Why the water access issue is so tricky to resolve

This morning, Sen. Corey Brown and administration officials presented their attempt at a compromise bill governing public access to bodies of water lying on top of private lands. The subject of months of negotiations, the legislation made large lakes public, while letting landowners close off access to lakes smaller than 40 acres.

Brown said he sought “an answer that maybe didn’t satisfy everyone but hit closer to the 80 percent of the folks in the middle.”

He drew a fierce response from a number of landowners.

"This bill is a direct assault on my fundamental property rights," said Reuben Parks, of Webster.

Another Webster resident, Mike Dale, agreed.

"To me it seems like the landowner gets to store all this public trust water with no compensation," Dale said.

The specific language here sheds some light on why months of negotiations failed to resolve the issue. Parks, and plenty of others, referred over and over again to private property “rights.”

A “right” is something absolute that people can’t negotiate over. Contrast it with an “interest” — that’s something you can compromise on. So as long as both sides think of access to this water as a question of rights (and many sportsmen believe in a public “right” to access water), any sort of deal is hard to get.

This is rooted in psychology. Over the past two decades, researchers looking at the psychology of morality have identified a special category of values called “sacred values” — “moral imperatives we’re unwilling to compromise on,” per the New York Times:

Faced with mundane choices, people will readily alter their behavior in response to money. You can pay someone to clean your house or defend you in a murder trial. But with issues like gun control or abortion, a fundamentally different calculus seems to be at work. Economic trade-offs — like lifting an embargo in exchange for concessions — suddenly become unacceptable. As Professor (Philip) Tetlock (now also at the University of Pennsylvania) has observed, even to suggest such a trade-off is to invite moral outrage, along with feelings of contamination and a need for moral cleansing.

For example, most people don’t think twice about spending money for a house. But, writes psychologist Stephen Pinker in “The Better Angels of Our Nature: Why Violence Has Declined”:

If someone offered to purchase your child… you would not ask how much he was offering but would be offended at the very idea.

Some research has suggested that the way an issue is framed determines whether people think of it as a sacred value, or a more mundane question of competing interests.

One (slightly dated) example:

When Professor Tetlock and a colleague asked people about President Bill Clinton’s practice of rewarding big campaign donors with a night in the Lincoln Bedroom, they got varying reactions depending on how the question was phrased. If they presented it as an economic transaction — pay $250,000 or more and get a night in the White House — even Clinton supporters were indignant. But when the practice was painted as the kind of thing you’d do for a friend, much less outrage ensued.

Another study looked at the poster child for intractable issues: the Israeli-Palestinian conflict. Various Israeli and Palestinian subjects were divided into groups and presented various peace scenarios. One proposal was a compromise: Israel withdraws from most but not all of the West Bank, but doesn’t allow Palestinians to return to lands they or their ancestors vacated in the 1940s. Pinker:

Not surprisingly, the proposal did not go over well. The absolutists on both sides reacted with anger and disgust and said they would, if necessary, resort to violence to oppose the deal.

Another group were given the same deal, but with a sweetener: the United States and European Union would give a large cash compensation to each side. For moderates, who saw themselves looking out for their peoples’ interests rather than inviolable rights, this made them much more likely to support the deal. “But the absolutists, forced to contemplate a taboo tradeoff, were even more disgusted, angry, and prepared to resort to violence,” Pinker writes.

But the third group was given a different kind of concession. Instead of a cash payment or other incentive, the Israelis and Palestinians were told that the other side would make make a symbolic concession of one of its own sacred values. Israelis were told that Palestinians would either give up their “right of return” or formally recognize the “historic and legitimate right of the Jewish people to (the land of Israel).” Palestinians were told the Israelis would “apologize for all of the wrongs done to the Palestinian people” or “symbolically recognize the historic legitimacy of the right of return (while not actually granting it).” Pinker:

The verbiage made a difference. Unlike the bribes of money or peace, the symbolic concession of a sacred value by the enemy, especially when it acknowledges a sacred value on one’s own side, reduced the absolutists’ anger, disgust, and willingness to endorse violence.

Access of hunters and anglers to lakes in northeastern South Dakota is obviously a much less intense issue than the Israeli-Palestinian conflict. But I would argue, based on the comments made this morning, that much the same psychological pathways are at work.

Water access compromise passes first committee

A tenuous compromise over when hunters and anglers should have access to waters lying over private land passed out of a legislative committee Monday.

