I am writing to express my strong support for the proposed TIF district for Libertyland USA in Rapid City, South Dakota. Tax Increment Financing (TIF) is a proven tool for capital formation, and South Dakota’s successful track record over 400 districts since the 1970s shows its historical benefit to local tax revenues and economic growth.

Trusting Leadership Over Bureaucratic Delays

The current bureaucratic hurdles and proprietary detail demands facing the developer mirror transparency measures that have stalled governance elsewhere. We must trust our elected representatives to negotiate these complex deals and move beyond the fear of change that fuels anti-development campaigns in South Dakota.

Libertyland USA’s Economic and Tourism Impact on Rapid City

Libertyland USA represents an extraordinary opportunity to transform underutilized land into a billion-dollar asset. This project will create an economic boom, expand the local customer pool, and boost tourism beyond Mount Rushmore.

Addressing Workforce and Energy Concerns

Opponents have raised concerns about job wages and labor competition, but decisive action is needed otherwise growth will stagnate. Regarding energy demands, even with two thousand power projects canceled in 2025, the federal administration is removing roadblocks to energy projects, ensuring that Rapid City’s development needs are met.

The January 20 Vote and South Dakota’s Business Future

The vote on January 20th will signal whether South Dakota is truly open for business or if bureaucracy and over-democratization will hinder progress. I encourage Rapid City residents to support the Libertyland USA TIF district and the long-term economic growth of the region.

The newly-created Blue Ribbon Task Force, which drew together twenty-six diverse members, both elected and appointed, was given the urgent task of accomplishing the Governor’s mission. The body first met at the beginning of July 2015 and gave their report—thirty-four pages including recommendations—early in November. They effectively decided that the only way to obtain revenue to increase teacher salaries was to raise the level of the statewide sales and use tax – a measure that would hit South Dakota taxpayers hard. No attempt was made to come up with any creative or intelligent solution to achieving the goals that the Governor had set; in particular, there was no attempt to answer the key question they had been asked to address – why are we being forced to pay more for less when it comes to our state education system?

Unnecessary Meddling and Key Areas of Concern Neglected

Instead, the task force has come up with a whole host of problematic recommendations. Significantly, they have made suggestions that would effectively result in greater central control of educational resources statewide. They have recommended, for example, changing the Per Student Allocation (PSA), which they claim is inequitable. What they have failed to realize, is that in actual practice, this has been a hugely effective budgetary tool for schools, ensuring that funding follows the students, and those who attend larger schools are not disadvantaged by mere circumstance. It is a fitting reward for school district excellence that a parent can effectively award that institution additional funding; by contrast, withdrawing a child punishes a poorly performing school. They have also suggested the capping of school district reserves, backed by the threatened withdrawal of a percentage of General Fund revenue following non-compliance in this area.

In an even worse attempt to butcher our funding model, the Task Force would like to transform the allocation of some taxes so that revenues are spread across school districts, supposedly ensuring fairness in educational resourcing for all – a reform which they indicate could be paralleled with similar unwelcome centralization of revenue generated from traffic fines and wind farms taxes, amongst other sources. Policies regarding our resources that are generated out of envy of ones’ neighbor are not the way forward in our great state – even if they are advocated by liberals elsewhere.

You don’t have to read far to identify the numerous contradictions and lack of logical consistency in the report. On page 21 of the document, for instance, the Task Force sets out its concern about the adequacy of infrastructure investment; while on page 16, the same body writes that capital outlay funds are actually robust and need to be unrestricted for disbursement. It is difficult to know what to make of this kind of intellectual confusion when it comes from a highly qualified body of elected state representatives and educators.

Their measures, recommended by the group, pose a significant threat to educational standards statewide. Recruitment of staff through the reciprocity initiative, for example, which is strongly endorsed, would allow teachers certified in other states to be immediately recognized as qualified to teach in South Dakota schools. This is extremely concerning on a community level, as it works against other efforts to promote consistency in teaching quality and ensuring that teachers are adequately equipped for culturally sensitive education which reflects our local values, concerns and priorities. As a measure, it seems to me to be somewhat akin to taking an automobile to be repaired by a boat mechanic (except education is more important than that!) or boarding a plane when the pilot has only ever flown a helicopter. As Governor Mellette once said, “The province of legislation is… to promote a common education, which is the preserver of all.” How can we guarantee any kind of common, locally sensitive education in South Dakota, when out-of-state educators are routinely assigned to our schools without meaningful checks taking place?

