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State Of The State Kicks Off Session

Governor Dennis Daugaard delivered the annual State of the State Address on Tuesday (January 14, 2014) in Pierre to the opening session of the state legislature.   Daugaard began by highlighting the state’s accomplishments.  Daugaard has preached fiscal conservatism throughout his term as Governor—and he told lawmakers their work has paid off.

“We’ve structurally balanced our budget without resorting to any gimmicks.  We’ve conservatively estimated revenue, and have enjoyed modest budget surpluses," says Daugaard.  "We’re one of a very few states in the nation to have a public pension that’s over 100 percent funded," he added.    "Last year we re-financed our tobacco funds—resulting in a $43-point-nine million dollar, present-value increase to the education enhancement trust fund.    And we’ve done it all without raising taxes.  Achievements like these, and our low debt load, led to South Dakota being named the best-run state in America in 2012,” says Daugaard.

EB-5 and GOED

The governor also took some time during his address to discuss the on-going EB-5 scandal. The issue deals with alleged illegal activity in the Governor’s Office of Economic Development.  Daugaard called for an Attorney General’s investigation into the actions of the department last spring, and released those results last fall.  Daugaard told the joint session of the Legislature he didn’t stop there.

“I have ordered three separate, independent investigations of the Economic Development Office, in regards to this situation.  One auditor is reviewing every disbursement made, under several economic development programs, going back to 2009.  This audit will confirm there is a signed agreement or proper application—and supporting documentation for every disbursement.  And that each payment amount was correct, and each disbursement was made to the proper recipient,” says Daugaard.


Concerns surfaced over the G-O-E-D’s conduct with funds from the federal E-B-5 program going to fund the Northern Beef Packers plant near Aberdeen.  E-B-5 supplies companies with concessions regarding foreign workers and visas.  The former head of the G-O-E-D, Richard Benda, died of an apparent self-inflicted gunshot wound last fall.

But some like Democratic State Representative Kathy Tyler say the Governor isn’t going far enough in his investigation into the EB-5 scandal.  Tyler is calling for a forensic audit; she says the current effort is not thorough enough.

“Also, you know his audits are going back to 2009 only.  And if you look back, the whole EB-5 issue started with the (inaudible) dairies back in 2006, 2007.  So there are still issues I think need to be covered.    But I’ll wait until I see what these audits say and then go from there,” says Tyler.


Tyler says she has a bill ready to introduce if the report from the current audits is not made before the deadline for new legislation.  She says the bill would form a legislative committee to oversee the audit process.   

Economic Development

Governor Dennis Daugaard is working to ensure enough revenue for the Building South Dakota fund.  That program provides tax incentives for major projects, and provides increases for education, housing and state infrastructure.  Daugaard says he’ll propose to earmark a $30–million, one-time payment to keep the fund operating.  But the Governor told lawmakers he has another idea to provide money for the program.

“Under current law, budget surpluses are transferred into budget reserves; part of our rainy day fund at the end of the fiscal year.  I’m proposing to change that in certain circumstances.  Under my proposal, the first priority for surplus funds will be to keep our rainy day fund at 10 percent of general fund appropriations for the year just ended.  Once that is met, the second priority will be to automatically pre-fund Building South Dakota, so that the program is always funded one year in advance,” says Daugaard.


Daugaard says the one-time $30-million pre-funding is meant to operate Building South Dakota for more than one year.  He says many lawmakers would agree the money is a good way to spend mid-term money.

Daugaard says he is also working to improve opportunities at South Dakota’s four technical institutes.  He asked officials with each school to put together a list of equipment needed to train workers, and awarded a package of nearly $4-million of equipment for programs in high-need fields.

“In addition—today I am announcing, that I’ll be awarding the technical institutes another one-point-five million dollars; that’s a half-million dollars a year over the next three years, for scholarships in 20 high-need program areas.  These scholarships of up to $5000 for two-year programs, will be awarded to students who agree to stay in South Dakota and work in a high-need field for three years,” says Daugaard.


Daugaard also highlighted his effort to keep workers in the state and spur economic development through his South Dakota Wins program.  Daugaard says South Dakota needs to do a better job attracting workers to the state.  

But some critics say the program isn’t going far enough.  State Representative Kathy Tyler says the Governor’s effort to attract workers won’t succeed if South Dakota’s wages remain lower than several surrounding states.

“One of the things that he commented on is that South Dakota has the lowest cost of living in the nation.  We’ll that’s because we don’t have a very good salary base for our workers.  You know in order to expand your workforce, you have to be able to pay your workforce,” says Tyler.


Across the aisle some GOP lawmakers counter that it’s the workplace that should dictate wages.   They note that small business is the backbone of the economy and should not be burdened by too many regulations.    South Dakota voters have a chance to weigh in on the issue.  An increase in the minimum wage is on the ballot this coming November.


In Tuesday’s State of the State Address, Governor Dennis Daugaard pointed out sectors of the economy with worker shortages.  Governor Daugaard says rural health care is one of the most glaring professions in need. health care.  He says most providers are found in and around South Dakota’s largest cities.

“Fifty-three of the state’s 66 counties are federally-designated as health professional shortage areas—either professionally, or completely.  Health care providers who are raised in South Dakota, educated in South Dakota and on-the-job trained in South Dakota, are more likely to stay in South Dakota.  And we have to work even harder to make that happen in rural areas.  And that’s where we’ve been focusing our efforts,” says Daugaard.


Within five years of starting the medical school expansion the governor says the plan creates 60 new openings for students at the University of South Dakota School of Medicine.  He says once that’s taken care of, officials need to work for residency programs so new doctors can complete their training in the state.

Meanwhile some state lawmakers are backing efforts to see Medicaid expansion under the Affordable Care Act.  They say the state should sign on as a way to insure those in poverty have fair access to health care.  It's a call Daugaard says he's not ready to make at this time until the program has a chance to play-out.  A new survey shows a majority of South Dakotan's support Medicaid expansion.

State lawmakers now begin the 2014 legislative session – they will spend the next few months considering the governor’s proposals and debating a number their own measures.