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Legislature winds down old program that made tax refunds to big projects

PIERRE — For the past decade, state government carried tens of millions of dollars on the books year after year waiting for companies to come looking for tax refunds they were owed on big projects in South Dakota.

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This spring, that practice will end.

The governor signed into law last week an emergency act passed by the Legislature setting a May 1 deadline for all claims to be filed.

Any money remaining afterward -- if there is any -- will go to general use.

It is the last act in what began as a very secretive program. For years the state Revenue Department of the Rounds administration treated as confidential the refund amounts and the names of the companies receiving them.

Not even legislators could find out the details.

That changed in 2009. A reporter for five daily newspapers successfully challenged Revenue for access to the permits that companies needed to obtain as a first step to qualifying for the refunds.

As that appeal moved forward, the Legislature declared the amounts of the refunds and the identities of the projects and the companies to be public records.

When all of that information became available, the Legislature decided in 2010 to end the program altogether. Lawmakers set an ending date of Dec. 31, 2012.

In 2011, new Gov. Dennis Daugaard convinced enough Republicans in the Legislature to approve a similar new program. But Democrats successfully petitioned for a referendum, and South Dakota voters overwhelmingly rejected it in the November 2012 elections.

The refund program wound up costing the state treasury more than $99 million through Dec. 31, 2013.

Approximately $30 million of potential liabilities are still on the state's books for the program, however.

The Legislature set a definite window for refunds to be processed for projects that qualified after the 2010 decision to end the program.

But there wasn't a cut-off for older projects. The emergency law taking effect this spring sets the deadline for them at May 1.

Approximately $30 million remains on the books as potential liabilities. The governor has built $19.4 million of the leftover into his budget plans. Another $10 million or so is still in play.

The new law, HB 1070, cruised through the House of Representatives 66-2 and the Senate 31-1.