2013 Capitol-ism - January 28

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South Dakota Chamber Of Commerce - Capitol-ism E-Newsletter

January 28, 2013

Serious Work Begins 

Anyone who has been to an amusement park will understand the first few weeks of nearly all legislative sessions.  Most readers are familiar with the concept of an amusement park, those places that feature rides designed to cull the family herd of the spontaneous and overly adventurous members; leaving behind only the reluctant and those susceptible to ruining car interiors on the ride home.

One of the worst inventions found in an amusement park is that contraption that slowly takes riders five stories in the air, only to stop for an indeterminable amount of time - then dropping them in a free fall - causing spontaneous expressions of pure emotion and halting at the bottom with bone jarring swiftness leaving riders dazed and dizzy with some inexplicable urge to repeat the experience. Ah, another session has begun.

The opening issue of this year's Capitol-ism reviewed the underpinnings of economic development policies, given the realities of having the previous refund program sunset and the replacement rejected by voters.  That issue predicted that many ideas would be offered and indeed there have been.  Here is the list of bills and a brief summary of what they are attempting.

HB 1161 - Rep. Munsterman (R-Brookings).  This bill creates a system of incentives and refunds of both state and local taxes.  It contains a long list of disclosures that would be required by those applying for refunds and requires local economic development organizations to conduct thorough economic impact studies.  The bill was to be heard this morning but it was moved to Wednesday's meeting.  Regardless of when the hearing is conducted, the bill will most likely be held until other issues are addressed.

SB 91 - Sen. Begalka (R-Clear Lake).  SB 91 attempts to repeal the Contractors' Excise Tax (CET) over three years.  During the hearing last Friday, the Chamber opposed this bill while appreciating the goal of trying to make the state's tax structure even more pro-business.  The difficulty is that replacing $70-90 million dollars is a huge task that could result in tax reform that is more horrifying.  The CET is annoying, as are all taxes.  Chamber President David Owen told the committee that "If every tax that is annoying were repealed, there will be nothing left."

The Chamber also understands that the CET alone is only part of a tax problem in South Dakota and that the combination of this added on top of sales/use taxes on materials during construction is the real issue.  This bill will also be held in committee for a while.

SB 195 - Sen. Rhoden (R-Union Center).  This bill attempts to return to a policy of refunds for wind energy projects that begin construction after January 1st of this year.  The projects are not subject to a minimum investment that refunds had in previous programs.  This bill would refund 25% of the sales/use tax and 100% of CET.  SB 195 also outlines refunds for transmission lines and wind farm collection systems that are linked to the other refunds.  Capitol-ism will analyze those details as the bill moves through the system, assuming that it isn't culled out by the tilt-o-whirl.

Place Holders and Titles.  There are a number of bills that have been submitted as place holders, meaning that they will be moved through the process while details are worked out about the best approach to economic development.  When . . . okay, if . . . a comprehensive approach can find general agreement, one of these bills would be hog-housed which is the legislative way of saying rewritten, starting with the title.

The hallmark of a place holder bill is the fact that they are all one line long and say nice things like "Incentives to encourage development shall be adopted."  To return to the amusement park comparison, this would be the hall of mirrors with the exit through the rolling tube where nothing looks right and there is a lot of stumbling and falling down.

Early Bills

HB 1055 - UI Fraud Penalties.  Wanna' hear something really strange?  (Why else does anyone read Capitol-ism?)  There is no penalty for some taking unemployment insurance benefits using fraudulent means.  Examples of fraud might be telling the UI system that you applied for three jobs and listing businesses that don't exist; or repeatedly forgetting to tell the UI system that you have a new job and continuing taking payments . . . for months.

HB 1055 will establish a penalty for fraudulently taking benefits.  The penalty will be 50% of the benefits received for the first offense and 100% repayment for subsequent violations.

During the committee hearing in the House, there was debate about the level of the penalty but in the end it stayed at 50%.  The bill came out of the committee and passed the full House on a vote of 61 to 5.

HB 1055 will be heard Tuesday morning in the Senate Commerce and Energy Committee.  Passage is expected, but on the same line of reasoning the Titanic was unsinkable. 

SB 44 is a texting ban on CDL drivers (commercial).  It is being "encouraged" (read forced) by the federal government.  The SD Truckers Association has accepted the fact that this will become law.  Here is another oddity of modern legislation where one class of people (in this case, drivers) are singled out for harsher treatment than others.  The bill only applies to commercial drivers of large vehicles.

There are other text bans.  SB 142 by Senator Vehle (R-Mitchell) would create a statewide ban on texting and SB 106 (youth driving task force) is aimed at restricting the use of wireless devices by young people.  The biggest gap in this approach is that no one else loses their way of life for doing something like texting.  Everyone else pays the fine, gripes to friends and anyone else who will listen (this brings up the whole issue of animal abuse caused by the loyalty of dogs and cats that just sit and listen to anything hoping to receive a treat).  Only commercial drivers get their professional licenses taken away.

HB 1129 - Guns in Trunks.  This concept has made an appearance for at least the past five sessions.  Gun owner groups sponsor this bill which would prohibit a business from adopting a policy banning guns from their property.  It would give citizens an absolute right to have firearms in their locked cars at work, regardless of the policies adopted by your business.  There are businesses that prohibit guns in their parking lots because they are required to have those policies by their customers, including the federal government itself.

The bill was opposed this morning by many business groups, including the State Chamber, South Dakota Retailers Association, contractors, health care and several local chambers.  It was defeated before House Commerce and Energy Committee on a vote of 8 to 4.  The motion was to "defer to the 41st day" which is a motion that kills bills.  There is no 41st day.  The reason for this motion is that it allows debate whereas a motion to table the bill does not.  Here is the vote:



































HB 1097 - Work Comp and Health Insurance.  Most importantly, this is not the bill from last year that extended the time employees have to report an injury from 3 days to 7 days.  That bill would have also allowed the use of out-of-state medical experts and services.  To repeat, the ideas from last year are NOT going to be introduced this year.

Last year's bill included a section that was never controversial and it was designed clearly state that if an injury is NOT a work comp injury, then health insurance (if there is any) is required to pay for treatment.  The Chamber supported this bill in committee where it passed on a unanimous vote.

HB 1066 - Making the Half-Cent Increase in Tourism Tax Permanent.  Those who remember the Rounds administration may also remember that he increased funding for tourism by $1 million dollars early in his first term.  Following the old adage that no kindness will go unpunished, Governor Rounds faced a series of deficit budgets and finally decided that he needed the million dollars back.

Rather than just fight or flee, the industry offered to increase the tourism tax by half-a-penny.  That tax increase was approved on a temporary two year basis in 2009.  It was given another two year test drive in 2011.  This year, the industry seeks to end the constant sunset resets and is seeking to make the current level of tourism tax permanent.

The South Dakota Chamber of Commerce and Industry has played an "us too" role in supporting HB 1066 which passed the House with only four dissenting votes.  It has passed out of Senate State Affairs Committee and will face a final vote on the Senate floor on Tuesday.  it seems obvious that when someone takes enough test drives to have gone past the warranty mileage, it'd be a good and honorable thing to actually purchase the car.

REMINDER:  Business Day at the Legislature is Thursday, February 21, 2013.  Click here for details:  http://sdchamber.biz/chambernews/businessdayatthelegislature/

Thank you for supporting the South Dakota Chamber of Commerce and Industry.


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