The measure in question would give the public access to large lakes over private land, but let landowners close off lakes below 40 acres. Both sides could appeal to the Game, Fish and Parks Commission to open waters that have been marked closed, or close waters that have been marked open.

Landowner groups generally want to bolster their ability to keep unwanted visitors off private land, and consider flooded private land to be just as private. Groups representing hunters and anglers believe the public should have access to those waters.

Sen. Corey Brown, R-Gettysburg, worked with Gov. Dennis Daugaard’s office to try to find a compromise. Brown acknowledged that people on both sides remain unhappy, but said he sought “an answer that maybe didn’t satisfy everyone but hit closer to the 80 percent of the folks in the middle.”

On Monday, lawmakers heard from plenty of landowners who weren’t satisfied with the compromise.

"This bill is a direct assault on my fundamental property rights," said Reuben Parks, of Webster.

Another Webster resident, Mike Dale, agreed.

"To me it seems like the landowner gets to store all this public trust water with no compensation," Dale said.

Most of the opponents came from Day County in northeastern South Dakota, a region of the state that has seen many new lakes created by heavy flooding in recent years.

The groups representing hunters and anglers were silent Monday, neither supporting nor opposing the measure.

After an hour and a half of debate and questions, a divided committee voted 6-3 to pass Brown’s bill, Senate Bill 169, and send it to the full Senate.

Brown and a majority of the committee resisted several attempts to amend the bill, saying those changes could upset the balance between various stakeholders.

Tags: Corey Brown

Legislature won’t discuss EB-5 audits until 2014

A final attempt by Democrats to immediately start an additional audit of the controversial EB-5 visa program was defeated Monday.

The South Dakota Legislature’s executive board voted largely along party lines to remove from the agenda discussion of EB-5 requested by Rep. Kathy Tyler, D-Big Stone City.

Tyler has argued that current investigations and audits initiated by Gov. Dennis Daugaard don’t go far enough and aren’t independent enough to get to the bottom of the visa program. That federal program, a vehicle for wealthy foreigners to invest in American projects, is under federal criminal investigation for its role in funding the bankrupt Northern Beef Packers plant. Attorney General Marty Jackley concluded that a $550,000 state grant to the beef plant was redirected to the EB-5 program.

But a majority of lawmakers on the executive board, which runs the Legislature in between sessions, said legislators could wait for current investigations to conclude instead of authorizing more audits immediately, as Tyler wants.

"Anything that we at this point in time discuss about the EB-5, as long as it’s under investigation by the federal government, is very premature," said Rep. Lance Carson, R-Mitchell.

Senate President Pro Tempore Corey Brown, R-Gettysburg, said the EB-5 program is “absolutely an issue for the Legislature” and that he wants to get to the bottom of things — but not yet.

Tyler disagreed sharply.

"It is our state’s responsibility to monitor this program and we didn’t do it," she said. "To totally ignore this discussion as an (executive) board is unfathomable."

The brief debate got heated. Brown dismissed Tyler as “a retired schoolteacher” when saying he would prefer to learn about EB-5 from an expert instead of her. Tyler in turn accused Republicans of having “closed your minds to any discussion” in spirited remarks.

Aside from the federal investigations, state examinations of the EB-5 program include:

- An external review by a Pierre accounting firm of the Governor’s Office of Economic Development, scheduled to be finished this month

- An audit by the Department of Legislative Audit, scheduled to finish by Jan. 24

- A review by accounting firm Eide Bailly of GOED’s internal control procedures, scheduled to finish on Jan. 3

Sen. Craig Tieszen, R-Rapid City, who said he was willing to discuss Tyler’s requested audit, said lawmakers will definitely continue to monitor the EB-5 program.

"I don’t think that now is the time to proceed. I think we ought to give deference to our criminal investigations, both our state and federal ones," Tieszen said. "On the other hand, this is an issue for the Legislature, and we will be reviewing this at some point. It’s our responsibility to review this, either to review what’s happened and what needs to be done in the past, but perhaps more importantly, how we need to protect ourselves from future incidents."

Amendment would add ‘trigger’ to economic development plan

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.”

Rave agreed.

“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.”

'Any willing provider' defeated in Senate

The South Dakota Senate firmly rejected a proposal attacking restricted “networks” of medical providers under health insurance plans Tuesday.

