Political Smokeout

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.

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

School sentinels bill passes committee 5-4

A proposal to let schools arm volunteer “sentinels” to protect against threats is on its way to the South Dakota Senate.

The school sentinels bill, House Bill 1087, passed a key Senate committee 5-4 Friday, and needs only approval from the Senate to head to Gov. Dennis Daugaard to be signed into law.

Under the proposal, school boards could vote to arm sentinels provided local law enforcement approved and the sentinels underwent training with the state.

Rural schools, located far from local law enforcement and without police resource officers, want the proposal’s flexibility, advocates said.

“If we think we’re immune in South Dakota from school violence, we should probably think again,” said Sen. Craig Tieszen, R-Rapid City. “Our local school officials and local school boards need to be making a decision about the security of their schools.”

Rep. Scott Craig, R-Rapid City, and other supporters emphasized the local control.

“For the schools that do not want ever to have anybody armed… they should want this bill,” Craig said. “It is this bill that guarantees that they make the decision to never have anyone armed.”

But what Sen. Larry Lucas called “the (key) issue of the 2013 legislative session” has plenty of opponents. Most major school groups testified in opposition, saying the sentinels program was risky and unwanted.

Jeff Marlette, a general in the South Dakota National Guard and the superintendent of the New Underwood School District, lamented that South Dakotans would now ask if “our state has gotten so bad and so dangerous and so unsafe that we must now attend school in an armed fortress.”

Lobbyists for the state’s school boards and school administrators proposed an alternative, to set up a task force studying school security. If that task force recommended school sentinels, they said, they could support it, but saw the current proposal as too rushed.

“This amendment would give you another option to talk about school safety,” said Wade Pogany, executive director of the Associated School Boards of South Dakota. “Let’s put a task force together that’s made up of these stakeholders and bring recommendations so school boards could have options to look at.”

But the committee rejected that amendment, with members questioning whether such a task force would produce new mandates and objecting to the last-minute nature of the proposal.

The Senate committee did make several changes to the proposal, notably removing a section added in the House that kept decisions about the sentinels program secret.

Tieszen, the prime sponsor of the bill, endorsed that change.

“This must be a publicly made decision,” Tieszen said.

Rep. Hal Wick, R-Sioux Falls, supports keeping the decision private. He said it would keep would-be attackers in the dark about which schools were and were not defended, and thus provide more protection to everyone.

Once a district has adopted a sentinels program, decisions about it — such as which people were armed — could be made behind closed doors.

Another change might be coming in the full Senate. Sen. Larry Rhoden, R-Union Center, said he’s interested in specifying that voters can refer a decision to create a sentinels program to a public election.

Senate passage isn’t assured, with many lawmakers skeptical. Sen. Jason Frerichs, D-Wilmot, suggested the sentinels bill wasn’t necessary because volunteers could be deputized by their local sheriff to defend the school.

Sen. Corey Brown, R-Gettysburg, said he likes the concept but has too many unanswered questions.

“If we’re going to do something like this, I need to feel more than reasonably confident that we’ve covered all our bases,” Brown said.

But supporters said the sentinels program is both needed and well-thought-out.

“I don’t think anyone has promoted this as the ultimate solution to the problem we face,” said Rhoden. “But it is a step.”

Sen. Dan Lederman, R-Dakota Dunes, said it was a good proposal that keeps decisions with local government.

“What I like about this bill is its permissive nature,” Lederman said. “This bill will maximize local control.”

Sen. Russell Olson, R-Wentworth, lambasted schools for opposing the local option.

“Do you just want the softballs? Do you just want the easy decisions?” he asked school representatives. “When it gets tough should it come back to the Legislature? Make up your mind.”

The Senate must take action on the sentinels bill by March 5, though it has yet to be scheduled for debate. Because the Senate has amended the version passed by the House earlier this month, the House would then get another vote, to either approve the Senate version or try to negotiate a compromise.

Craig said House members will likely be divided on whether removing the secrecy provision is a good move.

If the Legislature approves the sentinels bill, it will head to Gov. Dennis Daugaard, who likes the concept and is studying the proposal’s specific details.

How will Senate State Affairs vote on ‘sentinels’?

Earlier, I speculated about what the decision to send the school sentinels bill to the State Affairs committee instead of the Education committee meant for its fate.

Yesterday, I did something better: I checked on each of the members to see what they thought about it.

A few of them were on the record with opinions about the bill; those who weren’t, I called.

You can read more about the state of the sentinels bill here.

Here’s where things stand now with the Senate State Affairs Committee:

• Brown: Undecided. Doesn’t have a problem with the “concept” but is “struggling” with a few components of the bill.
• Frerichs: Doesn’t ”support the bill in its current form,” would need “to change it pretty drastically” to vote for it.
• Johnston: Has called the sentinels bill premature, saying other discussions of school security needs to come first.
• Lederman: A sponsor of the bill, has spoken critically of making schools gun-free zones.
• Lucas: Is “not going to support it.”
• Olson: Supportive as long as it maintains its local control.
• Rave: Leaning toward supporting the bill, but is “well aware of the concerns” and could change his mind.
• Rhoden: Supportive; believes the state should “let the local governing body make the decision for themselves.”
• Tieszen: Prime sponsor of the bill, has testified for it.

Taking a bit of a leap (some of these statements have been more decisive and clear than others), I’d categorize the committee like this:

Yes votes (4): Lederman, Olson, Rhoden, Tieszen

No votes (3): Frerichs, Johnston, Lucas

Undecided (2): Brown, Rave

With nine members on the committee, the bill needs five votes to pass, and is already one short. If either Brown or Rave votes yes, or one of the no votes changes their mind (without any yes votes flipping), House Bill 1087 will probably pass out of committee.

Snow could cancel Monday’s Legislature

With a big snow event scheduled to sweep across South Dakota Sunday, lawmakers are reconsidering their scheduled meetings on Monday.

The Legislature is scheduled to meet Monday through Thursday next week. But if the roads are really bad on Sunday, the Monday session could be cancelled. Friday would be an easy day to make it up if legislators so choose, though they have other options.

This affects the “Crossover Day” deadline. That’s when all bills have to pass out of their house of origin or be defeated, meaning House Bills have to pass the House and Senate Bills the Senate. In the original schedule, Crossover Day is February 20. That means February 19 is the deadline for those bills to pass out of committee in order for the full House and Senate to act on them Wednesday.

Senate President Pro Tempore Corey Brown said Crossover Day could be delayed if — and it’s still if — the Legislature doesn’t meet on Monday.

(Updated to correct the date of Crossover Day.)