Gratuitous Tax Rises

It is suggested in the Blue Ribbon report, that in order to attract our best teachers, and effectively compete in the national employment market, we need to provide teachers with an average annual salary of $48,000, which is up from the current level of $40,000. To back up this viewpoint, the Task Force provides many pages of illustrative pie charts and statistics although disappointingly, these statistics have been handpicked to fit a politically pre-determined narrative supporting what can essentially be referred to as the ‘monetary rape’ of South Dakotans in order to access competitive education for our children.

I believe other charts— which appear to have been deliberately left out of the report— would support very different conclusions that could negate the need for tax rises. For instance, it could be shown that funding allocation from the General Fund for Education, which includes both K-12 and Higher Education, has swung by over 4% toward Higher Education across the last decade (4% of $352 million is $14 million). Our K-12 system cannot sustain continuing growing favoritism in the General Fund toward Higher Education initiatives, prioritized over our residents’ children’s learning.

In fact, the Task Force has made decidedly dodgy use of statistics throughout their report. For example, the argument is made that education spending in South Dakota has fallen behind that of other sectors of government that are of comparable importance, such as healthcare. But in making this comparison, the year 1996 was picked, for reasons undisclosed, as the baseline for the assessment of the state’s recent, supposedly disappointing, annual growth in the level of educational spending. Could it be possible that this year was selected in order to make use of our explosive growth—of over 279%—in Medicaid spending after that point as an excuse to spend more in Education? Anyway, is it really the case that since we are getting bloodied in Medicaid, we should be fair and allow ourselves to go into deeper debt distress in the realm of education too?

Returning to the statistics, the report recognizes that per student spending on capital outlay is significantly higher in South Dakota than it is in other states; in fact, it is $405 dollars more than the national average. Of course, this should lead us back to the pressing question asked by Governor Daugaard when first setting up the Task Force: Why it is that the state spends more on education, but receives less return in terms of school standards? But the report makes no attempt to answer this pressing question. Perhaps the body lacked the motivation to propose constructive and meaningful reforms, when the ‘easier’ alternative of simply recommending tax increases, with commensurate opportunities for the distribution of pork to interest groups, was readily available. ‘Big government’ enthusiasts across the nation appear to have adopted the knee-jerk reaction of increasing taxes whenever they are faced with a problem, no matter the context of the situation.

By comparison, no alternative recommendations were suggested by the Blue Ribbon Task Force for what would be a more helpful policy of reallocating state funds. Instead of pouring millions of additional taxpayer dollars into increased education spending, we should be cutting out some of the extravagances in our state education system and redistributing the resources currently being wasted. The Governor has vowed to make ‘bold’ decisions, based on the people’s demand for better education in our high schools, so I’ll make a few suggestions that wouldn’t be considered anything less than bold.

First, in the report it is determined that we have 14 students per teacher in South Dakota, which is a ratio to be proud of nationwide. It is the wish of the Task Force to preserve that ratio. I agree with the desirability of this objective. However, it must also be recognized that this may not be an achievable goal as a result of the so-called ‘educational crisis’ based on teacher shortages for K-12. (To give the reader some perspective, it should be noted that our ratio is far superior to the 20 to 1 teacher that exists nationally, or the 23 students to 1 teacher in Minnesota.) It might be more realistic for us to manage an increase in the ratio, possibly scaled, so that older students have larger class sizes than younger ones. If South Dakota budgeted on a ratio of eighteen students to one teacher, this would still be superior to the national average, and this alone would allow us to achieve the Task Force’s objective singlehandedly by refocusing funds. Consider it as being 22% fewer teachers to teach the same amount of kids. If its 9,300 teachers at $40,000 then that makes $372 million. Reallocate 22% and that is nearly $82 million. That would give us an average teaching salary of over $48,000.

