Middle of Week Three and the Pace is
Starting to Pick Up Speed

Below you will find a brief summary of bills that are being tracked by your lobbyists at the South Dakota Chamber of Commerce and Industry.

SB 36 - An Act to revise the time to file certain tax returns and remit certain taxes.

Businesses that sell goods or services directly to people act as tax collectors for the state.  This process requires businesses to file a report and pay taxes that they have collected during the month after the taxes were actually collected.  This bill changes the date when businesses filing and remitting via electronic transfer must file and hand over the taxes collected the previous month. 

Under current law, tax money that is collected in January must be reported by February 23^rd and the cash sent in by the second to the last day of that month.  This bill moves the filing date to the 20^th, matching the date required by those businesses filing paper returns and moves the date for remitting the taxes to the 23^rd of the month rather than the second to the last day.  This means businesses must send the taxes collected the previous month about 5-7 days earlier.

Why?  The State is having cash flow problems that are exacerbated by the fact that 84% of the funds being remitted are being sent via electronic transfer and arrive later than the checks that are mailed.  In a mind boggling set of circumstance, the State has created a situation where electronic transfers are actually slower than the mail; a feat that one would be tempted to think was beyond the realm of possibility.

The delayed date for electronic transfers was established when those transfers were tantamount to a wire transfer needing humans at every step along the way.  Looking into the way-back machine, one will discover that only 40% of the funds were sent via electronic methods.  Today, the vast majority of funds are sent via computer which involves a process that most six year olds have mastered.

Status.  The South Dakota Chamber of Commerce and Industry has taken no position on SB 36.  Several business groups have objected to the accelerated payment dates.  The bill was deferred until February 1^st by Senate Taxation Committee Chairman Monroe in today’s meeting.

SB 65 – An Act to establish the South Dakota Board of Technical Education and to revise certain provisions regarding career and technical education and post-secondary technical institutes.

Finally, the four state-supported technical schools will get a seat at the grown-up's table.

South Dakota has some of the best technical institutes in the nation but the way they have been governed since the mid-1960s has been a bit awkward and never really embraced as a “post-secondary” education.  Created as extensions of local school districts in Rapid City, Watertown, Mitchell and Sioux Falls, these schools focused on training students who were “good with their hands” and prepared them with basic skills needed on the farm, by local manufacturers, contractors and restaurants.  The school districts have always handled the administration and staffing of these institutions and, over time, the State became the sole source of funding beyond student paid tuition.

The skills needed and education process have become more complex and demanding.  Computers have come to dominate all professions and students at these technical institutes are now training with equipment more powerful than the computers used to put man into orbit and on the moon (heck, everyone’s cars now have more computing capacity than was used back then). 

Program control of these institutes was centered in the State’s Department of Education and formal authority was placed in the State’s Board of Education, which is tasked with oversight of K-12 schools.

K-12 Schools???  That’s literally the kid’s table, arguably important and undeniably more fun, but these institutes are not really high school level education.  Until passage of Amendment R in last fall’s election, the technical institutes couldn’t be recognized as “post-secondary” without being placed under the control of the State’s Board of Regents.  The Regents are brilliant at guiding advanced degree programs and mind-boggling research programs but technical education is a fast moving endeavor that is best guided by the industries needing specific skills.

HB 65 creates a governing system designed specifically to address the needs of fast changing industries for high level skill development and education programs that prepare students for high paying careers earning “head of household” and professional level wages.

The New Approach.  SB 65 begins by creating a statewide board called the South Dakota Board of Technical Education which will have nine members selected from industries that hire graduates of the various programs taught by the technical institutes.  All nine of the board members will be appointed by the Governor, with four of the members chosen from a list provided by each of the technical institutes.  (The Governor can reject the entire list and ask for more nominations.)

The powers and authority of the South Dakota Board of Technical Education will be exactly the same as is currently granted to the statewide Board of Education.  This new board will be able to focus on training people to meet the needs of the future workforce as their sole focus rather than as one item on a very long agenda during a daylong meeting.

SB 65 empowers the South Dakota Board of Technical Education to hire an Executive Director and develop the staffing over time.  The schools will remain administratively part of the local school districts for administration and staffing, assuring that local business leaders will continue to play a key role in each school.

