Recommended reading: 41

The biography of George Herbert Walker Bush by his son George W. Bush is light, fast, often surprising and generally informative. 41: A Portrait of My Father is unique among American literature because it is the only book written by a son who was a U.S. president about his father who was a U.S. president. I was interested for that reason, but I wasn’t quite interested enough to buy a copy before I had read any reviews. Meanwhile the staff at Rawlins Municipal Library in Pierre showed its acumen once again; I was fortunate to discover the book on the shelf and be its first reader. I enjoyed it and I am richer for having read it. I respect George Herbert Walker Bush now more than I had before. He is one of the four one-term presidents during my lifetime so far (not counting Gerald Ford, who didn’t win election, and categorizing Lyndon Johnson as one term because he didn’t run for a second term even though he served the remaining year-plus of John Kennedy’s first term). I have tried to read biographies of all of the presidents in our nation’s history — I still have a few scattered gaps to fill — and 41 is special for its perspective. If you’re in search of a Christmas gift, this would be worth picking up at your local bookstore, whether for someone else or yourself.

A new fight ahead over retire-rehire?

One idea of late regarding teacher pay and teacher recruitment is to resurrect the retire-rehire option in the South Dakota Retirement System. The School Administrators of South Dakota might bring legislation to the 2015 session that would repeal most or all of the reforms and penalties that were put into state law by the Legislature in 2010. For some years before that, retire-rehire was used in much of state government and in some school districts and other governments. It worked like this: A public employee covered by SDRS would take retirement and then return to public employment, often in the same job — drawing an SDRS retirement check and a public employment check.

The costs to SDRS gradually became evident, because people were getting retirement benefits for more years than planned, and in 2009 the system’s board of trustees called for changes. (You can read the 2010 legislation here.)

The value of retire-rehire for school teachers would be important in South Dakota: A teacher could retire, draw the SDRS check and return to work in the same job. School districts could offer the retire-rehire option as a way to retain teachers in instances where there were better salary offers elsewhere, and they could recruit teachers by offering retire-rehire. But all of that requires a change in state law.

The SDRS board of trustees voted Thursday to direct their administrator, Rob Wylie, and the staff to lobby against a repeal of the 2010 changes. During the discussion several trustees said that the school administrators either didn’t contact another important group — the South Dakota Education Association that represents teachers and other staff — and didn’t win support from the other important group, the Associated School Boards of South Dakota.

What hasn’t happened yet is an analysis of how much retire-rehire for teachers would cost in what essentially would be a subsidy from other SDRS members. It might be worth a look as part of an effort now under way at SDRS to study the costs and usage of other benefits that don’t apply to all members.

In the search for ways to make teacher pay more competitive, this could be one way to avoid raising taxes. There might be other subsidies that could be eliminated by SDRS to cover retire-rehire for teachers. But providing retire-rehire for only teachers would raise a difficult question: Why not others? The answer becomes political: If you want retire-rehire, go into teaching. That won’t put smiles on faces. No one will be smiling however if something isn’t done and teachers become more difficult to hire and quality falls.

Colder economy ahead for South Dakota?

That was quite the gloomy forecast given by Gov. Dennis Daugaard in his budget speech to the Legislature. His administration’s crystal ball foretells times turning tougher for South Dakota’s economy. From February to November, the outlook for calendar 2015 became worse and worse:

Non-farm employment in South Dakota was expected to grow 1.9 percent. Now it’s all the way down to 1.2 percent. That is a staggering drop;

Non-farm income in South Dakota was forecast to grow 5.4 percent. Now it is down to 4.4 percent; and

Housing starts in South Dakota were predicted at 6,100. Now it’s down to 4,800.

Despite a slowdown evidently brewing, there wasn’t any discussion of new economic-development initiatives in the governor’s speech Tuesday. This struck some observers from communities outside Pierre as unusual because of the workforce summits held in communities by the governor last year.

Coming out of the recession in 2011 and 2012, South Dakota’s economy looked to be on a solid path of recovery. Now it seems the recovery was short. The state sales-tax growth so far in fiscal 2015 that began July 1 of this year didn’t meet the forecast set by the Legislature when the fiscal 2015 budget for state government was approved. The governor’s recommended budget for fiscal 2016 that starts July 1, 2015, estimates sales-tax revenues will grow 4.1 percent. He said that’s below average. He also mentioned that U.S. job growth on a percentage basis is now outpacing South Dakota.

