Breyfogle Libertarian Amendments Would Cost SD State & Local Governments $4.68 Billion

In January, Levi Breyfogle of Rapid City submitted drafts of two seemingly Libertarian constitutional amendments that he may petition onto South Dakota’s 2020 ballot. One amendment, discussed on this blog in January, would prohibit the state from prosecuting “victimless” crimes or crimes in which no physical and quantifiable damage has occurred. The other amendment would allow any adult to “freely buy, sell, or rent any property or service,” which probably means hookers, pipe bombs, and crack.

The two amendments also mean the collapse of state and local government. On March 30, the Legislative Research Council weighed in, as required by law*, with fiscal notes on each proposed initiated amendment. By LRC’s calculations, the crime redefinition would cost the state $2.67 billion and local governments $1.42 billion, while the capitalist free-for-all amendment would cost the state $604 million but save local governments $6.88 million:

LRC notes that the crime amendment would nullify 93% of crimes, including non-payment of taxes, which does not physical damage. Breyfogle says he may revise his measure to include monetary damages, but in the form scored by LRC, taxes take a holiday, and the $39 million the state saves not putting as many people behind bars is less than 3% of the general fund revenues lost. The state loses nearly 85% of its general fund dollars and nearly 57% of its total budget. Local governments lose $1.45 billion in revenues; for perspective, the total local property tax collected by school districts statewide in 2017 was $713 million; counties, cities, townships, and other local entities collected $548 million in property tax; all municipal sales tax collections in 2017 totaled $364 million. The net local revenue loss from the crime amendment of $1.42 billion thus equals 87% of all 2017 local property tax and sales tax revenues.

Letting people buy and sell whatever they want knocks another $604 million out of state revenues, since “freely” means we can no longer impose licenses and other fee-generating regulations on business transactions. And even if all the new brothels and pot shops authorized by this measure could be taxes, the crime amendment would make it impossible for us to require those entrepreneurs to pay their taxes, so don’t count on any new revenue from those businesses. Somehow allowing anarcho-capitalism also would disqualify South Dakota from Medicaid, so goodbye, hundreds of millions in federal dollars.

These two amendments would be a far bigger disaster for South Dakota’s fiscal situation than Senator Jim Stalzer’s ill-conceived SJR 5, which would have imposed multiple arbitrary caps on state spending. School districts would have to pimp out their teachers and sell meth to keep schools open… and of course, the victimless-crime amendment would let them do that. Yeesh.

*Too Clever by ½: Last year the Legislature added LRC fiscal notes to the paperwork that must be filed before ballot question sponsors can file and circulate their petitions. The statute governing those fiscal notes, SDCL 2-9-31, limits those notes to 50 words, which means LRC’s fiscal notes can’t really explain all the budgetary factors behind their calculations. But LRC director notes in letters accompanying each fiscal note that since the statute says “words,” “numbers and percentages do not count against the fifty-word limit.” If that’s the case, I say skip the verbage altogether and give us fifty-line spreadsheets!