Daugaard Meets with Corporate Donors, We Give Him the Facts

As Governor Daugaard meets with corporate campaign donors for his effort to protect taxpayer funded giveaways for big corporations today, South Dakota Democratic Party Chairman Ben Nesselhuf released the following statement and fact sheet on Referred Law 14:

“Governor Daugaard has consistently misled voters about the merits of his new Large Project Development Fund, and now we want to set the record straight. Referred Law 14 expands a broken program at nearly triple the cost without any accountability. It’s about priorities. At a time when state government is cutting funding for our kids, seniors, and families in need, we do not feel it’s appropriate to start a new taxpayer funded giveaway program.”

FACT: Referred Law 14 expands a broken program that the state legislature repealed with overwhelming bipartisan support.

Background: The old construction tax refund program was sunset during the 2010 legislative session after a public records request by five newspapers revealed that the program was granting secret refunds at much higher cost to companies like TransCanada that would have come here anyway. Nevertheless, Governor Daugaard has called the old construction tax refund a “key incentive program” worth keeping.

FACT: The new Large Project Development Fund will cost taxpayers almost three times as much as the old construction tax refund program.

Background: The old construction tax refund program cost taxpayers $69 million over its first 15 years. The nonpartisan South Dakota Budget and Policy Priorities estimates that the new Large Project Development fund will cost at least $189 million over the next 15 years, representing a 275% increase between the old and new programs! On average, the old construction tax refund program cost $4 million per year. The new program will cost approximately $17 million per year.

FACT: All proceeds for the Large Project Development Fund will be diverted from the general fund, which is traditionally reserved for education, health care, and other essential government services.

Background: The Large Project Development Fund created a continuous appropriation of $17 million taken from the general fund at the same time that Governor Daugaard cut $127 million from education, health care, and other essential government services. In trying economic times, our tax dollars must fund the basics before funding large corporate projects.

FACT: The Large Project Development Fund is not subject to annual review and approval.

Background: The Large Project Development Fund represents a continuous appropriation of funds. Unlike standard appropriations, continuous appropriations are neither subject to annual review nor approval, which means our elected officials won’t be able to evaluate whether the program is working every year.

FACT: Referred Law 14 gives complete discretion over the Large Project Development Fund to unelected members of the Governor’s Office of Economic Development without any transparency or accountability.

Background: Referred Law 14 establishes no criteria for the distribution of taxpayer dollars in the large project development fund. Without any criteria for the distribution of funds, taxpayers may never know why the GOED picks favorites in the marketplace – even when the companies that the GOED picks go bankrupt.

Example: At its own discretion, the GOED dedicated nearly $3 million in taxpayer dollars to Anderson Seed Company in late 2010 and early 2011. Less than one year later, the company went bankrupt, costing South Dakota farmers over $2.6 million. The lack of disclosure for taxpayer funded giveaways means we may never know why the GOED gave companies like Anderson Seed millions of dollars in taxpayer funded giveaways in the first place.

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