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Small Biz Not Snapping up Corporate Welfare; State Wants to Offer More to Big Biz

When the South Dakota Legislature created the Building South Dakota economic development fund in 2013, I responded with ambivalence: the program resulted from Democrats’ successful use of the voter referendum to repeal an earlier, less fair economic development program and force the GOP majority to include some progressive Democratic policies in the legislation, but Building South Dakota still fed South Dakota’s addiction to corporate welfare.

That addiction may not afflict every South Dakota businessperson. Two years later, Bob Mercer reports that smaller businesses are not taking advantage of Building South Dakota’s tax breaks:

The business and housing assistance programs created three years ago as part of the Building South Dakota program saw big demand so far. But one designed specifically to offer tax breaks for smaller business projects has found few takers.

There have been two grants totaling $36,480 for equipment upgrades by Yankton-area businesses Sapa Extrusions Inc. and TruXedo Inc. Meanwhile, the program’s fund balance has grown to more than $1.3 million.

The grants, which are essentially refunds of sales and use tax, are available to businesses with projects smaller than $20 million or purchasing equipment for less than $2 million.

Pat Costello, state commissioner of economic development, told a panel of legislators Tuesday businesses “haven’t found a tremendous lot of value” in the program [Bob Mercer, “Small Businesses Not Using Tax-Break Program in South Dakota,” Aberdeen American News, 2015.08.26].

The Reinvestment Payment Program handed nine corporate welfare checks to companies for bigger projects in 2014 and three in 2013. But smaller operators seem able to pay their own way, without taking corporate welfare.

Crony capital points its fork at small business’s plate and says, you gonna eat that?

Costello told members of the Legislature’s Government Operations and Audit Committee that a legislator — Rep. Dick Werner, R-Huron — suggested there be consideration to allow funds to be transferred between Building South Dakota’s various programs.

Costello said that could be helpful in making best use of the money, so large amounts aren’t mothballed. He said it could work both ways for a program. “In future years, it may reverse itself,” he said [Mercer, 2015.08.26].

Do call me when the big boys leave free state money on the table for the small fry.


  1. Roger Cornelius 2015-08-26 20:31

    When I read articles about South Dakota’s socialistic economic development programs and see the large amounts granted to corporations, my first and immediate question is: Who are the actual owners of these corporations and how much have they contributed the state GOP and their candidates

  2. Douglas Wiken 2015-08-26 20:56

    RIght on, Roger.

  3. scott 2015-08-26 21:08

    If small business can grow without government help, then so can big business. Just end the corporate welfare program.

  4. Heidi Marttila-Losure 2015-08-26 23:02

    I’m not remembering what all the business parts of the “business and housing assistance programs” are, but I think you could argue the housing program is targeted toward providing housing for “small fry”–it’s intended for low- and moderate-income families, and the biggest chunk of it goes to rural communities.

    Lack of housing is a huge problem in many small towns. Where a small-town business is actually growing, lack of housing can choke growth when new workers can’t find adequate housing–rentals, especially.

    So, if they are talking about shifting money around through all of different BSD programs, that doesn’t necessarily mean it will go to the “big boys.”

  5. caheidelberger Post author | 2015-08-27 06:10

    Scott, that’s the basic irony of this story. South Dakota’s economic development policy gets the proper role of government exactly backward.

    Heidi, if GOED has the good sense to put more money into the housing side of this program, then yes, they would be succeeding in using their dollars wisely for the benefit of those who really need the help. But even that help might not be needed if those growing businesses paid their workers enough to qualify for a good construction loan.

  6. caheidelberger Post author | 2015-08-27 07:22

    Roger C, you’re going to make me research right off the bat this morning, aren’t you?

    Here are the 12 corporate recipients of Reinvestment Payment Program refunds, the amount they got, and who’s in charge:

    1. B&H Wind, LLC; $2.9M; Ronnie Hornstra, Avon, president; now owned by German company BayWa AG
    2. Polaris Sales, Inc.; $117,080; Scott W. Wine, CEO, based in Minnesota, recipient facility in Vermillion
    3. Consumers Supply Distributing, LLC; $240,852; owner David Patee, VP Dan Patee, North Sioux City
    4. Campbell County Wind Farm LLC; $3,883,683; project developed by Dakota Plains Energy, organized by Heath Johnson and CarQuest magnate Rob Johnson here in Aberdeen;
    5. Hansen Manufacturing Corporation; $294,543; refund appears to have been for building Hi Roller plant in Sioux Falls owned by Ag Growth International, based in Winnipeg, CEO and founder Gary Anderson
    6. Day County Wind II, LLC; $4,419,600; appears to be one of the many affiliates of NextEra Energy, which evolved from Florida Power and Light, James L. Robo, CEO
    7. 3M Brookings; $234,000 in 2013, $1,323,960 in 2014; plant manager Jim Fay
    8. Interbake Foods, LLC; $203,060; Kevin McDonough, president; manufactures Girl Scout cookies; based in Richmond, VA, plant in North Sioux City
    9. PEG Project 1, LLC; $356,420; holding company opening fine metals plant in Beresford; I have no idea who they are
    10. Marmen Energy; $600,000; based in Canada, expanded to Brandon
    11. Novita Aurora, LLC; $771,082; run by Don Endresbuilt with investment money from Mike Rounds
  7. bearcreekbat 2015-08-27 11:13

    Thursday’s RC Journal (8-27-15) reports that Noem supports federal welfare in the form of a $10 million economic-recovery grant for the Rapid City, Pierre & Eastern Railroad to improve and expand railroads.

    The RCP & E appears to be owned by Genesee & Wyoming Inc., which has been reported to have spent approximately $1.8 billion dollars over the last five years in acquiring more properties and businesses. Noem also consistently voted to cut food stamps to the needy, while collecting farm subsidies for her own business interests.

    What’s wrong with this picture?

  8. mike from iowa 2015-08-27 12:08

    Lack of empathy on the part of red pols.

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