Second, there has been well-founded criticism, not least from the state’s schools, of recent extravagant increases in the salaries of university professors within South Dakota’s Higher Education. In a Rapid City Journal article, published on the 16th of December by correspondent Bob Mercer, it was stated that even “…officials in the state Bureau of Finance and Management thought the 3.2 percent for university faculty was “generous” when inflation has been below 1 percent in the past year.” It is too late, of course, to reverse these increases, but future pay raises should be commensurately less extravagant.

Third, we should reduce the unhealthy dependency of Northern State University (NSU) and Dakota State University (DSU) on General Fund revenue. Northern State University and Dakota State University are, in stark contrast to equivalent institutions elsewhere in the state, such as South Dakota State University (SDSU), the University of South Dakota (USD), and the Black Hills State University (BHSU), gravely dependent on state taxpayer revenue in their current operations. Drilling into the detail, it may be shown that whilst SDSU and BHSU today receive roughly the same amount from their state general funds as they do from tuition revenue, in the case of NSU and DSU, the General Fund contributes no less than double the amount that comes from tuition. Reforms are obviously needed to address this disparity.

Semi-privatizing or privatizing NSU and DSU completely over a three-year time frame would necessarily raise the contribution made to operations by tuition costs and force both institutions to dramatically reorganize in order to keep their student offering competitive. The potential saving for the state is dramatic: over $7.5 million of annual revenue could be reallocated from DSU and over $10.5 million from NSU.

(Incidentally, I recognize that the University of South Dakota is not as financially well-off as either SDSU or BSHU. But it does have a rather healthy endowment. In fact, it has more than double that of SDSU, even though fewer students are enrolled. I believe we should have a benchmark that pulls funds from colleges back to facilitate equal General Fund contribution for tuition revenue. This would have the benefit of forcing bloated institutions to undertake reforms. USD would painfully use its burgeoning endowment while they face the transition to a more financially fit model. That would add $12 million back to the General Fund each year.)

Fourth, South Dakota higher education institutions should be compelled to abstain from the ‘arms race’ in spending on non-educational facilities to compete for students nationally. Instead, a low cost, no-frills approach to tuition should be adopted. It should be recognized that keeping public college tuition costs as low as possible (without making unnecessary General Fund sacrifices) is a higher priority than college campus expansion. That is the accountability that must be displayed to the taxpayers.

This no-frills approach could certainly ultimately lead to lower student tuition fees. The ambition should be to slash public college tuition costs by 30% for all South Dakotan children by 2020, thereby removing obstacles preventing our students from attending. This fits very much with the ideals of the great former Governor Arthur Mellette –“All pupils who have thus finished the academic course of instruction should be admitted to the higher educational institutions of the State by a certificate from the county authority and without further examination. We believe that under such a system the attendance in the higher institutions will be largely and rapidly increased, and their running expenses to the State will be greatly diminished.”

Fifth, we should place emphasis within our state universities, on serving the needs of local people as opposed to those who come from outside of South Dakota. At SDSU, 36% of students today come from out-of-state, and 7% of the students are international. These students pay only about $1000 extra in annual tuition a year to attend, yet benefit from our state subsidies provided to the university.

As an illustration of what draws my ire, imagine an average, hard-working South Dakotan family paying even more in sales tax, as the Blue Ribbon Task Force currently recommends, so that Mike or Mallory, from Massachusetts, can attend a college that is heavily subsidized through their tax dollars and then return to Massachusetts upon graduation. This is far from smart. We should clearly be addressing the need to raise out-of-state tuition if we want to resolve the issue of South Dakotans indebting themselves to educate someone else’s children rather than their own.

(The argument that the current extra tuition payment for out-of-state students already covers their missing tax contribution is, of course, flawed two-dimensional thinking, given the sheer level of state subsidy that exists for higher education in South Dakota. Remember tax dollars contribute twice as much as tuition fees to the running of NSU alone. The current extra contribution of $1000 in no way covers this expense. If it did, of course, then this would imply that the state government could pull out all general funding of its higher institutions, and this would only require South Dakotan students’ tuition fees to rise by $1000, which is nonsense.)

Another question, by the way, that should be asked is why our own homegrown rural students choose to attend Agricultural Colleges outside of South Dakota, if they wish to farm or ranch our unique South Dakota soil. A funding priority should be placed on our higher education institutions to promote the state that we actually are, over the cosmopolitan state that some others may wish us to be.

