Weather Forecast

Bob Mercer

MERCER: Veterans home project in Hot Springs part of larger pattern

Email Sign up for Breaking News Alerts
opinion Mitchell,South Dakota 57301
The Daily Republic
(605) 996-5020 customer support
MERCER: Veterans home project in Hot Springs part of larger pattern
Mitchell South Dakota 120 South Lawler 57301

PIERRE -- The escalating price for building the new State Veterans Home at Hot Springs really shouldn't come as a surprise.

Whether a home or a business or a public project, the price tag quite often winds up higher than planned.


For example, bids on state highway work generally are within 10 percent of estimates.

But sometimes they come in much higher.

Often there's a reasonable explanation. Sometimes the state Transportation Commission simply says, go try again.

On June 22, at the call of Gov. Dennis Daugaard, the Legislature convenes for a special session about the veterans home.

The lawmakers deserve a detailed explanation and, presumably, they'll get it.

But the rising price is part of something bigger that has troubled various legislators in recent years.

It is a pattern of the Daugaard administration privately committing to millions of dollars on a few contracts, and only later telling legislators money is needed to make good.

One incident involved the Manpower recruiting contract. The governor reached a $5 million deal for Manpower to find 1,000 skilled workers to move to South Dakota during the next two to three years.

That project, called New South Dakotans, was set in motion in late 2011. He told the Legislature about it during his State of the State speech in January 2012.

Contract documents show the deal was reached with an understanding: It would be valid only if the Legislature came up with the money.

The Daugaard administration paid $98,000 to Manpower in the final two months of the 2012 fiscal year, which ended June 30, 2012, and $534,825.85 so far in the first 11 months of fiscal 2013.

However, the Manpower contract is unlikely to cost anything close to the $5 million that the governor announced.

That's because a second part of the deal happened in secret months ago.

State government quit paying the $49,000 monthly fee to Manpower because results were so poor.

Manpower still gets a bounty payment for each new hire, with the amount varying according to the worker's salary.

The agreement to suspend the final monthly payments in the first year of the contract was done verbally. Nothing is in writing.

The Manpower contract was renewed in March for year two, but without the monthly fee. Other recruiters now can be paid too.

Another incident was the governor's commitment last summer to give $5 million to the Bel Brands cheese-plant project at Brookings and the Baldwin Filters expansion in Yankton.

He asked the Legislature for the $5 million during his December 2012 budget speech.

The latest example came in May. To avoid a re-bid on the veterans home project, the governor decided to proceed with the low bid from Scull Construction.

Again, the contract is contingent on an understanding: Getting the rest of the money.

That's why the Legislature is coming back on June 22.

Lawmakers gave their OK last winter to higher spending on the project of $41.3 million, up from the previous $34.6 million.

The governor will ask again, this time for another $7 million to $10 million on June 22. Don't be surprised if some legislators snarl back.