Governor’s economic plan doesn’t save money

On July 20, the Rapid City Journal editorial board urged readers to support an initiative by Gov. Dennis Daugaard that takes $16 million a year of your tax dollars from schools, hospitals, and nursing homes that depend on the general fund, and diverts it into a fund for large corporate projects.

Of course, the Rapid City Journal has the right to arrive at its own conclusion with respect to this initiative; however, reaching any conclusion requires first establishing the facts.

Underlying the general premise of the editorial is the incorrect assertion that the new Daugaard initiative will cost taxpayers less money by ending an old, costly development program.

This assertion, coming straight from the governor’s office, is demonstrably false. Indeed, the editorial board relied on Gov. Daugaard’s statement that the old program cost taxpayers $23 million a year.

Gov. Daugaard either lied or didn’t do his homework. The South Dakota Department of Revenue provides the numbers: Refunds for large-projects in 2010 reached $11.7 million. In 2009, they hit $18 million. In 2008, $14.9 million. And in 2007, $5 million.

In not a single year of the old program’s life did refunds reach anywhere near $23 million and in only one year will the new Daugaard initiative cost less than the old one. Bob Mercer, reporter and former press secretary for Bill Janklow, called the $23 million figure used by the Governor’s office “tainted and grossly inaccurate.”

In fact, the old program cost taxpayers $69 million over its 15 year lifespan, ballooning in those final four years under the direction of the Rounds/Daugaard administration before public outcry forced the legislature to kill it last year.

How much will the new Daugaard initiative cost you over a similar 15 year period? $240 million.

Compare that again: $69 million for the old program versus $240 million for the new Daugaard initiative. Governor Daugaard didn’t improve the old program in so much as he revived it at much greater expense to taxpayers.

Whether taxpayer funded giveaways for large out-of-state projects is a good investment is a matter of unsettled debate. What matters is where the money is coming from. In this case, that money is taken every year from schools, hospitals, and nursing homes that depend on the general fund – and at much greater expense than ever before.

In contrast, when Gov. Mickelson wanted to establish the REDI fund, a very successful economic development program that still exists today, he didn’t do it by pitting economic development against essential services provided by the state. He believed in the fund so strongly that he created a new revenue source specifically earmarked for this purpose. Mickelson understood that South Dakota needs both economic development and essential services for our kids and seniors.

Gov. Daugaard would do well to follow Governor Mickelson’s example instead of pitting funds for economic development against essential services.

Our children, seniors, and families in need suffered savage cuts so the governor could fund his new large projects initiative. South Dakota citizens want a conversation about South Dakota’s fiscal priorities, and voters deserve the facts to reach their own conclusions.

To be sure, the Rapid City Journal is correct to say “the governor faces the daunting task of convincing voters of the new program’s approach.” It becomes more daunting when he has to stick to the actual facts.

This Forum piece is written by Ben Nesselhuf of Vermillion, chairman of the South Dakota Democratic Party.

 

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