Finally, we should also seek to make savings outside of the area of education. For 2016, according to the Governor’s budget, an increase in $30 million dollars to South Dakota Executive Management funding, in relation to Governor Daugaard’s own office and cabinet staff, has been recommended. That is over a 10% increase that I would scrutinize, particularly when compared to the Governor’s recommended 1.5% increase in all education.

To give one more example, the Corn/ Soybean/Wheat check-off fund should be partially redirected to absorb the expense of the Agricultural Experimentation Station. That will save the state no less than $10 million a year. (Each fund will add enough to the per bushel cost to cover 40% of the total Agricultural Experimental Station’s expense. At the end of the year, we should then review their respective actual share of grain production of South Dakota. That review will result in a producer refund check, where necessary, taken from any fund that did not require allocated funds to contribute their fair share.) Since grain producers are the direct beneficiaries of the Agricultural Station, it seems suitable for those producers to take on the cost of this facility.

These funding changes, without changing the student ratio, would result in a potential annual saving of over $40 million to apply to K-12 teacher salaries.

So the way to get to the $75 million target, set by the Blue Ribbon Task Force, should be founded on reallocation of money from the General Fund; we should also make hard but necessary decisions and consider avoiding expansion of other programs that South Dakotans may want, but do not need. Paying our K-12 teachers an adequate salary is more important than expanding the scope of the state government’s assumed responsibility over the people.

Other legislators have been promoting options without a tax raise. Currently, State Representative Lance Russell is proposing an excellent bill that would redirect South Dakota lottery revenues to pay for the salary increases and thereby entirely fund the proposed teacher salary enhancement fund (TSEF).

I also believe the funding for the teacher pay raises that this Task Force was established to rake in should be also be targeted toward benefiting those teachers currently on lower salaries (say those earning less than $50,000 a year). Of course, this is grossly above the $40,000 a year current average level, which is the rallying cry of the Blue Ribbon Task Force. Such targeting will have the effect of allocating our dollars to the teachers who are most in need of pay increases, whilst still raising the headline state average effectively.

It is often a good idea, particularly in matters related to fiscal prudence, to look back to the founders of our state for guidance. As a figure none other than Doane Robinson explained, “The limitations upon taxation for State purposes made it exceeding difficult to finance the necessary operations of the young state.” It was this necessary discipline, which these limitations imposed on South Dakota at its founding, that gave us our tradition of fiscal responsibility and spending restraint. So repeat after our first Governor: “The present school system is too expensive, inefficient and lacking in that unity and system so necessary in educational matters in order to obtain the greatest public benefit from the public schools for this most important public institution.” – Governor Arthur Mellette. 

This Blue Ribbon Task Force was not up to the task of recommending the sort of hard political decisions that South Dakota urgently needs to take. Instead, it recommended an “easy” solution – we will all pay more for our education system through taxes; and when they can’t make those dollars stretch far enough… another study like this will show how you didn’t dig deep enough yet again.

Say no to the tax and spend, Blue Ribbon Task Force – and identify educated solutions instead!

As an employer I know that if I offer adequate compensation the potential employees will apply. Unlike the illogical members of the Board of Regents I also know that if new businesses locate in South Dakota then the local higher education institutions will offer programs that are attractive for potential students that may desire to apply for a job at those new businesses. However, the Board of Regents in its perverse wisdom will probably suggest additional funds to educate blindly for unknown jobs, that have not been produced, at businesses that don’t yet exist based on this press release.

No real deterrent exists for a company in finding a skilled workforce if the need arises. Migration to our state will occur if jobs with reasonable compensation, through salary and benefits, are offered. We have a competitive edge over many other states through our reasonable state tax system that attract both businesses wishing to setup on South Dakota soil and also potential out-of-state job seekers considering relocating to our state. The Board of Regents despairingly imagines a South Dakota with so many skilled job offerings that South Dakota’s educational system can’t keep up with the demand for candidates through our state graduation rates.

The availability of several higher education institutions in South Dakota is a more valid talking point than the factory production of graduates, no different than the presence of adequate police protection being more valid than the number of speeding tickets issued as a measure of performance. With six universities and colleges, complemented by numerous private educational entities, we have more than adequate educational opportunity especially considering our small population when compared to the rest of the nation.

