State Chamber official salutes ‘terrific session’

• David Owen

David Owen, president of the South Dakota Chamber of Commerce and Industry, addresses a room of more than 50 people Wednesday during a noon meeting about this year’s legislative session at the Ramada Inn in Mitchell.

Talk about it

Ever-quick with a one-liner, David Owen summed up South Dakota’s 2012 legislative session with, “The budget was easier.”

Owen, president of the South Dakota Chamber of Commerce and Industry, delivered his take on the 2012 session during a packed noon meeting of the Mitchell Rotary Club held at the Ramada Inn.

“I thought we had a terrific session,” Owen said in his trademark breezy style, “but then, I’m genetically mutated to enjoy such things.”

Of the 471 bills introduced by both legislative houses, Owen said 258, or 54 percent, passed. The increased bill count by itself showed a growing confidence in the state’s economy, he said.

The greatest problem the state faces is to support business growth that will create jobs and permanently bolster revenues.

“We had one of the healthiest debates about business incentives and their importance to the state,” he said.

The session fostered rare, but muchneeded conversation about economic development incentives, he said. South Dakota is a great state for an established business, Owen said, but it’s tough on start-ups and, in the long run, isn’t that competitive.

“South Dakota has a problem with large investments because our tax structure is brutal for projects that are in the $10 million to $50 million and higher range,” he said.

On all construction projects business must pay “2 percent to the city — if you’re in town; 4 percent sales and use tax on the material, and on top of that, a 2 percent contractor’s excise tax, which is applied to the materials and the labor — that’s a 2 percent bill on the final bill,” Owen said.

That higher toll can quickly erode some of the benefits of building in South Dakota, he said, and can be particularly burdensome for large-dollar projects.

On the other hand, he said, some argue that projects like the Keystone oil pipeline don’t need incentives.

Referred Law 14, a veto referendum which will be on the November ballot, would stop the implementation of HB 1230, which is scheduled to become law by Jan 1. That bill would create a large grant project fund that would itself be funded by using 22 percent of the current excise tax.

The fund would then issue grants to qualifying businesses that decide to build in the state. The money would have to be approved and allocated by the state Board of Economic Develop- ment to qualifying projects of $5 million or larger.

Killing HB 1230 is being backed by Democrats who see incentives as a form of corporate welfare, Owen said, but the incentives are needed in his view. Owen said his organization will urge voters to vote “yes” to keep the bill.

“We’ll hope voters will look at that and see that it creates permanent funding for schools, employment for people and see that this is how we grow an economy and create tax revenues,” he said.

The state Chamber has also supported the pay incentives in HB 1234 that will create market differentials for math and science teachers, and bonuses for the top teachers in a school district.

“Pay market differentials work as incentives in the private sector,” he said, and they will also work to retain the best and brightest teachers. But Owen said those incentives may still not be enough to draw needed talent to more remote school districts.

HB 1234 is opposed by the South Dakota Education Association, could be referred to voters this fall, Owen said. Committees will continue working on alternatives to No Child Left Behind in the next year, he said.

Also referred are measures that will add a one-cent sales tax to fund Medicaid and education; as well as a measure to raise the nickel-a-mile constitutional mileage allowance limit for state lawmakers.

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