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Daugaard vetoes tax refunds for energy projects

Gov. Dennis Daugaard has vetoed an economic development bill that gave tax subsidies to power companies.

The measure, HB1228, was a last-minute proposal in the legislative session. It gave automatic tax refunds to large wind energy projects, and to large environmental projects at traditional power plants.

The latter clause was aimed at helping the Big Stone power plant in northeast South Dakota with a planned upgrade.

In his veto message, Daugaard said HB1228 had many flaws, which he said derived from the haste with which it was assembled.

“This legislation… was not fully and completely vetted,” Daugaard wrote in his message.

Saying the bill would also benefit electricity customers in neighboring states, Daugaard urged lawmakers to take the time “to determine whether tax breaks to benefit citizens of other states is the best use of (scarce state) dollars.”

The governor also criticized the requirement that projects be worth at least $50 million to qualify. Some smaller proposed projects, like a 20-megawatt wind farm planned near Belle Fourche, would not qualify under HB1228.

Daugaard also said the Legislature shouldn’t pass a new economic development plan until the voters decide on his own plan. The Legislature approved an economic development grant fund proposed by the governor last year, but the South Dakota Democratic Party referred it to a popular vote this November.

“I am committed to working with stakeholders in the energy arena to develop mechanisms to incentivize their industry,” Daugaard said in the statement. “However, HB1228 is the wrong mechanism at the wrong time.”

Legislators will convene in Pierre on Monday to consider Daugaard’s veto. It takes a two-third majority to override a veto – 24 votes in the Senate and 47 votes in the House of Representatives.

HB1228 passed the House with 52 votes, but only got 18 votes in the Senate.