Despite tight state funds, S.D. projects get millions of dollars in sales-tax rebates 

Several more wind parks and cattle farms are getting rewarded by state government for making investments in South Dakota.

The South Dakota Board of Economic Development decided Wednesday to return more than $9 million of the state sales and use taxes that had been paid on the four projects.

The board’s actions came one week after Governor Kristi Noem had told the Legislature she expected only about $23 million more in ongoing revenue for state government’s general fund in the coming year.

For the coming budget that starts July 1, Noem recommended no raises for state government employees or Medicaid services providers, and no inflation-based increase for public school districts.

She asked instead for lawmakers to put $7.9 million more into special education and $1 million more to cover an expected increase in K-12 enrollment.

Organizations representing school boards and K-12 administrators responded by issuing public statements, saying they would ask legislators to uphold a state law that requires annual increases in state aid to schools.

Her budget office pushed back Wednesday, releasing a document that showed a one percent increase for schools, Medicaid providers and state employees would cost $15.6 million in general funds and $28.7 million total.

On Thursday the budget office – officially called the state Bureau of Finance and Management – released its latest monthly update. The December report showed sales and use taxes came in stronger during November than legislators or the governor had expected.

The 2020 legislative session opens January 14 and ends March 30.

The Legislature in 2013 passed broader incentives for business development, including reinvestment payments and South Dakota Jobs grants. Dennis Daugaard was governor at the time.

After Noem took office this year, she and her commissioner of economic development, Steve Westra, had livestock businesses start assigning their incentive rebates to county governments, as a way to further assist growth.

The state board on Wednesday went into closed executive session to go through matters. The votes in open session afterward were unanimous and without discussion.

The board approved a reinvestment payment for Triple H Wind Project LLC of up to $4,828,058 – 50-percent of the state sales and use taxes paid on eligible costs – for a wind farm in Hyde County.

The company, based in Houston, Texas, will receive the payment. The board had voted 8-3 in September to reject an application from Triple H after the Governor’s Office of Economic Development staff recommended a denial.

Board members didn’t discuss the 50-percent reimbursement level in the open portion of the meeting Wednesday. The board, with most of the same members, gave higher levels of reimbursement last year, ranging from 65 to 75-percent, to six wind projects.

Also receiving approval for a 50-percent reimbursement payment Tuesday was another wind developer, Tatanka Ridge Wind LLC. The Houston, Texas-based company will receive up to $2,966,507.

Two livestock-related businesses have arranged for their state incentives to go to the governments of the counties where their new developments are.

Riverview, LLP will assign its reinvestment payment of up to $1,302,278 to Clark County.

The Morris, Minnesota-based company, whose partners are Bradley Fehr and Kurtis Domnick, is developing a dairy facility that is expected to employ 42 people.

Leaning Oak will assign its South Dakota Jobs payment of up to $217,926 to Spink County. The business is developing a cattle facility expected to employ eight people.