The bottom line is that South Dakota’s state government and to a large extent the public school system, the public technical institutes and the public universities rely on natural growth of South Dakota’s economy. When state government can’t provide more to the education system, there must be either reductions in spending or additional revenue from property owners for K-12 schools and from students at the techs and universities. And that seems to be what is about to happen.

Is Citibank owed $30 million, $4 million or $0?

We’ll didn’t find anything in the fine print of Gov. Dennis Daugaard’s budget recommendations Tuesday regarding any refund money for Citibank. The international banking corporation centers its business at Sioux Falls and therefore is subject to South Dakota’s bank franchise tax in addition to its federal taxes. The South Dakota Supreme Court will hold oral arguments Jan. 14 in a fascinating case about whether the state Department of Revenue owes a $30 million refund for state taxes overpaid for the period of 1999-2002. State law bases the bank franchise tax on federal income taxes owed, and a federal audit completed in 2012 concluded that Citibank had paid too much in federal taxes for that 1999-2002 period. Citibank subsequently applied in 2012 for a $30 million state refund. But the state Department of Revenue refused to pay the refund, arguing that the three-year statute of limitations had run. Citibank’s argument is that it didn’t know how much it actually owed in federal taxes for 1999-2002 until January 2012 when the federal audit was complete, and therefore the company couldn’t know how much it actually owed in state taxes for 1999-2002 until January 2012, because the state taxes are calculated using the federal taxes.

This story has two more twists that might lead you to wonder whether the federal Internal Revenue Service is more taxpayer-friendly than South Dakota’s Department of Revenue. And I don’t mean that as a jab, but these next sets of facts are astounding when seen from Citibank’s perspective.

In 2007, Citibank paid the state treasury an additional $4 million in state taxes after an IRS audit found Citibank didn’t report its income fully for the period of 1993-1998. The state Department of Revenue accepted the $4 million long after the three-year limitation in state law.

In September 2009, Citibank filed its state tax return for 2008. In September 2012, Citibank requested a $900,000 refund. The state Department of Revenue hasn’t acted yet on that refund request because the IRS hasn’t completed an audit for that period. We are now in 2014 and outside the three-year limitation.

According to a South Dakota lawyer who represents Citibank at the state level, Citibank officials have offered to structure a settlement on the $30 million refund and remain willing to do so.

You have to wonder whether the governor and his budget staff might want to consider handling bank-franchise ta revenues from state-chartered national and international banks in a new fashion, such as putting the revenues into a trust fund that can be tapped only for emergencies but otherwise would spin off interest earnings that could be generally used for state government purposes.

In the meantime, depending upon what is decided in the coming months by a majority of at least three of the five justices of our state Supreme Court, state government could face a $30 million liability. At the very least, a lot of explaining seems to be in order regarding a three-year statute of limitations that counts sometimes and sometimes doesn’t.

Banking Commission will hold a meeting

In the past few years the state Banking Commission has settled into a pattern of meeting twice annually. The second meeting of 2014 is set for Friday, Dec. 5, at the Minnehaha Country Club in Sioux Falls. The session starts at 10 a.m. CST and lunch is planned as part of the agenda. If you want to read the unapproved minutes of the previous meeting on June 3 in Pierre, go here. An item that isn’t on the Friday agenda is whether bank taxes might be owed on the EB-5 loan pool activities conducted by SDRC Inc. of Aberdeen. The Brown County Commission requested that state officials consider the matter. The Banking Commission members currently are Jeff Erickson of Sioux Falls, John Lillibridge of Burke, Paul Christen of Huron, Richard Westra of Aberdeen and Steve Hayes of Presho. Erickson and Christen are the public members; they are retired bankers who were on the board while they were bankers. Jim Terwilliger, economist for the state Bureau of Finance and Management, will present an update on the South Dakota economy Friday.

SDRS trustees meet Thursday

The South Dakota Retirement System board meets Thursday in Pierre at View 34. The trustees will receive financial statements, a valuation report and an audit report for the past fiscal year that ended June 30, 2014, and a projected funded status for the current fiscal year that runs through June 30, 2015. They’ll also get analysis of costs for some SDRS benefits and set the improvement factor (cost of living allowance aka COLA) that takes effect for benefit recipients on July 1, 2015. The meeting begins at 8:30 a.m. CST.

Road hunting on Thanksgiving eve

This happened near dusk on Wednesday. We were headed east on U.S. 14 between Blunt and Highmore, traveling to Watertown to spend the Thanksgiving holiday with our son. A car was parked on the east-bound shoulder. I slowed our car slightly and looked. There wasn’t anyone in the parked car. Instead there was a man standing in the ditch about 20 to 30 yards farther east. I took a closer look at him. From the way he was standing, he appeared to be a hunter holding a shotgun and waiting for a game bird — likely a pheasant — to flush. I hadn’t seen another person or a dog. Road hunting, I thought to myself.