The so-called “any willing provider” proposal would have required health insurance plans to cover visits to any health care provider in the area who met the insurer’s “terms and conditions.”

Supporters said insurers are increasingly restricting their customers to a limited number of doctors. Particular ire was focused on the insurance plans run by large hospitals, who were accused of trying to force their customers to use the physicians and facilities run by those hospital chains.

“The big (hospital) systems are in the insurance business for one reason — to capture patients and market share, by undercutting competing insurance companies while making up the difference by funnelling patients to their employees,” said Sen. Phil Jensen, R-Rapid City.

Others focused on the consumers, saying this bill would let people keep their doctors if they changed insurance plans.

“Insurance providers are moving in and out of different areas,” said Sen. Corey Brown, R-Gettysburg. “As it occurs, I think it’s only fair that the patients, those who are insured, have the option to continue with the same providers they already have.”

But opponents fought back fiercely. Sen. Mark Johnston, R-Sioux Falls, said restricted networks serve a purpose — saving customers money.

“The more open the network, the higher the cost,” said Johnston, discussing an analysis of insurance options. “You have a totally open network, the premiums for that family were the highest… The more narrow the network, the lower the premium.”

Johnston, who works for Sanford Health, said the bill was being backed primarily by specialty hospitals, who he said had much higher profit margins than the community hospitals who oppose it.

Sen. Deb Soholt, R-Sioux Falls, said provider-run networks can mean more profits for those health care providers — profits that pay for the less profitable care they provide, such as charity care or treatment to people on Medicaid.

“Let’s keep a critical access hospital open in your community so your citizens have a place to go,” Soholt said. “Let’s provide the overarching shelter of overhead within other mechanisms so we can do economy of scale.”

Soholt works for Avera McKennan.

Sen. Bruce Rampelberg, R-Rapid City, said passing the “any willing provider” law would limit capitalism.

“Under the guise of fairness and patient choice, competing businesses are asking the Legislature… to enact laws in their favor rather than working to develop their own products,” Rampelberg said.

Jensen disagreed.

“The legislation embodies the meaning of the free market in the truest sense by fostering competition,” Jensen said.

But supporters of the “any willing provider” bill got outvoted two to one. The Senate rejected the bill 23-11, ending the fight for at least one year.

'Building South Dakota' development bill passes committee

It was a “love fest” Monday for a bipartisan economic development package that passed unanimously out of the House State Affairs Committee.

Around 20 different groups and individuals testified in favor of the “Building South Dakota” plan, including businesses, economic development officials, legislators, local governments and education groups.

The complex proposal includes tax incentive for large business projects, grants for local infrastructure and affordable housing, and millions of dollars for education.

It would be funded by tax revenue from projects incentivized by the fund, and from part of the state’s “unclaimed property” revenue from banks.

No one testified against Building South Dakota, part of Senate Bill 235. Several lawmakers had skeptical questions about part of the proposal, but the committee voted 12-0 to send SB 235 to the full House.

“I think it’s an outstanding effort,” said Rep. Mike Verchio, R-Hill City.

Rep. Justin Cronin, R-Gettysburg, said the bill was a great package even though he doesn’t “agree with every single part.” Rep. Scott Munsterman, R-Brookings, called it a “good comprehensive model for economic development for all of South Dakota.”

Democrats helped refer Gov. Dennis Daugaard’s economic development bill in 2011, arguing it was “corporate welfare” and spent scare state resources that were better spent on education and health care.

But they’re on board with the Building South Dakota plan, saying its safeguards, transparency and money for education and housing make the bill a good package.

“We’ve got a lot more transparency, a lot more accountability, a lot more vetting,” said Rep. Bernie Hunhoff, D-Yankton and the Democratic leader in the House. “From now on, the more incentives you give out, bring them on, because we’re going to trigger a whole lot of good things.”

Not testifying at Monday’s hearing were representatives of Daugaard’s office. The governor likes some parts of the bill but continues to negotiate with legislators on others.

House Majority Leader David Lust said the governor’s office has expressed unease about taking so much money from the state’s Unclaimed Property fund. Daugaard aide Tony Venhuizen declined to comment about the governor’s concerns about Building South Dakota.

The bill now heads to the House floor, which must pass it on Tuesday if it’s to become law. It would then head to the Senate for approval or further changes.

Either on the House floor or in the Senate, proponents will propose several changes to the bill. Its basic structure will remain the same, but some parts will be tweaked, including letting large projects file for incentives earlier than 90 days before the start of construction.

