Economic development spending should be put on hold when the state experiences budget trouble, legislative leaders announced Wednesday.
In a proposed amendment to the “Building South Dakota” economic development package, funding for the program would be dependent on the state also giving normal yearly increases to K-12 education, Medicaid providers and state employees.
If those programs were funded regularly, then millions of dollars every year would be deposited in the Building South Dakota fund to pay for career education, affordable housing and infrastructure projects around the state.
If the state didn’t pay those increases, or cut those programs, then the money set aside from the state’s contractor’s excise tax and Unclaimed Property fund would instead go to the state’s general fund.
This “trigger” helped bring Gov. Dennis Daugaard on board with the economic development plan, assembled by a group of bipartisan legislators.
“The main issue or concern from the governor’s office was protecting the general fund, to be able to ensure that we can adequately provide for education, Medicaid, state salary policy, and those things,” said Pat Costello, Daugaard’s economic development director, who endorsed the Building South Dakota program Wednesday. “When we got comfortable with that, the governor could support the bill.”
Sen. Corey Brown, R-Gettysburg and the prime architect of the proposal, said it wasn’t a tough concession for legislators to make.
“My guess is we as a Legislature probably would have done that on our own (without the trigger),” Brown said.
Sen. Tim Rave, R-Baltic, said the trigger is good policy.
“The trigger mechanism makes it very clear that we will fund our priorities first. I think that makes total sense,” Rave said.
The trigger was part of a package of changes introduced Wednesday for Building South Dakota.
The bill is expected to pass out of a conference committee of House and Senate members Thursday morning, after the amendment is tweaked to address legislator concerns.
Brown also proposed seeding Building South Dakota with $7 million in one-time money. The program’s funding stream won’t start in earnest until 2015. The $7 million will let the state start spending money on education, housing, roads and other areas right away.
Another change in the proposal is more specifics about the education funding it contains. For the next three years, the workforce education subfund — which gets 30 percent of the total Building South Dakota fund — will pay for English language education in K-12 schools. That will cost about $1.9 million for the first year, and around $1.3 million in future years.
The next $1.5 million in the fund will go to high schools to pay for career and technical education. Any money in the workforce education subfund after that will be given as bonuses for K-12 education.
The legislative committee will meet at 9 a.m. to amend and approve Building South Dakota. It would then head to both the House and Senate to be adopted.
So far it seems to be maintaining its bipartisan support. No one testified against the package on Wednesday, or at its prior hearing before a House committee. It faced some opposition on the House floor, primarily from legislators who argued it should be split into multiple bills, but a majority rejected those challenges
Members of both parties praised Building South Dakota Wednesday.
“I’m hopeful we can iron out these details,” said Sen. Jason Frerichs, D-Wilmot. “It almost feels like the 11th hour, but it is not. We still have time left in the session to work through these problems.”
“It’s just a great comprehensive piece of legislation,” he said. “I think it’s a great compromise bill that really addresses a lot of areas of need.”