HB 1230 Referral Organizers Claim Wide Support, Bill Backing Crosses Party Lines

Organizers behind an effort to refer South Dakota legislation that will establish a large project development fund in 2013 say support for their cause has crossed party lines.

“The response we’ve gotten from Democrats, Republicans and independents — South Dakotans across the political spectrum — has been positive,” said Zach Crago, legislative director for the South Dakota Democratic Party (SDDP). “We’re moving forward with a coalition of individuals who want a say on this issue. It’s very important to them.”

The party launched the attempt to refer House Bill 1230, which was proposed by Gov. Dennis Daugaard and supported in the Legislature this year, on April 4. According to state law, Ben Nesselhuf, chairman of the SDDP, has until 5 p.m. Monday, June 27, to submit the required 15,855 signatures to place the measure on the Nov. 6, 2012, ballot. The figure represents 5 percent of the total votes cast for governor in the 2010 election.

Crago would not say how many signatures are believed to have been collected so far, but confirmed that more than 200 people have committed to circulating petitions.

“We’re really happy where we’re standing. We’re going to surpass our expectations,” he said. “We’re hoping to get far beyond the required number of signatures — anywhere between 21,000-25,000 valid signatures.”

House Minority Leader Bernie Hunhoff of Yankton said he always carries petitions with him and has not had a problem getting signatures.

“During the legislative session, a lot of people were frustrated and wanted to do something positive,” he stated. “This is something they can sink their teeth into, instead of just complaining and wondering what will happen next year. Now they can take some action and create change.”

If the referral is placed on the ballot, Daugaard told the Press & Dakotan this week that he will explain to the voters why the program is vital to South Dakota.

“This bill is an important part of my job creation plan,” he said. “Expanding our economy will create more tax revenue for schools, Medicaid and other state needs.”

The Large Project Development Fund will replace a program that sunsets at the end of 2012 and automatically refunds a portion of the sales and excise taxes for certain projects.

“The problem with our (current) tax refund program is that it subsidizes many projects that would have come to South Dakota anyway,” Daugaard wrote in a Feb. 9 column touting the Large Project Development Fund. “That is not a good use of taxpayer dollars.”

To address that issue, the Board of Economic Development will examine the projects individually before determining if they need an economic development grant or will occur without one.

It will be funded by 22 percent of the contractor’s excise tax, and the governor projects it will generate about $16 million for the program in a typical year.

“My plan will use economic development tools to attract or expand projects such as ag processing plants, manufacturing, ethanol plants and wind power generation in South Dakota,” Daugaard wrote in his column. “Those projects employ construction workers, purchase materials in South Dakota and pay millions in taxes. Once completed, they result in good new jobs that strengthen our state’s economy.”

Democrats say they support economic development and job creation but cannot support a program that will divert money from the state’s general fund and has questionable value.

“This is just the wrong funding source for this proposal, and it’s questionable whether these outright grants to large corporations even work,” Hunhoff said. “It’s really poor legislation, and it’s sad that we even have to waste our time and energy doing the referral. It’s legislation that, at best, belonged in the 1950s and not in the year 2011. When you can hardly fund your public schools, you don’t go out and write checks to large corporations.”

The SDDP points out that its members joined Republicans during the 2011 legislative session to support economic development tools such as reform of the ethanol subsidy program, the sales of public lands to bolster the REDI Fund, incentives for the aviation industry and others.

“Many of us who oppose the Large Project Development Fund do support economic development,” Hunhoff said. “We do not want a vote or an initiative against economic development.”

Crago said South Dakotans are already seeing the “extreme effects” of the budget passed by the Legislature and Daugaard.

“A lot of people are responding to the broader question at hand that this (Large Project Development Fund issue) raises,” he said. “Are larger class sizes, higher local property taxes, fewer programs for students who need extra support, fewer teachers and fewer people to help those in nursing homes really worth the cost of subsidizing large development projects like the TransCanada pipeline? People want to decide on this issue. If we get this on the ballot, it will be in their hands.”

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