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What is South Dakota Referred Law 14?

Title: An Act to establish the Large Project Development Fund.

Explanation: The referred law establishes the “Large Project Development Fund.” Beginning January 1, 2013, 22% of contractors’ excise tax revenues would be transferred from the state general fund to the Large Project Development Fund.

The South Dakota Board of Economic Development would use Large Project Development Fund monies to provide grants for the construction of large economic development projects within the state. To be eligible, a project must have a cost exceeding $5 million. Examples of eligible projects include laboratories and facilities for testing, manufacturing, power generation, power transmission, agricultural processing, and wind energy. Examples of ineligible projects include retail establishments; residential housing; and facilities for lodging, health care services and the raising or feeding of livestock.

  • A vote “Yes” is for the establishment of the Large Project Development Fund.
  • A vote “No” is against the referred law.

 


PRO

High paying jobs with benefits, COMMUNITY growth and an increasing tax base that PROVIDES PERMANENT FUNDING to schools and keeps OUR economy immune from national recessions are ECONOMIC GOALS that have near unanimous agreement.

The incentive program behind Referred Law 14 will be the most effective way to achieve these goals.

We are FOR economic development; we are FOR 14.

We are writing to encourage you to vote yes, to be “for 14”. Ask your Chamber of Commerce or Economic Development Committee about why incentives work, and why most of them are FOR 14. They will tell you about more than a thousand jobs created by incentives, about millions of dollars of taxes that provide long term funding for schools, Medicaid, and law enforcement.

You will hear about some successes that will be familiar:

Wind Energy - incentives were essential to bringing wind farms to South Dakota. There are now a number of wind farms offering excellent jobs, paying taxes and farmers. Aberdeen has 400 people are employed making wind turbine blades.

Ethanol Industry – Ethanol plants employ more than 400 people, and pay millions to farmers. The plants, workers and
farmers all pay taxes. These are funds that would not be possible without incentives

Expansion of Local Businesses – 3M in Brookings; Valley Queen Cheese in Milbank; Universal Packaging in Mitchell all expanded because South Dakota offered incentives.

New Industries – ADP which is a high tech data storage industry; Bell Brands (Laughing Cow Cheese) in Brookings; are in South Dakota as a result of strong incentives. Incentives will now be reviewed by the State Board of Economic Development they will no longer be automatic. Businesses receiving grants will be paying construction taxes that will fund future grants. There is no net loss of to the state.

We ask you to vote for 14, you’ll be in good company:

  • Farmers are FOR – 14
  • Local Chambers of Commerce are FOR – 14
  • Cities and Counties are FOR – 14
  • There are over 30 Organizations that FOR – 14

 

Signed by

  • Pat Costello – state economic development commissioner
  • Scott VanderWal, president of South Dakota Farm Bureau
  • David Owen –President, South Dakota Chamber of Commerce and Industry

 


CON

Referred Law 14 expands a broken program at nearly triple the cost without any accountability. The Large Project Development Fund expands the old construction tax refund program that the state legislature repealed with overwhelming bipartisan support 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.

The new Large Project Development Fund will cost taxpayers almost three times as much as the old construction tax refund program. The nonpartisan South Dakota Budget and Policy Priorities estimates that the new program 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.

All proceeds for the new program will be diverted from the general fund, which is traditionally reserved for education, health care, and other essential government services. 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.

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. 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

Submitted by: Ben Nesselhuf, South Dakota Democratic Party Chairman, Sioux Falls, SD.

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