Author Archives: Bob Mercer

About Bob Mercer

Bob Mercer is a newspaper reporter in Pierre where I cover state government, issues and politics for the Aberdeen American News and four other separately owned newspapers: the Black Hills Pioneer, the Pierre Capital Journal, the Mitchell Daily Republic and the Watertown Public Opinion. I began covering the Legislature in 1985 and have lived in Pierre since December 1986. I grew up in Wisconsin, worked my way through college, took my first full-time newspapers jobs in Wyoming, and have lived in South Dakota since the summer of 1984 when I moved to Aberdeen to join the American News. I worked for the Rapid City Journal as its state government reporter in Pierre from late 1992 through late 1998. I spent four years as press secretary and a senior aide to Gov. Bill Janklow during his fourth and final term from late 1998 through 2002. I returned to journalism in January 2003 as a self-employed reporter, providing state government coverage to the Mitchell, Watertown, Spearfish, Pierre and, depending on the year, Aberdeen newspapers. In 2008, the Aberdeen American News offered to hire me as full-time member of the AAN staff, with my reports continuing to be available to the Mitchell, Watertown, Spearfish and Pierre papers. The new arrangement has been in effect since January 2009 as the five papers continue their remarkable dedication to their readers and the general public, as the only South Dakota news outlets with a full-time reporter covering state government in Pierre throughout the year. In addition to focusing on the Legislature during the annual winter session and its various activities during the interim periods between sessions, I spend many days throughout the year -- traveling as often necessary -- to cover state government boards and commissions which oversee the state universities, technical institutes, outdoors, water, environment, business, public schools, banking, agriculture, utilities, health care and various other areas of public interest. I purposely don't register to vote because of my profession; the last time I recall voting in a presidential election was the first time, 1976, when I had just turned 18. I think I voted for Jimmy Carter over Gerald Ford. Make of that what you want, just don't make much of it.

The insight of David Newquist

His latest post on South Dakota Democrats at the Northern Valley Beacon blog is yet another reason to keep track of the writings by David Newquist of Aberdeen. Another example is a recent post regarding the education climate in South Dakota. His social commentary is well-written and through its use of anecdotes rings true. You don’t find his level of intellect and his command of language at most South Dakota blogs or in most mainstream publications or broadcasts in South Dakota.

SDHSAA foundation draws comment

Director Sandy Klatt of Brandon school board led the South Dakota High School Activities Association board into a discussion today about the decision last spring by the general membership to approve putting $155,000 into the association’s foundation. Klatt said school districts subsequently received bills for catastrophic insurance from the association. Her question was, in a nutshell, whether this is fair to taxpayers who fund public schools. The upshot was an eventual consensus among board members that the board should change its process so that significant finance decisions receive more than a single, brief discussion. There was a mixture of opinions today from various directors about whether school district officials understood the $155,000 shift into the foundation. Director Linda Whitney of Sanborn Central turned the discussion when she explained it is a matter of perception. Chairman Jason Uttermark of Aberdeen Central said there are things the board can do differently in the future to allow more time for schools’ staffs and school boards to consider proposals from the association’s board. New director Dave Planteen of Langford school board said he would appreciate that school boards receive time to analyze such issues. Executive director Wayne Carney remains a firm advocate for growing the foundation. Uttermark and director Steve Morford of Spearfish said they support the foundation but the funding should come from private donations. Carney asked the eight directors to submit to him their ideas on what the foundation could provide.

SDHSAA directors talk strategy today

The South Dakota High School Activities Association board of directors gathers today in Pierre for a strategic planning session. There are some important things on the agenda including a look at the financial results from state-tournament basketball play at Sanford Premier Center and a review of state-tournament ticket prices. Assuming there will be a live audio stream, the link would be here and the meeting starts at 11 a.m. CT.  The board also holds a regular business meeting Thursday. Those agenda materials are here.

LRC converting library space to offices

This is a sign of the times, specifically digital. The Legislative Research Council’s office complex on the Capitol’s third floor currently has a library space that includes a conference table and three stacks of law books, reports and other materials. That area will receive a new purpose this fall when the space is converted to offices for LRC fiscal staff. The change will put the fiscal staff directly adjacent to the offices of the chairmen for the Legislature’s Joint Committee on Appropriations and a few steps from the two conference rooms that serve as the meeting places for the committee. The hallway and sitting area between the offices and the conference rooms won’t be closed as some had contemplated. Jason Hancock, the LRC’s director, briefed the Legislature’s Executive Board on the reconfiguration plan Monday.

Hancock said the space for the library area is underutilized. He said the books and other printed materials once were “the critical resource” for legislative operations and research but “not all of those shelves and files contain things we use on an every-day basis in the Internet age.”  He said the remodeling will proceed in mid-September with a few people moving up to the Capitol’s fourth floor for four to six weeks. He said legislators were surveyed whether they wanted to put a conference room in the hallway space by the arching window, The results showed a plurality preferred no change there. “We’re not proposing to do anything different with that space at this time,” he said.