“We knew it – a massive growth of government”!!  Not Really.  While the board will cover travel and meals for members, most of the industry leaders sitting as members will most likely never submit forms for reimbursement.  The Executive Director position is expected to come from within the current staffing for the Department of Education and will not require any extra taxpayer funding. 

SB 65 is a cautious step toward, fulfilling a critical need in the State’s future economic growth.  It is a good bill that the South Dakota Chamber of Commerce and Industry is proud to support.


Work Begins on Initiative/Referendum Reform

The South Dakota Chamber of Commerce and Industry was formed to address public policies that have an impact on those doing business in the state.  The Chamber supports policies that enhance South Dakota’s business environment and opposes policies that inhibit the ability to run a business in the state.  Pursuing this purpose has brought the Chamber into providing leadership on ballot measures in each of the past seven elections and a number of issues in 1990s.

Given the fact that initiatives are playing a larger role in the policies that affect business, such as last year’s IM-23 which would have allowed unions to charge fees to nonmembers, it is with great interest that the Chamber’s lobbyists are following the proposed changes in the initiative and referendum process.

Here is a list of the bills that have been filed as of today that address the process of ballot measures:

Brief Summaries

HB 1035 comes from the Secretary of State’s office and revises a complex set of technical details about challenging signatures and how they are counted.  The Chamber has never mounted any challenge to signatures because it costs too much and is rarely successful.  As much fun as it is to shoot at squirrels, the ammunition used for that sport isn’t available for the actual battle.

HB 1074 is an attempt to limit out-of-state donations.  For ballot question committees, this bill will limit contributions from nonresidents to 75% of the total of contributions from residents.

SB 53 creates an ethics commission.  This is Secretary of State Krebs’ proposal for the ethics commission that is called for in IM-22 which is on the path for being repealed.  The bill outlines how the commission is formed and how it will operate.

SB 54 revises campaign finance regulations.  This is an attempt to clean up the flawed language of IM-22 and establish clear contribution limits which will be more restrictive than current law.  The most startling change for the ballot measure process is placing the limit for individual contributions (from people or businesses) to a ballot question committee at $10,000; which is the same limit for political action committees and candidate campaign committees under current law.

Ballot question committees have always been found to be different from political campaigns for candidates because the decision makers are the general public, which does not have the same potential for corruption or the appearance of corruption that could potentially be evident with an elected official.

Ballot question committees have no limits.  This was evident during the Chamber-led campaign against IM-23 (payment to unions by nonmembers) where the International Union of Operating Engineers put $840,000+ into the proponent’s campaign and were defeated by a campaign that raised $205,000 (along with $140,000 from the National Right to Work Committee in a separate campaign).

Changing to a limit of $10,000 seems to shift the funding of campaigns from those having the deepest pockets to those having the most friends capable of writing $10,000 checks.

SB 59 – effective dates.  Initiatives become law as soon as the results of the election have been officially canvassed, which occurs about a week after Election Day.  This bill would make initiatives become law on July first, the same date as bills passed by the legislature (unless otherwise stated in the initiative).

SB 67 involves changing the number of signatures that are required to place a constitutional amendment on the ballot.  Under current law, the number of signatures needed to place an initiative on the ballot or to have a bill referred to the voters is equal to five percent (5%) of the number of votes cast in the most recent gubernatorial election.  Constitutional amendments are required to have ten percent (10%) of those that voted in the most recent race for Governor.

However, the Constitution has different language for initiatives and referendums, stating that not more than “five percent of the qualified electors shall be required to invoke either the initiative or the referendum”.  That would seem to allow the use of all registered voters as the basis for the required number of signatures which this bill does for constitutional amendments.

SB 77 requires a fiscal note for initiatives so that the public can assess the cost of programs proposed by initiatives.

Other Ideas Being Rumored

There are rumors (which is the favorite indoor sport during a legislative session) that other ideas will be introduced soon.  Several of these ideas include requiring signatures be gathered by a minimum number of legislative districts to make sure voters from across the state have a say in placing items on the ballot; and having the legislature need a 2/3rds vote to place constitutional amendments on the ballot directly.

This is an important policy for all businesses in South Dakota, and your Chamber will be watching all proposals closely.

Thank you for your support of the South Dakota Chamber of Commerce & Industry!

Special thanks to 3M Company for their sponsorship of the 2017 Capitol-ism newsletter series.

Don't forget:
Business Day at the Legislature and the 2017 Manufacturer's Showcase