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The legislation would have lowered fees paid by employers to the Future Fund – the use and lack of transparency of which has become controversial under the Noem Administration.

Tax cut for SD business should have been a “slam-dunk”

PIERRE – A legislative hearing convened with the intention of discussing cuts to the state’s “Future Fund” quickly evolved into a harsh critique of the current administration’s handling of the fund’s resources.

Lawmakers voted by a single vote margin to defeat a proposal aimed at reducing the fund’s allocation by one-tenth of a percent. The bill, Senate Bill 208 sponsored by Rep. Chris Karr and Sen. Ryan Maher, sought to divert less money to the Employer’s Investment in South Dakota’s Future Fund, established by Gov. Mark Mickelson in 1987 for the purpose of bolstering economic development in the state.

Julie Johnson, the Secretary of Labor when the fund was established in 1987, testified that the intent of the fund was always to have broad application to “economic development” in the state.

“I remember distinctly when we agreed on what the name of the fund should be,” Johnson testified Thursday. “It has been an amazing gift.  I am proud of what it has done for South Dakota.”

Following her testimony, numerous business organizations voiced opposition to the proposed reduction, praising the fund’s role in facilitating economic development in the state.

Sen. Ryan Maher, though, was prepared for the opposition testimony. He brought a similar bill in 2017.

“Half the fun of introducing this bill is getting to watch the parade of opponents come forward.  Their message is always the same, ‘don’t take our pork away from us,'” Maher said. “This doesn’t change any projects from the past.”

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Committee members in particular scrutinized Governor Kristi Noem’s administration’s expenditure of the funds, highlighting a $2.5 million dollar allocation for a rodeo in Sioux Falls, S.D.,  last year. Senate President Pro Tempore Lee Schoenbeck was one of several committee members that grilled the Governor’s Office of Economic Development (GOED) for its oversight of the funds.

“You talk about a shift in legislative power that has been given away, the last figures show $24 million in a fund that the Legislature has no oversight over,” Schoenbeck said. “That is a huge shift in the appropriations authority of the citizens of South Dakota.  All that money is being spent on rodeos and s**t that they won’t even post the contracts for.”

Despite vigorous debate, Committee Chair David Wheeler’s deciding vote led to the bill’s postponement, effectively ending its progression.

However, both proponents and opponents expressed openness to future discussions regarding oversight of the Future Fund.

Still, Rep. Chris Karr expressed disappointment at the missed opportunity for a tax cut but remained hopeful for future conversations on the matter.

“We missed an opportunity to provide a five million dollar tax cut for businesses and employees that would not have made a significant change in the intent of the Future Funds,” Karr said after the hearing. “This should have been a slam dunk issue.”

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