And that’s when I saw the car in front of me that seemed to have come to a complete stop. I crammed on the brake pedal hard and braced both hands on the steering wheel. With each millisecond our car got closer and closer to the rear of the car ahead of us. I knew we were about to smash into it. There just wasn’t enough time and distance. Then, just at the moment I thought the crash couldn’t be avoided, the car ahead gained just a little speed and then a little more. While I kept braking as hard as I could, the car in front began to ever so slowly pull away. We had escaped.

The car in front still wasn’t moving fast. I pulled around it and passed. I glanced for a moment to see the driver. It was a woman likely in her 70s or older, old enough to have been my mother. She didn’t look over. I don’t know whether she ever knew that I was behind or how close I came to crashing into her. My guess is she had done what she believed to be prudent and had slowed down to look at the car parked on the shoulder and then perhaps slowed way down when she saw the man standing in the ditch with a gun.

We made it to Watertown without further incident. I give thanks.

Regents need to OK search team at DSU

One of the seemingly small but extremely important decisions to be made by members of the state Board of Regents next week at their Rapid City meeting will be setting the members of the search team for the next president of Dakota State University in Madison.

As proposed, the search committee would have five DSU employees, two DSU students, a Madison community member and two executives from Sioux Falls — alumnus Michael Halverson, now a Citibank global senior vice president for information security administration, and Miles Beacom, president and CEO for PREMIER Bankcard, who is DSU foundation president. There would be one outside perspective from Northern State University president Jim Smith.

The Madison campus went through an unusual degree of administrative turmoil under the past DSU president, David Borofsky. He suddenly found the exit door in August during a regents meeting in Pierre that he didn’t attend. Instead Marysz Rames, an official from South Dakota State University, was hurriedly installed as interim president. Borofsky was supposed to be an interim president when he was installed in January 2012. Because of community support, the regents reversed their plan and hired him as the permanent president later that year. The arrangement didn’t last. Rames has been vice president for student affairs at SDSU since 2000 and carries a strong list of achievements there.

There are four regents assigned to the search. They are Terry Baloun, the retired Sioux Falls banker; Randy Schaefer of Madison; former long-time regents president Harvey Jewett of Aberdeen; and Bob Sutton of Pierre. This is the sixth search for a president at one of the six state universities since 2008. It tends to be exhausting work.

EPA, carbon emissions and South Dakota

Let’s start by agreeing on two points (whether or not you actually agree with both, neither or just one or the other). The U.S. Environmental Protection Agency always is looking out for humankind’s best interest. Rural electric cooperatives are always looking out for humankind’s best interest. EPA’s latest round of proposed clean-air rules puts the federal agency on the opposite side of rural electric cooperatives as well as investor owned electricity utilities in South Dakota. Brenda Kleinjan is a good journalist by training who works for the South Dakota Rural Electric Association. Her latest piece on the EPA proposal arrived via U.S. mail yesterday in the Cooperative Connections newsletter / magazine for December 2014.  It is worth reading. The latest installment looks at “Dispatching More Natural Gas.” The link to the article is here. The link to the previous installment, “Increasing Coal Plant Efficiency,” is here. And she suggests visiting the South Dakota Public Utilities Commission website for its information on the topic here. She added this note in her response to my email asking for the Cooperative Connections links: “As of Friday, nearly 15,000 South Dakotans had sent in a message to the EPA through (And more are coming in this week.) The EPA public comment period closes on Monday, Dec. 1.” The site is here if you want to see it.

Keystone XL hearing set for Dec. 9

No, there won’t be a hearing tomorrow before the state Public Utilities Commission regarding the Keystone XL pipeline permit. The PUC pushed the date back to Dec. 9 to allow more time for various interveners to prepare their responses to a motion from TransCanada. The company wants the PUC to limit the scope of the issues that will be argued. TransCanada contends the permit granted four years ago never expired and agrees that, because the construction permit hasn’t yet been used, the company now needs to certify that the conditions underlying the permit haven’t changed. The interveners and PUC staff face a Dec. 1 deadline to submit their legal positions on that motion from TransCanada. The company then faces a Dec. 5 deadline to respond. The PUC plans to consider the motion as part of its regular meeting on Dec. 9. The PUC also will hear that day from the parties about the procedural schedule and might make a decision that day regarding the scheduling. TransCanada’s motion seeking limited scope can be read here.