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Wismer rips trusts, faces backlash from Lust

PIERRE -- A political love fest between several lawyers for South Dakota's permanent task force on financial trusts and nine of the legislators on the House Judiciary Committee went suddenly off the rails Wednesday.

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South Dakota State Capitol

PIERRE - A political love fest between several lawyers for South Dakota's permanent task force on financial trusts and nine of the legislators on the House Judiciary Committee went suddenly off the rails Wednesday.

The crash came when the tenth, Rep. Susan Wismer, D-Britton, intensely criticized the favorable conditions the Legislature has offered trusts to locate in South Dakota.

Ninety-four private trusts made their home in the state as of Dec. 31 with $234 billion in assets and more than 500 people employed.

But Wismer flipped back the calendar to 1997, the year she said South Dakota "broke the social contract," when Gov. Bill Janklow first appointed a trust task force.

Since then, lawmakers have repeatedly passed statutes encouraging trusts to come to South Dakota. Wismer said they previously weren't allowed in the same fashion anywhere else in the nation.

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She said trusts and video lottery are comparable, except trusts provide better-paying jobs. South Dakota has become a haven for "fiefdoms from generation to generation," according to Wismer.

"It's really nothing to be proud of," she told other committee members and a room with many financial professionals.

"It's the way South Dakota has struggled to find alternative sources of revenue that really in the long run are not good for democracy as a whole," she said.

Her speech came during the commentary time prior to the vote on HB 1072. Rep. David Lust, a lawyer who's been a past chairman of the task force, fired a counter-attack at Wismer.

Video lottery is gambling, while trusts employed hundreds of people in positions higher than those commonly available to many working people, according to Lust, R-Rapid City.

"They're intellectual-property jobs," he said.

Lust said it was "incredibly naïve" that anyone could "think for an instant" the trusts wouldn't be offshore somewhere if they weren't in South Dakota.

He described Wismer's remarks as "a screed."

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"It's just a jaded and biased opinion," he said.

Wismer was the Democratic challenger to Republican Gov. Dennis Daugaard in the 2014 general election. Daugaard won with 195,477 votes to Wismer's 70,549.

Terry Prendergast, a lawyer from Sioux Falls, explained the opening 20 sections of the legislation Wednesday. Pat Goetzinger, a lawyer from Rapid City and a law partner of Lust, took the second group of 19 sections.

This is the seventh year they've presented legislation from the task force.

Prendergast said South Dakota now is considered the premier state in the nation for placing trusts.

He cited a financial journal's rankings that put South Dakota number-one in the top tier of states in 2010, 2012, 2014, 2016 and 2018. Rankings come every two years.

Goetzinger said the legislation is intended to keep South Dakota "at the leading edge and top of the rankings."

He said South Dakota was attractive because there isn't any state or local tax that affects trusts and the Legislature repealed the perpetuities ban in 1983 for Homestake Mining Co.

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That led trust experts to approach Janklow and suggest South Dakota could become a popular site, according to Goetzinger.

"We're the envy of the nation in regard to our trust statutes."

Judiciary members recommended on a 9-1 vote the House of Representatives approve HB 1072. House members could debate it as soon as Thursday afternoon.

They also unanimously backed HB 1028, a bill from the state Department of Labor and Regulation that revises some regulations on trust companies.

The committee put HB 1028 on the consent calendar. That means lawmakers can ask questions but can't debate it when it comes up Thursday.

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