SD House panel approves economic development fundPIERRE (AP) — A comprehensive South Dakota economic development fund proposed by state legislators would be paid for with contractors excise tax collections and money from unclaimed property.
By: Dirk Lammers, The Associated Press
PIERRE (AP) — Neighbor states are blowing past South Dakota in wind-energy production, but Senate President Pro Tem Corey Brown says the problem has nothing to do with airflow.
South Dakota's up-front tax structure is why the nation's fifth-windiest state produces just 784 megawatts in wind energy — a number doubled by North Dakota, more than tripled by Minnesota and is surpassed nearly six-fold by Iowa.
"I think it would be difficult to argue that it's any more windy in North Dakota or Minnesota or Iowa," Brown told the House State Affairs Committee Monday.
Committee members voted unanimously to send to the House floor a comprehensive South Dakota economic development fund plan aimed at helping to recruit large ventures such as wind farms as well as smaller projects to the state.
"It puts the 'Open for Business' sign out in the state of South Dakota, particularly for wind developers," said Bob Sahr, general counsel for East River Electric Cooperative.
South Dakota currently has no incentive plan because a previous program that refunded construction taxes for large industrial projects was allowed to expire on Dec. 31. A replacement plan suggested by Gov. Dennis Daugaard was rejected by voters in the November election.
Republicans and Democrats have worked for the past two months to find a compromise to help level the playing field with other states that do a better job recruiting large projects.
South Dakota charges not only a 4 percent sales tax on construction projects, but also a 2 percent contractors' excise tax on gross receipts. Few other states have a contractors' excise tax, so construction is cheaper elsewhere.
The new plan introduced at a bipartisan news conference last week would refund part or all of the state sales tax paid by projects of more than $20 million that would not located in South Dakota without such an incentive.
The contractors' excise tax collected on those projects would be placed in the Building South Dakota Fund so the state can reinvest in future projects. The new fund would also get a portion of unclaimed property that the state receives from abandoned bank accounts.
House Democratic Leader Bernie Hunhoff said the bill tackles economic development with a lot more transparency, vetting and accountability, and it also helps communities build the infrastructure needed to encourage development.
The plan also incorporates a strong educational element, working with the state's technical centers on training and helping K-12 schools bear the cost of English language training when a project draws workers from other cultures.
Hunhoff said some of these programs would otherwise not be considered by legislators if they weren't packaged in this bill.
"It's going to trigger really good things," he said.
Thirty percent of the Building South Dakota Fund would be dedicated to workforce education. Of the remaining money, 25 percent would go to the South Dakota Housing Opportunity Fund, 25 percent to infrastructure and transportation, 15 percent to local development efforts, 5 percent to the state's REDI fund.
The bill received support from nearly two dozen people and no opposition in committee testimony Monday.