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Tuesday, March 16, 2010

Hunhoff: Open Government Saves South Dakota Over $10 Million

State House Minority Leader Bernie Hunhoff (D-18/Yankton) takes a moment to send me some thoughts on how open government promotes fiscal responsibility.

Hunhoff speaks here specifically of the huge subsidies South Dakota planned to hand to multi-billion dollar foreign corporation TransCanada to build its Keystone pipelines. Pierre wanted to keep those numbers secret; last year's new open government law brought those surprising numbers out. We're still handing TransCanada a subsidy (our neighbors in North Dakota and Nebraska are not), but Democrats in the Legislature managed to push their pro-corporate Republicans to compromise and cut the subsidy in half, thus keeping more money in our hands to balance our budget.

You can't save money if you don't know how government is spending that money in the first place.

Hmm... I think I know a Democratic candidate for governor who's saying very much the same thing....


By Rep. Bernie Hunhoff

It's always fun to say "I told you so," and when millions are at stake it's really nice. So here goes.

Remember when certain lawmakers begged for a more open and transparent government? We said it could save money because we might find waste and inefficiencies.

Finally, last year we passed a decent "open government" bill. When it took effect, a Pierre reporter named Bob Mercer requested a list of companies benefiting from a fairly obscure economic development program. The news hound had asked for information earlier but he was denied. The new law made it impossible for state officials to refuse.

Some of us were shocked when we saw that the corporate incentive program — which rebates sales and excise taxes to energy projects over $10 million in size — had already paid out $59 million to a long list of companies.

Some of the projects seemed worthy of a tax incentive. They were creating lots of jobs or developing renewable energies such as wind and ethanol. Some projects may not have come to South Dakota without the program. But other subsidies seemed unnecessary. One of the beneficiaries was TransCanada Pipeline, a $40 billion foreign company that had just completed a crude oil pipeline from deep in Canada to the southern states. The pipe was laid across East River last summer and fall.

North Dakota and Nebraska and other states aren't subsidizing the line. Quite the opposite. They intend to fully apply their sales taxes, and then charge their corporate income taxes forever — based on the amount of property the pipeline has in each state.

Quite a debate ensued in Pierre. We soon found that TransCanada would get a $38 million subsidy on a second West River pipeline if we did nothing. And it looked like little would happen because House Republicans refused to budge on the issue. But on our last day Friday, we reached a compromise that should trim the TransCanada subsidy by about half, and will also save tax dollars on other large projects. We then added a "sunset" to the entire program. Hopefully it will resurrected with targeted goals and lots of transparency.

Don't be mad at TransCanada or their lobbyists (though they seemed slightly irritated with some of us by the end of session). TransCanada officials have done nothing wrong, and they provided substantial economic activity here. They will also pay a lot of property taxes. They have every right to stand up for themselves in Pierre. But legislators should put South Dakota's interests first.

We can't balance our budget without aid from Washington. We haven't done so for eight years. And we can't even find $4 million to meet our statutory obligation to local schools. Yet many Republican legislators thought we could afford nearly ten times as much for an international company that will only provide a handful of permanent jobs.

Secrecy is expensive in government. Once the veil was lifted on this tax give-away program, we had a fighting chance to reform it. Hopefully we'll find other savings as South Dakota grows accustomed to government transparency.

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