No matter who is South Dakota's next governor,change is coming to state economic development
PIERRE — All three Republican and Democratic candidates plan changes for the Governor's Office of Economic Development when one wins election Nov. 6 as South Dakota's next chief executive.
Their words have the attention of Scott Stern. The commissioner brought up the topic Tuesday to state Board of Economic Development members.
Stern said the office landed 26 new or expanded businesses from within South Dakota during the past year, compared to 16 from other states. Stern said he would like "a healthy conversation" about what the balance should be.
On Thursday, Gov. Dennis Daugaard gave the $20,000 Giant Vision award for economic development to SMRTGrid, a Baltic utility-technology company led by Todd Christensen and Jamie Hale. It's engaged in beta testing with several major companies.
This Tuesday, Daugaard plans to speak at the groundbreaking for the new Terex Utilities international headquarters at Watertown. Stern said the project would put South Dakota on the world stage as host for a Fortune 200 company.
Terex makes vehicles and equipment for construction and maintenance work. The company closed four plants elsewhere in the world and had capacity to move the main offices to Oklahoma.
"In this circumstance, we were exposed," Stern told the board.
The Republican governor appointed Stern during the summer of 2016 to replace Pat Costello, who returned to Sioux Falls after five-plus years as commissioner. Stern is the eleventh full commissioner since 1987.
Gov. George S. Mickelson created the current version of GOED when he took office in 1987. The Legislature at Mickelson's request temporarily added one percent to the state sales tax to raise $40 million for the Revolving Economic Development Initiative fund.
Since then the program has made many low-interest REDI loans to help businesses create jobs. Few failed. The Feb. 28 monthly report said REDI had $63 million in loans and commitments while $49 million remained available.
Mickelson also convinced the Legislature in 1987 to establish the Future Fund by taking a portion of what businesses paid in unemployment taxes and re-designating it as economic-development grants he and four subsequent governors solely controlled.
Daugaard spread more than $13 million of Future Fund grants in 2017 and more than $11.7 million in 2016, according to state reports.
The Legislature went past Daugaard and Costello in 2013 and started the Building South Dakota programs. Legislators assigned the incentive efforts to the state board to administer and installed four lawmakers as non-voting board members.
But Daugaard used state government financial shortfalls, turnover of legislators, varying degrees of involvement and generally conservative spending to gradually bring more control over Building South Dakota.
At the same time, the GOED staff gradually shrunk, falling from 34 full-time equivalents in 2013 down to 28 in 2017.
Here are the views of the three major-party candidates for governor:
Senate Democratic leader Billie Sutton: "As governor, I'd prioritize the focus of the Governor's Office of Economic Development on entrepreneurs and small businesses in all parts of the state and ensure the program is simplified so everyday South Dakotans can more easily utilize available resources.
"Local development groups and the state should work together to further streamline operations and include every community in our plans for growth.
"REDI Fund dollars should be used to develop residential recruitment tools like housing and Main Street development and provide access to start-up capital to new or expanding small businesses that call South Dakota home.
"Our existing industries remain important, and there are additional opportunities for growth if we invest in technology, housing, and workforce through affordable education and training opportunities—— all of which will renew the spirit of entrepreneurism in the state and provide opportunities for our families and communities to flourish."
Republican state Attorney General Marty Jackley: "The Governor's Office of Economic Development administers numerous economic development programs, including the REDI Fund- which is a great program that has created countless jobs and opportunities for our state since it was created by Gov. Mickelson in 1987.
"I do believe we should review existing economic development programs like REDI to make sure the programs are being effective in an ever changing economic environment.
"I have traveled every corner of the state holding economic development roundtables, and I hear the same message. Workforce, affordable housing, and potential uses of REDI funds are all concerns.
"As governor, I will make sure the REDI Fund is being utilized to match the needs of today's lending environment and to make sure our in-state businesses have the tools to succeed.
"I will also make sure we consistently review and reform state programs so they do not become outdated or stagnate.
"Government does not create jobs, it is the job of government to remove obstacles, and provide resources so jobs can be created by the private sector."
Republican U.S. Rep. Kristi Noem: "South Dakota - including GOED - does a lot of things right. But as a candidate - and as governor - it's my job to look for ways to improve, and I have a fundamental belief that every government agency has room for improvement.
"From 2014-2018, South Dakota experienced roughly half the nonfarm employment rate of growth, compared to the national average. Previous to that, South Dakota nonfarm employment growth was very near to or higher than the U.S. growth rate.
"To reverse the trend, my Kickstarting the Economy Plan centers around keeping South Dakota's taxes and red tape at a minimum - which South Dakota has historically done well - while making the right investments.
"First, as I lay out in my Kickstarting the Economy agenda, I want to use GOED to make it even easier to start and grow a business. Today, SDReadyToWork.com employs the resources of GOED. Unfortunately, it does not adequately address the complete needs of starting and growing a business.
"I have proposed modernizing SDReadyToWork.com to significantly simplify the user experience, while also providing GOED employees with sufficient training to better help those looking for assistance.
"Second, I see GOED playing a bigger role in coordinating workforce development. As I lay out in my agenda, I want to bring GOED together with area employers, the South Dakota Department of Education, the Board of Regents, and tech schools to make sure young people are getting the skills needed for key jobs.
"Third, I believe South Dakota is ready for a new growth industry. The financial services industry flourished in South Dakota during the 80's and 90's because Gov. Janklow made it a priority to provide that industry with low regulatory burdens and an advantageous tax environment.
"Between low taxes, minimal regulations, and the skills training and research available at South Dakota's universities and tech schools, I believe the state has all the necessary ingredients to recruit a new industry - we just have to recruit it and I see a targeted role for GOED in that effort.
"Finally, I've heard from many across the state that more can be done to expand and nurture business growth within the state. I've owned and operated my own businesses throughout my life, so I get that concern.
"If elected, I'll work to incorporate the feedback received from folks across the state into GOED's core mission, helping the businesses putting South Dakotans to work today grow from five employees to 10, 20 or more.
"To be successful, the next governor will need a multi-pronged approach within GOED, as well as the experience to champion change. Again, GOED does a lot of things right, but a more streamlined and responsive agency, combined with a passionate economic development advocate, is going to be the best recipe for job creation and growth for tomorrow."