In Tuesday's budget address, Governor Dennis Daugaard proposed dropping $30 million of unexpected revenue (you and I should have such problems!) into the Building South Dakota Fund. This fund arises from 2013's Senate Bill 235, the omnibus economic development bill that won support from most Republicans and Democrats in Pierre.
That $30 million would have made its way into the Building South Dakota Fund over a few years, but Governor Daugaard wants to play a trick that converts this year's one-time money into ongoing budget savings that he can justify directing toward education, health care, and other programs. Clever.
Speaking of clever tricks, Governor Daugaard would drop this thirty-million-dollar windfall mostly in the lap of the Governor's Office of Economic Development (GOED), the one state agency facing state and federal investigations of its activities. The Governor is not only resisting calls for a perfectly legal and prudent audit of the GOED's activities, including most prominently its dubious EB-5 visa investment program; he's saying he trusts GOED, prior to the completion even the limited audit he has ordered, with a huge chunk of new money.
Does anyone else think giving GOED this windfall is premature? Why, yes:
...This is essentially a pre-payment of BSD's costs to the state, which would have taken years to pay off, including interest. I really think this is a bad idea. For one thing, in this environment of ultra-low interest rates, with long term borrowing still available at very low single-digit rates, I don't think it's a great idea to pay off anything, much less an untested agency that may prove to be of little or no value. That's the businessman inside of me speaking.
...Building South Dakota sounds like a good idea, but so did the Governor's Office of Economic Development at one time. The GOED fiasco itself should be fair warning that economic development agencies need careful scrutiny and oversight--and what better way to exercise that sort of control than by making agency directors come forward every year with a score card attached to their request for annual funds? No way can I see handing over a big chunk of cash at the outset and telling those folks to have at it. Make BSD fight for its money like every other agency [John Tsitrian, "Hold On There, Governor Daugaard. Let's Think About Pre-Funding That Economic Development Agency," The Constant Commoner, 2013.12.04].
Tsitrian suggests other budget items, like K-12 education and healthcare, that may be a better investment of our unexpected revenue. Our public schools and Medicaid programs certainly aren't currently answering to the FBI for mishandling of funds. They aren't drawing public petitions and editorials demanding that the state take action to find and reclaim misappropriated money.
Legislators, economic development is an important policy area. But before we hand GOED a huge new pot of money, let's at least get a full accounting of what GOED did with the money we've already given them.
Good that Mr. Tsitrian is able to sit up and take nourishment.
Fair concerns but for the record GOED doesn't get most of the money, but rather it goes to education low income housing projects and rural grassroots economic development. I don't like the upfront money because I think it will be accompanied by an effort to remove the ongoing funding source for all the above.
Thanks, Bernie! SB 235 divides the money as follows:
" (1) Twenty-five percent of the fund shall be transferred to the local infrastructure improvement grant fund created in section 4 of this Act;
(2) Fifteen percent of the fund shall be transferred to the economic development partnership fund created in section 5 of this Act;
(3) Thirty percent of the fund shall be transferred to the workforce education fund created in section 10 of this Act;
(4) Twenty-five percent of the fund shall be transferred to the South Dakota housing opportunity fund created in section 13 of this Act;
(5) Five percent of the fund shall be transferred to the revolving economic development and initiative fund created in § 1-16G-3 for the purpose of making grants to projects that have a total project cost of less than twenty million dollars."
Just so we're clear: #1 and #2 go to the new Board of Economic Development, right? And that Board operates independently from GOED?
Cory, I don't think the $70 million windfall from which the $30 million for BSD is connected to Sec 2 of SB 235. This FY's funding has already been set, and because the cash came in during this fy it isn't subject to the formula you quote because that will apply to unclaimed property money that comes in after July1, 2014. This $70 million is actually free-standing cash, basically uncommitted to anything other than what the Gov and the legislature want to do with it.
Not a nickel until there is in place independent and verifiable 3d party regular auditing that includes verifiable ROI and real accountability for board members of the GOED. Remember: trust, but verify? Well, do it!
Presently it appears the governor is advocating reinforcing failure. Is the learning curve in Pierre as flat as it appears?
I understood that the $30 million would run thru the formula.
John, as flat and meandering as the James River.
Not sure I know what you mean, Bernie, but I'm pretty sure that pre-paying debt with the unclaimed property money that funds BSD isn't anywhere in SB 235, though I may have missed something while reading through it. At some point the Governor noted that to get this thing through would take legislation to authorize it, which I take to mean that it's an extraordinary, one time event.
Right on, John, though I would apply your sentiments to the ongoing funding that's now in place and still deny BSD the use of this money to pre-fund its existence. I'm a business guy and strongly support the concept of private-public efforts aimed at economic development. BSD came into existence with a solid funding source in place and was touted as having enough resources to get its job done. I say leave well enough alone and get this windfall cash into circulation throughout the state.