Schools Lose to Corporate Welfare on 9-4 Vote

School students lost to corporate salesmen in the House State Affairs Committee today.

“Anyone who believes that the state’s priority should be educating our youth and caring for the sick and elderly should contact legislators before this goes any further,” said House Minority Leader Bernie Hunhoff of Yankton.
Hunhoff’s effort to amend or kill the bill (HB 1230) was joined by Rep. Mitch Fargen of Flandreau, Rep. Susy Blake of Sioux Falls and Rep. Peggy Gibson of Huron.

But they were out-voted by all nine Republicans on the committee, who supported the Daugaard administration’s creation of a new “large projects” development fund that takes money from the general fund, whose proceeds fund education and health care.

Administration lobbyists couldn’t estimate how many jobs they hope to create from the fund, which will take $15 to $20 million a year from the general fund and redirect it at the governor’s discretion to large projects that locate in South Dakota.

Republicans argued that it’s not a new fund but a refined idea of an existing give-away program that was ended by the legislature last year because of controversy over whether it was effective in creating new jobs that wouldn’t otherwise exist.

The most wasteful subsidy was awarded to TransCanada Pipeline, a foreign oil company that built a crude oil pipeline across East River and is planning to dig another across West River. TransCanada may have received up to $38 million in subsidies for a transcontinental pipeline that created very few permanent jobs in South Dakota, and would have gone through our state anyway.

Democrats argued in committee testimony that public schools were under-funded in South Dakota even before the recession. Then, the school formula was ignored when the recession affected state revenues. Federal dollars sent to help the schools never left Pierre. Line items in the budget for technology, teacher training and other special expenses were cut. Finally, the new governor advocated a 10% cut in the 2011 session.

“Taking $15 to $20 million more is unconscionable,” said Rep. Fargen, the Assistant Leader of the House Democrats. “Everyone says education is the top priority. They agree that it is the best form of economic development. But this vote says it’s less important to have an educated workforce than to give millions in questionable subsidies.”

Hunhoff said the give-away program is misguided for three reasons.

“First, we have the lowest unemployment rate in the nation and many of our unemployed need education and training to get a job. We hear constantly from existing employers who can’t find trained and qualified workers,” he said.

“Secondly, it’s doubtful that subsidizing large projects has much if any impact on where a company locates. There’s lots of date to show that workforce availability, average wages, education, quality of life, transportation, utilities and numerous other factors rank far above taxes and subsidies when officials make their location decisions.”

“Thirdly, small businesses are creating most of the jogs in the USA,” Hunhoff said. “That’s especially true in South Dakota. Look around your own community. Many of our best employers are companies that started small and grew. We should be encouraging small start-ups and innovation. Instead, this program taxes the small guys and the existing companies to subsidize newcomers who don’t need the assistance and probably would come without it.”

Hunhoff, Fargen and the Democrats in the legislature have supported the Daugaard administration on numerous other economic development initiatives — including reform of the ethanol subsidy program, the sales of public lands to bolster the REDI Fund, incentives for the aviation industry and others.
“We are eager to help our Republican colleagues work toward better paying jobs for South Dakotans, but it is wrong to do so at the expense of schools and health care,” Fargen said.

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