In one semi-related change, the two conference rooms used for appropriations meetings (and for Democratic legislators’ caucuses) will be permanently separated by a new wall with a door. Currently there is a folding divider that serves as a barrier. The audio and visual presentations in the main conference room will be made available in the smaller conference room under the new arrangement. Several times Rep. Fred Romkema, R-Spearfish, questioned the wisdom of a new permanent wall but none of the other Executive Board members joined the point. There would be less seating with direct access to the main conference room as a result of the change.

SDHSAA gets additional director

Among its planning meeting and regular business meeting later this week, the South Dakota High School Activities Association board of directors also holds a special meeting at 11 a.m. CT on Thursday, Aug. 27, to accept nominations for a newly created seat on the board. The additional seat won approval from the high school membership earlier this year and is designed specifically to guarantee that the largest high schools — namely Rapid City and Sioux Falls — get their own director. The additional seat increases the total number of directors to nine. The statewide membership will select the new Division I representatives in a special mail-in election, with ballots due Oct. 9, for a five-year term. Future terms will be decided by elections held among the high schools.

The current directors are chair Jason Uttermark of Aberdeen Central, vice chair Steve Morford of Spearfish High School, Linda Whitney of Sanborn Central High School, David Planteen of the Langford school board, Sandy Klatt of the Brandon Valley school board, Bud Postma of Madison High School, Moe Ruesink of Sioux Valley High School and Roger Bordeaux of Tiospa Zina High School as at-large representative for Native Americans.

Governor reappoints economic advisors

The governor’s Council of Economic Advisors meets next week in Lead. (The agenda is at CEA Agenda 8_27_15 and there’s some meat on the bones.) Gov. Dennis Daugaard recently reappointed the following members:

Curt Everson, Pierre;

John Hemmingstad, Elk Point;

Dan Newell, Sioux Falls;

Joel Rosenthal, Sioux Falls;

Doug Sharp, Watertown;

Randall Stuefen, Vermillion;

Everhardus Van Der Sluis, Brookings;

Steve Zellmer, Rapid City;

Susan Johnson, Deadwood;

Dan Noteboom, Corsica; and

Roger Musick, Mitchell.

 

School districts are using the capital outlay fail-safe

Once upon a time the Legislature created a special property-tax levy for school districts known as the capital outlay fund. It began for “the acquisition or lease of or additions to real property, plant, or equipment.” It gradually expanded to where it now occupies 474 words of space (but who’s counting) in South Dakota’s legal code. Basically it is a levy for a school district to use in addition to its general-education levy. But it applies on a straight basis regardless of property type, unlike the three separate levy amounts for general education on agricultural property, owner-occupied housing and other property that includes businesses, second homes and assorted other uses.

The use of capital outlay expanded because the Legislature doesn’t have to match it, whereas the state-aid formula involving the general-education levy does. State aid is based on a per-pupil amount set each year by the Legislature; what local property can’t provide for that per-pupil amount through the general-education levy, the Legislature supplements to reach the per-pupil amount. So the amount of state aid varies widely among school districts. Capital outlay is controlled locally by each school board and decides upon its uses. The Legislature has allowed broader and broader uses of capital outlay in recent years as the Legislature’s ability to provide sufficient state aid has become more strained.

In 2009, led by then-Sen. Russ Olson, R-Wentworth, the Legislature broadly expanded capital outlay’s uses to include routine expenses such as “the purchase of property insurance and casualty insurance, for payments for energy costs and the cost of utilities, and for motor fuel or for any portion of a contract providing transportation to students or for any mileage reimbursements.” This provision was supposed to expire June 30, 2012. But Olson came back with a renewer in 2011 that extended the expiration to 2014. And then in 2013, another renewer came, this time from Sen. Bill Van Gerpen, R-Tyndall; his measure took the expiration all the way out to June 30, 2018. So a three-year bandage suddenly became a 10-year fixture.

A year ago, Gov. Dennis Daugaard attempted to find a corrective, but his panel didn’t locate the sweet spot. Likewise for the Legislature’s agriculture assessment oversight task force. Capital outlay had the attention of the governor’s current Blue Ribbon task force on K-12 education at its meeting Wednesday. Tami Darnall, the finance director for the state Department of Education, presented data on the use of the 2009 flexibility provisions. She said 45 school districts have used capital outlay flexibility all five years while 29 haven’t used it at all; the remainder of the 151 districts used it at some point in the past five years. Her data showed many things, including information about districts that have opted out — that is, raised their general-education levy higher than the statewide standard set by the Legislature, and therefore putting more tax responsibility on their local property owners. Darnall’s data showed a cluster of districts that have used capital outlay flexibility all five years and have been in opt-out for all five years. Those “5 and 5″ districts are Woonsocket, White Lake, Wessington Springs, Tripp-Delmont, Stickney, Scotland, Rutland, Arlington, Bison, Bon Homme, Bowdle, Dakota Valley, DeSmet, Grant-Deuel, Herreid, Irene-Wakonda, Lake Preston, McCook Central and Oldham-Ramona.

