Basin Electric leaving behind RUS

I couldn’t pretend to explain everything the federal Rural Utilities Service does and why its future at times looks iffy. But enough is happening with federal regulations that Basin Electric, the big provider of rural power for much of rural South Dakota, has said goodbye to RUS.

As detailed in the latest issue of Basin Today magazine, the North Dakota-based cooperative’s board voted in May to “refinance all RUS guaranteed Federal Finance Banking debt and go to cooperative banks as well as private and public markets for all future debt financing.”

Basin reportedly could be clear of RUS as early as September. That’s $1.4 billion that needs to be moved.

Steve Johnson, Basin’s chief financial officer, is quoted in the magazine’s story saying that changes sought for federal rules administering the National Environmental Policy Act helped drive the decision. Johnson said there could be “much longer delays” in financing construction for generation and large transmission projects.

He also noted, however, that RUS would continue to serve “a vital purpose” for distribution cooperatives.

Dakota Access pipeline wants NorthWestern power

The proposed Dakota Access crude-oil pipeline that would run from the North Dakota fields through South Dakota would have one pump station within South Dakota, according to the developers. That pump station would be in Spink County just north of Crandon and southeast of Redfield. While the pipeline project awaits permit consideration by the state Public Utilities Commission, Dakota Access is asking the PUC to allow the pump station to receive electricity from NorthWestern Energy. Technically, the pump station would be in the service territory of Northern Electric cooperative. But a NWE line runs through the precise area of the pump station. Dakota Access in its new filing with the PUC on June 16 said it can receive “reliable electrical service at an economic rate and without extensive development of facilities to provide such service.” The PUC will establish a schedule to consider the request by Dakota Access to use NorthWestern. Meanwhile the main evidentiary hearing on the Dakota Access construction permit is set for Sept. 29 through Oct. 8 if necessary. The main docket on the pipeline permit is available here on the PUC web site.

Looking ahead: 2018 U.S. House contest(s)

If South Dakota voters indeed get a three-way (or more) Republican primary for the governor nomination in 2018, the state’s lone seat in the U.S. House of Representatives might open up too. First, there seems little to no doubt that state Attorney General Marty Jackley of Pierre and state Rep. G. Mark Mickelson of Sioux Falls will be running for the Republican nomination for governor. There seems a solid movement favoring a gubernatorial candidacy by U.S. Rep. Kristi Noem of Castlewood in that Republican primary as well. Early prognosticators point to her experience in one statewide primary in 2010 and three general-election campaigns in ’10, ’12 and ’14 as valuable.

A Noem candidacy for governor would throw open the door to the U.S. House seat in the 2018 elections. No one seems to be openly positioning yet, at least not to the point where an actual name surfaces. Getting some attention of late, through her work in Washington, D.C., on the issues involved in charging state and local sales taxes on goods shipped by carriers to South Dakota consumers from companies outside the state, has been state Sen. Deb Peters, R-Hartford. She is in her 11th year as a state legislator and just turned 40 last fall. As a South Dakota leader for the pro-business American Legislative Exchange Council, her conservative credentials seem beyond question on most matters , and she chairs the Senate Appropriations Committee. As for Democrats, the question is open who might run for U.S. House in 2016, and whether a run in ’16 would clear the path for the party’s nomination to run again in 2018.

Video lottery does fund K-12 education

I’m running into this again, evidently because the Blue Ribbon panel is meeting on K-12 education across South Dakota. Contrary to the folklore spinning among many, South Dakota’s state law already dedicates nearly all of state government’s share of net machine income from video lottery to property tax reduction. In turn, the money in state government’s property tax reduction is dedicated to “property tax relief through state aid to education.” You can read the two laws here and here in the South Dakota Codified Laws. State government takes half of the money lost by players in the privately owned terminals.

Back in 1994-95, first under acting Gov. Walter Dale Miller and then under elected Gov. Bill Janklow, South Dakota used increases in state government’s share of net machine income to help fund state government and ultimately school-tax relief. Under Janklow, state government’s share of NMI became dedicated to property tax relief, specifically for K-12 education, after South Dakota voters came within a political eyelash of capping the property-tax system in the 1994 general election. The property-tax reduction fund became law in 1996 and the dedication to K-12 property-tax relief became law on Jan. 1, 1997.

You can raise all kinds of arguments about whether the steps taken during Janklow’s third term were the correct ones for property tax relief. But I conducted a simple study during that third term and found two key things: Property taxes collected for K-12 school districts were lower statewide as a result of the relief program; and the sample of individual taxpayers — I used the 105 legislators — showed their school taxes generally were lower too. The goal of the 1995 package was an immediate 20 percent reduction from the 1994 amounts of school taxes. That was essentially achieved. The longer-term goal was 30 percent, and Janklow with the Legislature achieved that goal in his fourth term.

Janklow, a Republican, was emulating the same 30 percent relief goal that the 1994 Democratic team, gubernatorial candidate Jim Beddow and running mate Jim Abbott, had announced first during that campaign. We are now 15 to 20 years after imposition of the caps on school taxes and local property taxes. School boards didn’t adopt tax opt-outs in the fashion that Janklow foresaw; instead, opt-outs seem to be seen as a last resort for them. County commissions likewise have struggled with using tax opt-outs. Voters vary throughout South Dakota but the general pattern seems to be the smaller the opt-out the more likely its passage in a local referendum.

