind of success stories did you envision?
Where do you see weaknesses in the bill?
The real hypocrisy in this discussion is the belief that out here in South Dakota is that we don't need guv'mint investments, despite evidence to the contrary everywhere we go: I-90, I-29, WPA stadiums and bridges, Ellsworth Air Force Base, rural post offices, social security to one of the nation's most senior populations, medicare, medicaid, GI Bill, rural electrication, Oahe Dam and the other mainstem dams, Mount Rushmore, VA hospitals, BIA offices and investments, federal funds for education, milk price supports, ag funding, rail line tax supports, U.S. highways, CRP payments and their influence on pheasant populations, etc. etc. etc. The list is ridiculously long.
Outlays for economic development are important if this tool is used wisely, and nobody is deluded into thinking supply-side economics is all we need to make the economy work. South Dakota's economy is intricate and vulnerable. Our number 1 industry is agriculture and number 2 is a very, very distant second. We don't have a Bakken oil field here, but we have wind which can't be harnessed until transmission issues are resolved.
I've got plenty of well-founded cynicism about cronyism, because the evidence in this state is historic and overwhelming. But, again, seeing the two parties come together to develop a forward-thinking plan that seeks to energyize our middle class economic base is refreshing.
Again, I fully appreciate the cynicism and mistrust out there. And any compromise we reach will only be as good as the spirit in which it is administered.
But look how far we've already come. Five years ago, the legislature and governor were vociferously arguing for the rights of TransCanada to receive incentive payments. Now, nobody wants to argue that projects like that should be included.
This compromise will state (the current language isn't strong enough yet) that the primary purpose for the large incentives is only for projects that won't otherwise occur, and there are better ways to screen and judge that than we've had in the past, including Democratic legislators on the GOED board.
But when incentives are granted -- again, hopefully to projects that wouldn't otherwise occur -- they will trigger monies for K-12 schools, housing for low income workers, and grassroots economic development.
For this bill to make any sense, you have to take a leap of faith and agree that the incentives will only be used on companies that would not otherwise come. Philosophically, I don't like it but we have to live in the real world of economics and in that world I think it can work.
If SD gives money to companies to locate in places they would otherwise pass over, what happens when that company fails or moves on? That is what is being talked about, correct? Locate a less-than-green business someplace in SD that doesn't have much going for it in terms of resources, maybe the schools have lost enrollment, families are moving away, and there is hope that when a business locates there, things might stabilize and some Main Street business will survive. What's the difference between the promises of the Redi-Fund Mickelson Days and this program with the exception of picking up costs for local school districts?
Sorry Bernie, but given the history of the 2013 Session, I am unwilling to make that leap of faith. It looks like one more attempt to jam something down the throats of the citizens of SD after they sent a strong 'no' in November.
"we have wind which can't be harnessed until transmission issues are resolved"
If you Democrats are against crony capitalist, you need to also include green crony capitalism if you want to be intellectually honest. Right now the environemnt in Pierre is one crony capitalist vs another crony capitalist. The loser are the ones working and too busy to know that they are being screwed over. And while we are being honest, admit that welfare to the poor increases consumption of corporate products and services. They (the corporatists) love welfare of all types. Instead of complaining about supply side economics, why don't yout start a business, hire some people, and pay them what you think people should be paid instead of expecting the rest of us to subsidize with tax increases that only provides the funds that makes the political football in Pierre such a lucrative game for the special interests.
So S. Dak. is giving a 5 year tax "incentive" for a company that might pass us by otherwise, they then get an reinvesentment payment and then tranfer ownership(sell company), leave state, while new company then starts 5 year tax "incentive" to operate in S. Dak??? While the Gov. and Legislature hand picks 26 more state employers to administer the different divisions of the "New Development Economic Plan" and state that some funds will be used for education while "dumbing down" the school aid formula's to eventually eliminate them?? I am confused!! We voters already decided this last fall I thought. 26 more state wages and perts to fund,(more state government). Why not develop plans to encourage our locals to come up with new ideas instead of giving monies to out of state companies that don't want to be here?
Steve, We can't have 1 rep per county because the counties have widely differing populations. The 1965 or 1966 "one man- one vote" decision banned districts based on area alone. The decision did make one house redundant if both based on the same populations and voting methods. A proportional representation system has the whole state as one district.
"we have wind which can't be harnessed until transmission issues are resolved"
We have wind which could generate energy locally to be used for fuel production. The PUC views all electricity as having to go through power lines they regulate. Methanol or anhydrous ammonia production would generate employment in the areas with the wind. The erratic power generation of wind is not a problem for some of the fuel production systems.
Lets use economic development funding for projects owned and operated by South Dakotans. Projects that send all profit out of SD don't have much turnover in the economy.
Steve, tax incentives for specific businesses is not a representative example of "supply side economics". It IS crony capitalism because the incentives will go to businesses that give quid pro quo campaign contributions to the ruling party.
"Steve, tax incentives for specific businesses is not a representative example of "supply side economics"."
Yes I understand that and I am against crony capitalism. Lowering overall tax rates will stimulate the economy without government interfering with the market. We all would then have "tax incentives", not just those who have political influence.
Sure it would provide incentives. But 32 years of econometric analysis prove conclusively that those incentives will not create anywhere close to enough revenue to make up for the first order effect of the reduction in tax revenue created by lowering the rates.
Justin, are you referring to analysis like this:
"Our findings are consistent with the broad body of research on incentives. A detailed 2002 study, published in the Journal of Regional Science [PDF] of more than 350 companies that received incentives, found incentives had a negative effect on these companies's ability to create jobs. Using detailed statistical models to control for a wide variety of factors, the study found that companies that received incentives expanded more slowly than others, and worse yet that overall effect of incentives was a reduction of 10.5 jobs per establishment. Incentives had their biggest effect by far not on actual jobs, but on "announced growth," finding that the average business receiving incentives overestimated its future employment by 28.5 jobs."
http://www.theatlanticcities.com/jobs-and-economy/2012/12/uselessness-economic-development-incentives/4081/
Oh my. Are we going to have this conversation in Pierre Monday morning?
I was actually referring to general "supply side" cuts where the impact is ethereal. Any specific tax abatements or credits should require at least a theoretical calculation where there is an acceptable IRR on the state's money.
That analysis is something different and concerning but not surprising. The folks who go after these tax abatements are professional government swindlers, no surprise as to the results. If your investment success relies upon state tax relief, the returns probably arent very juicy anyway.
I can guarantee this though: Those conversations will not take place in Pierre.
@Justin wanna bet? I have printed out the linked article "The Uselessness of Economic Development Incentives" and it is distributed to every member of the South Dakota House of Representatives in advance for our debate on SB-235.
Look who spoke in tabor of the bill. Wasn't it mostly those who had something to gain? As well as something to offer the sheep in the legislature.