Task force members didn’t make any judgements, at least not publicly, yesterday about the capital outlay. The message from the data seemed to be that the capital outlay flexibility has become very important to the financial plans of many school districts and especially to those “5 and 5″ districts that are taxing their property owners at additional levels through opt-outs. Making assumptions at the broad level would be difficult, said one of the task force co-chairs, Sen. Deb Soholt, R-Sioux Falls. “We wouldn’t even begin to understand all the nuances that went into that decision,” Soholt said. “We would really have to understand that at the very local level.” The governor’s chief of staff, Tony Venhuizen, said the importance of the information is to look ahead regarding what happens with the flexibility. Another member, Rep. Justin Cronin, R-Gettysburg, noted the 2018 expiration for the additional uses of capital outlay. As Cronin put it, the flexibility could be gone shortly.

What the task force might recommend regarding capital outlay isn’t clear. The panel meets again Sept. 9 and Oct. 1 to set goals and begin making recommendations. The scope is much, much broader than capital outlay. But the future of capital outlay will be an important piece of whatever the task force recommends to the governor and, in turn, whatever he recommends to the Legislature for consideration in the 2016 session.

 

Today’s Blue Ribbon meeting

The governor’s Blue Ribbon task force on K-12 education meets today (Wednesday). The agenda is here. The main web page for the panel is at this link and there reportedly will be a live-stream of audio from the meeting. The significance of today’s agenda is the strong emphasis on distance education as a delivery mechanism. This traces back two decades to then-Gov. Bill Janklow’s decision to wire the schools across South Dakota for Internet capability and capacity. The task force likely will consider at some point in the next two months whether to recommend incentives for school districts to use technology to receive more distance courses and to share their teachers with other school districts in subjects where there are needs. In South Dakota the health-care systems have made broader use of distance technology to deliver expertise to remote clinics for serving patients, and this model has great appeal for one of the Blue Ribbon task force’s chairs, Sen. Deb Soholt, R-Sioux Falls. She sees parallels between the current difficulties for school districts in hiring quality teachers and the recent difficulties in the health-care field in hiring quality nurses. The morning half of today’s meeting will deal with teacher quality and quantity, including an outside analysis by University of Pennsylvania professor Richard Ingersoll. It’s also worth noting that current state Education Secretary Melody Schopp, a former teacher and a former school board member, began her career with the state department as part of the “wiring” wave of personnel during the Janklow initiative. She has been with the department for those two decades. As we know from American history,  revolutions don’t normally happen overnight.

The two new judicial seats are now filled

Today, Gov. Dennis Daugaard said he has appointed Jon Sogn of Sioux Falls to the new judgeship in the state’s Second Circuit. Sogn (pronounced song) is from the Lynn, Jackson, Shultz and Lebrun firm, where he’s worked since his 1986 graduation from the University of South Dakota law school. The Legislature created two new judgeships this year. The other new seat is in the Seventh Circuit. The governor selected Magistrate Judge Matthew Brown of Custer for that slot two weeks ago. Brown became a magistrate in 2014 after working for Black Hills Legal Services, the Pennington County state’s attorney office and the Custer County state’s attorney office. He is a 1999 graduate of the USD law school. The Seventh Circuit covers Custer, Fall River, Oglala Lakota and Pennington counties. The Second Circuit covers Minnehaha and Lincoln counties.

The sales-tax sieve

While speaking to the South Dakota Telecommunications Association’s legislative committee yesterday, one of the points I made was the Legislature and the governor are looking for money to increase aid to public schools. And at the same time, county government officials have convinced at least some members of the Legislature that they need more money too. I acknowledged during the talk that I didn’t know where the Legislature would turn for the money. Driving back to Pierre, I realized the possible answer: Sales-tax exemptions.

The more I mulled this, the more sense it makes. For years the Legislature, courtesy of the Daugaard administration, has known the potential amounts of revenue available from closing a long and varied list of sales-tax exemptions. From a tax-fairness perspective, removing exemptions can make sense, unless it’s “your” exemption that would be repealed. Putting all or at least most exemptions under the legislative microscope for examination would prompt people to defend specific exemptions. That exercise in itself might be good in this era of term-limited legislators.

Here is the state Revenue Department analysis from the 2013 legislative session. Many tens of millions of dollars could be raised by closing exemptions without increasing the general 4 percent rate for the state sales and use tax. It’s long been argued that imposing sales tax on medical services would be a smart — but politically explosive — move because the federal government pays so much of medical costs for citizens in South Dakota. How explosive?

Well, it was tried in 1995 and ultimately failed. But there are many seven- and eight-figure exemptions for other goods and services on the 2013 list. Yes, advertising is one, to the tune of $7 million annually; an argument could be made that’s how legal notices published in newspapers by school districts, counties and cities could get funded, for example. Insurance commissions carry a $7.7 million exemption, and securities and commodity brokers have a $1 million exemption, and credit-card processing services for retailers have a $3 million exemption. There’s an estimated $48 million exemption for long-term lodging and parking sites. And on and on…

This blog post isn’t a statement of advocacy for any of these exemptions to be closed. But as the Legislature searches for what to do, if anything, about school funding and giving local governments some leeway after 20 years of the property-tax caps, the Revenue Department’s analysis might be a place lawmakers will look.