Two big packages of road and bridge funding have come through the Legislature in the past few years to help counties and other local governments, one despite the veto by Gov. Dennis Daugaard and the current one, which had his now second-term support and puts a lot into the state Department of Transportation’s budget too. The Legislature’s Executive Board meanwhile recently selected county funding overall as an interim topic for this summer and fall. The governor’s Blue Ribbon Task Force is gathering opinions city by city and will deliver its report this fall. The Lottery Commission has tried mightily under Daugaard these past four-plus years to generate more revenue from video lottery, with some success, but net machine income remains below its level prior to voters adopting the statewide smoking ban in 2010.

One senses the Janklow-era caps have run their course for many people, but nobody has yet come up with the new funding sources for K-12 and counties. Just three years ago, in the 2012 general election, nearly 57 percent of South Dakota voters opposed an initiated measure that would have added 1 percent of sales tax, with the revenues to be split between Medicaid and K-12 education. There really doesn’t seem to be widespread interest in adding a state general income tax. The Legislature has focused on lower fruit, such as spending the unclaimed-property receipts that legally belong to others but must be remitted to the state treasury for supposed safe-keeping. But if one or two world-level banking corporations leave South Dakota, much of the unclaimed-property stream of revenue dries up when they go.

It will be important to see whether governor’s Blue Ribbon panel comes up with an analysis of how school districts are spending their funding now in comparison to 20-some years ago. Therein might be the telling data. Has the revenue been flowing increasingly into different purposes than pre-1994? And if so, what should be done? And if not, what is the appetite to ask taxpayers for more money?

Busy days begin for Blue Ribbon panel

Last week Gov. Dennis Daugaard stepped up the focus and the participation in the Blue Ribbon Task Force on K-12 education. He wrote his weekly column on the topic here and doubled the panel to 26 members. The public schedule of meetings cranks up this week and next week too with stops in Sioux Falls today (Tuesday), Yankton on Wednesday (June 17), Watertown on June 22 and Aberdeen on June 23. The next phase will be to consider the data and comments collected during the town meetings. Come September and October the task force will work out its recommendations, suggest any policy changes believed to be necessary and deliver a final report to the governor and the Legislature. From there it’s up to the governor and the legislators to make the actual decisions. The 2016 session of the Legislature could be quite the forum — but preferably not a circus.

Duncan continues as Gaming Commission chair

Dennis Duncan of Parker went unopposed Monday afternoon in winning re-election as chairman for the South Dakota Commission on Gaming. Ralph “Chip” Kemnitz of Philip likewise didn’t have a competitor for vice chairman. The commission held a short teleconference meeting to handle routine renewals of licenses and contracts. It was the first meeting for the new member, Dennis McFarland of Sioux Falls, whom Gov. Dennis Daugaard appointed to succeed long-time member Karen Crew of Sioux Falls. The other two members are Harry Christianson of Rapid City and Tim Holland of Custer. The commission set its next meeting for Sept. 24 at Deadwood City Hall starting at 9 a.m. MT. The commission oversees Deadwood casino gambling and horse and dog racing including simulcast betting.

Kim Vanneman succeeds Bob Benson

The state Transportation Commission appears to be at an all-time high of two women among its members with Gov. Dennis Daugaard’s choice of former state Rep. Kim Vanneman, R-Ideal. She joins Kathy Zander of Pierre on the nine-member panel. Vanneman replaces former state Sen. Bob Benson, R-Winner, whom the governor didn’t reappoint. Benson officially resigned as chairman and left during the commission’s last in-person meeting at the end of May.

Vanneman, 58, earlier this year completed a two-year term as co-chair of the South Dakota Republican Party. She spent six years in the state House of Representatives from 2007 through 2012 and her household is heavily in wheat production and promotion, including donating to the Rails To The Future effort to extend railroad service west from Chamberlain to the Kennebec / Presho area. Her term on the Transportation Commission will end April 18, 2019, although she would be eligible for reappointment. The Daugaard administration announced her appointment shortly before the 5 p.m. Friday close of business for the weekend.

Benson, 71, had served 12 years on the commission. The word that he wouldn’t be reappointed came from Transportation Secretary Darin Bergquist rather than directly from the governor. Benson’s original appointment came from then-Gov. Mike Rounds. Benson served four years in the state Senate from 1997 through 2000 while Rounds was the chamber’s Republican leader. Then-Rep. John Koskan, R-Wood, defeated Benson in the 2000 Republican primary 1,465 votes to 1,110. Then-Gov. Bill Janklow supported Koskan’s challenge to Benson.

Benson never was shy about saying what he thought while he was on the Transportation Commission. Last fall, Benson cast the deciding vote in favor of proceeding with the U.S. 85 project through Deadwood despite the DOT staff recommending against it. Then-commissioner Mike Trucano of Deadwood resigned after the approval, ending his 17 years on the commission. At the time Trucano said the project had been on DOT’s planning board since before he became a commissioner. It’s possible that Benson sealed his fate that day as well.

When transparency is opaque

Government websites that provide official documents are great — when someone posts the documents. Maybe it’s operator error, but for several years I’ve been mystified by the state agencies and offices that don’t post their requests for proposals on the state’s official RFP register. On the other hand, I’m grateful to all of those that do. Check out it for yourself at http://www.open.sd.gov/.

Lottery still running at faster pace

The numbers through May 30 indicate the South Dakota Lottery is generating more revenue for state government than at the similar point one year ago. Video lottery was up more than 7 percent at $182.5 million total (split between state government and the private businesses that run and own the terminals). Instant tickets were up 1 percent and estimated to net nearly $5.3 million. Lotto (jackpot) tickets were down 11.4 percent and projected to net $7.8 million. Based on the current numbers, lottery products would produce about $5.5 million more for fiscal 2015, which ends June 30.