Legislators looking for a new plan to relieve taxes on business projects

2013-02-14T20:30:00Z Legislators looking for a new plan to relieve taxes on business projectsBob Mercer Legislative correspondent Rapid City Journal
February 14, 2013 8:30 pm  • 

PIERRE | Just four months after South Dakota voters rejected their previous plan, many members of the Legislature and Gov. Dennis Daugaard’s administration seem determined to find new tax breaks for business projects.

A House committee folded together a pair of plans Wednesday evening from Rep. Scott Munsterman, R-Brookings, and Rep. Dick Werner, R-Huron, that would provide tax relief on new business construction and attempt to spur rural development by providing state financial aid for local staff, equipment and training.

On Thursday morning, a Senate panel endorsed a rewritten version of incentives that Sen. Larry Rhoden, R-Union Center, is seeking for wind farms.

The latest approach, brought by representatives of wind developers, calls for direct payments from state government linked to the amount invested in each project. A $100 million project would get a $2 million payment, for example.

Both pieces of legislation essentially aim to offset the 2 percent contractor-excise tax. There are other pieces of legislation still in play, too, as lawmakers head home today for a three-day weekend, before returning Tuesday for the final three weeks of the 2013 session.

In November, voters rejected a plan that the governor proposed and only Republican legislators had supported. It would have siphoned 22 percent of the revenue from the state’s contractor excise tax and allowed the state Board of Economic Development to make grants to large projects.

That plan had been a replacement for the tax-refund system that was greatly expanded under the previous Rounds administration. As legislators and the general public eventually learned the identity of the businesses receiving the refunds and the amounts, support faded.

The refund system was repealed, effective Dec. 31, 2012. But when 57.6 percent of voters opposed the Daugaard grants program, state officials concluded they needed to come up with something new to try.

The Munsterman-Werner bill, HB1161, is now 10 pages and 23 sections long.

“The goal is to try to have something in there for everybody,” Werner said. “The thought was that if we incorporate a lot of pieces, maybe it will get some traction.”

Munsterman’s concept calls for cities and counties to determine if projects are worthy of tax relief. It calls for a refund of the municipal sales and use tax, plus a grant equal to that amount. For projects outside cities, the grant would be a maximum amount equal to one-half of the state sales and use tax paid.

The bill had as its co-sponsors the two House caucus leaders, Republican David Lust of Rapid City and Democrat Bernie Hunhoff of Yankton.

In the Senate, it has the caucus leaders Republican Russ Olson of Wentworth and Democrat Jason Frerichs of Wilmot, as well as Senate president pro tem Republican Corey Brown of Gettysburg. Brown is its lead Senate sponsor.

Copyright 2015 Rapid City Journal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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