The Board of Regents suggests a strange requirement that all jobs developed in South Dakota should be filled by current South Dakota school children. That requirement is unnecessary if your goal is simply that South Dakota should continue to be financially stable and her people prosperous. A college graduate will always seek out opportunity that best fits his or her purposes and attempting to keep them captive is a fool’s errand. In conclusion, this embarrassing study should be torn up and thrown on the heap of misguided and disingenuous intellectual garbage commonly produced by ever short-funded and overpaid government boards.

Leasing out a portion of our interstate through competitive bidding would greatly solve South Dakota’s transportation budget issues. The build-operate-transfer, or BOT, program is a partnership where a company leases a public highway for a contracted period of years and designs, builds, and operates a toll system that reverts back to government ownership after the lease expires. One possible location for a BOT program in South Dakota is the ‘V’ portion of the interstate triangle in Sioux Falls which has a 2012 yearly traffic average of around 2,737,000 heavy trucks and 27,375,000 cars traveling on 22 miles of I-29 and I-229, according to the interstate flow map. For comparison, in 2006 Indiana was given 3.8 billion dollars in a lump sum up front payment to lease 156 miles of highway for 75 years. Traffic at the time was about 11,000,000 heavy trucks and 8,577,500 cars per year. Currently, on the Indiana Toll Road heavy trucks are valued at 24 cents a mile and cars are valued at 6 cents a mile, making the revenue value of four cars equivalent to one heavy truck. That means the 8,577,500 cars per year in Indiana was equivalent to 2,144,375 trucks, for a total of 13,144,375 truck equivalents per year. Back in South Dakota in 2012, the 27,375,000 cars traveling the ‘V’ of the Sioux Falls interstate triangle were equivalent to 6,843,750 trucks, for a total of 9,580,750 truck equivalents per year. Dividing 9,580,750 trucks/yr in South Dakota by 13,144,375 trucks/yr in Indiana gives us a traffic ratio of 0.729. Dividing 22 miles of highway in South Dakota by 156 miles of highway in Indiana gives us a distance ratio of 0.141. We can multiply these two ratios to get a total conversion ratio of 0.1028. Now we take the value of Indiana’s 2006 75-year toll road lease of 3.8 billion dollars and multiply it by that total conversion ratio to arrive at a figure of $390,640,000 in 2006 dollars for a similar 75-year toll road lease of the ‘V’ portion of the Sioux Falls interstate triangle. Adjusting for inflation that lease would be valued at $455,760,000 in 2013 dollars. To put that amount in perspective, the total amount of funds, including federal funds, for our state highways in 2011 was $567,000,000.

As with any lease, the agreement with the operating entity would have provisions addressing any concerns of the public, such as upkeep and safety. Since the lease would be fully funded up front there would be no payment concerns if the company should fail. Toll rate increases could be capped, as they are in other states, with a yearly allowable adjustment for inflation permitted. Also, South Dakota would not be responsible for the maintenance on the leased interstate highway for the entire length of the lease, which would save a significant amount of tax dollars. In addition to that there would be a new source of state tax revenue from the operation of the BOT program. However, a portion of the federal highway funds for the leased interstate would have to be returned to the federal government.

In order to avoid what happened in Indiana, where the state went on a spending spree with the funds by adding nearly 400 miles of new highway (permanently increasing future maintenance costs), South Dakota could put the lease payment in a trust which would have its uses designated specifically for upkeep of existing infrastructure so that it cannot be raided.  In the government if money is not spoken for it will be spent, so we must be vigilant in how it’s protected for the future. The interest on nearly half a billion dollars would be a blessing to our state treasury, so we should protect the majority of that capital for future projects and only make necessary infrastructure expenditures.

These days with the quickly rising costs of road maintenance, replacement, and bridge repair we must act in ways that seek to counter that burden. The typical government solution to greater infrastructure costs is raising fuel taxes, which is a foolish solution when high fuel prices already plague our economy and consumer product pricing.  The overriding truth with whatever scenario is discussed to solve our infrastructure problems in South Dakota is that they must be solved soon.