Sen. Corey Brown, R-Gettysburg and the prime author of the legislation, said none of the coming changes will significantly impact the structure of the legislative package.

Reps. Justin Cronin and David Lust watch Sen. Corey Brown pitch a bipartisan economic development bill to the House State Affairs Committee on Monday, March 4, 2013.

Reps. Justin Cronin and David Lust watch Sen. Corey Brown pitch a bipartisan economic development bill to the House State Affairs Committee on Monday, March 4, 2013.

Here’s the Building South Dakota bill (updated)

Sent over just now by state Sen. Corey Brown. He writes that this is a draft and will likely change slightly before Monday, but that the changes will not “drastically change the framework or substance of the proposal.”

Key points: The building South Dakota Fund, which will receive millions in Unclaimed Property money starting in 2015, plus proceeds from large economic development projects, will distribute its money like so:

  • 25 percent: The “Local Infrastructure Improvement Grant Fund,” grants to local governments to build infrastructure for economic development projects
  • 15 percent: The “Economic Development Partnership Fund,” matching grants to local governments and development corporations
  • 30 percent: The “Workforce Education Fund,” support for English language learner subsidies and career and technology education.
  • 25 percent: The “South Dakota Housing Opportunity Fund,” making grants and loans for affordable housing targeted at “low to moderate income households” with income at or below 115 percent of the area’s median income.
  • 5 percent: The “Revolving Economic Development and Initiative Fund,” making grants and loans to business projects less than $20 million.

Money wouldn’t start flowing in earnest into this fund until 2015, when it starts getting Unclaimed Property dollars. 

That means the English language learner program wouldn’t have much, if any, money until a year from now. Lawmakers are discussing making a one-time investment to start the program this year.

Once the money is there, the English language learner program gets first dibs on the Workforce Education Fund. Any money after that is directed to career and technology education.

The local infrastructure grant program has an interesting clause: “No county is eligible for a grant for infrastructure improvements, unless the county imposes the maximum wheel tax… or supplements road funds with general funds or other funds in an amount equal to or greater than what may be generated from a wheel tax increase.” 

The Housing Opportunity Fund specifies that 30 percent of the money is to be spent in Rapid City and Sioux Falls (technically, “municipalities that have a population of fifty thousand or more”) and 70 percent for everyone else.

The big new program, which won’t have to wait for the Building South Dakota fund to fill up, is the large project grant fund. That gives sales tax rebates to approved projects over $20 million that wouldn’t have come to South Dakota without the incentive. The contractor’s excise tax revenue from those projects will go into the Building South Dakota fund instead of the general fund.

Contractor’s excise tax is a 2 percent tax on construction costs, which means it’s not applied to the entire cost of a project. That means that even a massive $100 million project would only contribute $1 to $2 million into the fund, whereas half the Unclaimed Property money could easily be $15 million or more each year.

Take a read:

Building South Dakota draft

When will we see the economic development bill?

After the jump is my story from today’s paper, summarizing the new economic development package unveiled by a bipartisan group of legislative leaders yesterday.

It was a tough story to write, because I had only descriptions (often vague) of the bill’s mechanics to go on.

That’s because the specific language of the bill hasn’t yet been released.

UPDATE: Now it has. Read the bill here.

The leaders promised it would be posted online at some point this weekend, though they didn’t say where that would be posted.

Hopefully that actually happens, so people can study the idea before the 7:45 a.m. hearing on Monday when it will be adopted.

From some of the language used Thursday, I gather the reason bill text wasn’t released immediately was they were still tweaking the proposal. 

"We’re on the verge of one of the more complex and bipartisan compromises I’ve seen put together in a long, long time,” Rep. Bernie Hunhoff, D-Yankton said. (Emphasis added.)

Once I see a final version I’ll post about it here.

Here’s my story:

Read More

Sen. Russell Olson, Rep. David Lust, Rep. Bernie Hunhoff, Sen. Jason Frerichs and Sen. Corey Brown, the top legislative leaders of both parties, introduce a new omnibus economic development package on Thursday, Feb. 28, 2013.

Sen. Russell Olson, Rep. David Lust, Rep. Bernie Hunhoff, Sen. Jason Frerichs and Sen. Corey Brown, the top legislative leaders of both parties, introduce a new omnibus economic development package on Thursday, Feb. 28, 2013.

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