More than two dozen South Dakota economic development organizations want voters to support an incentive program for new companies, but opponents question the means of luring new businesses with bonuses.
Referred Law 14 creates a large project development fund, and the governor’s office gains the authority to choose which incoming businesses benefit from state grants.
Slater Barr is the president of the Sioux Falls Development Foundation. He says companies that get the incentive money buy from local businesses and contribute to the state’s tax revenue.
"We’re getting more than we’re giving, so it’s a good deal for our community," Barr says. "Other states are doing that same kind of calculation. What are we getting and what are we giving? We have to be competitive with that if we’re going to attract these jobs."
Barr says the state has to have a concrete way to entice businesses, because South Dakota is one of only three states with corporate excise taxes.
Opponents to Referred Law 14 say the measure requires little accountability and transparency for what happens with South Dakota tax dollars. They say the excise tax funds could be used for other areas of the state’s budget through the general fund.
David Owen is president of the South Dakota Chamber of Commerce and Industry. He says the incentive to bring business to South Dakota adds money to the general fund as the economy develops.
"You look at the companies that have received these refunds. Not only did they pay in money as they were going through construction, because this isn’t an exemption from tax, this is a partial refund, but now and we’re talking 2,000 jobs, $12 million a year in taxes and payroll $65 million," Owen says. "And astonishingly, especially with value-added agriculture there, we’re talking $3 billion in payments to farmers and small businesses."
If supported, Referred Law 14 allows the Governor’s Office of Economic Development to distribute the money from the contractor’s excise tax to incoming businesses.
