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MERCER: Out of the darkness, sun shining on state tax refunds

PIERRE -- State government awarded $113,985,231.94 in construction tax refunds for projects in South Dakota between July 1, 1996, and June 30, 2014.

More than $67 million of those refunds came since early 2009.

Those were under a state program that expired at the end of 2012. Projects were allowed to continue collecting their refunds through this year.

We know the names of the companies and the amounts they received but nothing more. They fit on a two-page document published by the state Department of Revenue. (You can find it at on the Internet.)

Until 2009, we weren't allowed to even know the names or the amounts.

That information was specifically kept confidential under a state law. A reporter for this newspaper and several other daily papers found a flaw that allowed the public to learn the names of companies that applied for the refunds.

At that point the Legislature, already concerned about the $46 million of refunds that had already been handed out, decided the names and amounts should become public knowledge.

And with that knowledge came a second decision by the Legislature to set an ending date for the program.

The Legislature then made another decision at the suggestion of Gov. Dennis Daugaard to create a replacement program. Democratic Party petition carriers successfully referred the legislation to the 2012 ballot and voters rejected it.

In 2013, the Legislature created another state refund program. It made several important changes.

Refunds aren't automatic. The state Board of Economic Development decides whether a project needed the refund as an incentive to be built in South Dakota.

Projects such as oil pipelines wouldn't be eligible any longer. The TransCanada Keystone pipeline received $14.3 million, the largest single refund under the old program.

Four legislators would serve in non-voting monitoring positions on the state board. And the board would receive broader responsibilities over new state grant programs intended to assist specific projects and local economic development organizations.

Under the new tax-refund program, the state board awarded $8,746,697 in "reinvestment payments" to seven projects during the 2014 fiscal year that ended June 30.

For the first time, legislators and citizens can see details about each of the projects.

Those include the amount of refund sought, the number of full-time equivalent positions expected to be created, the average hourly wage for those positions, the project's location, local property taxes to be paid by the project and other government assistance received by the project.

The Legislature's Government Operations and Audit Committee received that first-ever report Tuesday.

The state board received nine applications. Two were rejected totaling $482,000 in reinvestment payments sought. Three were approved at 100 percent of the amounts requested. Four were approved at 38 to 84 percent of the amounts sought.

There will be 367 FTEs created: 3M Brookings 17; Marmen Energy at Brandon 250; Novita at Aurora 28; B&H Wind in Campbell County 30; Polaris Sales at Vermillion 20; Consumers Supply Distributing at Dakota Dunes 16; and Campbell County Wind Farm six.

The next step should be posting the report on a state government Internet site that people can find.