We Are Only As Strong As Our Smallest Community...

Recent actions by the national government are increasingly endangering the viability of the smaller communities around the state. Possible policies, as outlined by Senator Thune, include cap-and-trade, bovine greenhouse gas emissions fines, and unfriendly attitudes toward our 2nd Amendment rights. Revitalizing our smaller communities is essential to the overall health of our state, and such policies will really hamper smaller communities’ ability to survive. Imagine how hard it would be for a small town, with already limited financial resources, to be expected to pay roughly 50% higher utility costs as a result of cap-and-trade policies (according to the PUC). Place on top of that the changes that are being enacted in the agricultural sector, as many small towns benefit economically from the surrounding farming community. Farmers who do not fully comply with cap-and-trade policies will have penalties levied upon them, and cattle ranchers will have to pay penalties for greenhouse gases produced naturally by their livestock. Adding in all these factors, communities will have a tough time making financial and budgetary ends meet with the decreased tax base, which severely hurts their solvency.

It will take strong leadership in the next few years to assert our state’s rights, particularly under the 10th Amendment, to fight back these taxing policies and ensure that our smaller communities are able to survive, flourish, and grow into strong and vibrant places once again.

The Employee Free Choice Consequences

Senator Tim Johnson recently let business leaders know that he would allow a Senate floor vote on the so-called Employee Free Choice Act, essentially lending his support of the bill by working towards a filibuster-proof majority cloture vote.

It can’t be stressed enough how much of a detriment this bill will be both to South Dakota businesses and workers alike. Here’s how:

• The secret ballot, a fundamental element of a working democracy, is eliminated, which does not necessarily allow employees to decide for themselves whether or not they wish to or see a need to unionize. They are opened up to pressures from both union officials and employers alike—skewing how they would truly vote.

• Unionization would become much easier, granting more power and money to union bosses who often devote dues to political slush funds that often don't reflect the views of the employees that were in the minority who did not vote for unionization, yet are required by law to be represented by the union regardless.
  

• The bill also calls for binding arbitration. When the union and management cannot come to an agreement, a third party comes in a determines what is best for both parties…and their decision is final and binding despite what each side thinks. Labor agreements often involve an arbitrator as last resort, but that should be up to labor and management to decide in their negotiations--not through government mandate.
  

Overall, the Employee Free Choice Act grants too much power to appointed bureaucracy and unelected arbitrators, undermining the rights of both employees and employers and needs to be opposed. Hopefully Senator Johnson will reconsider his position.

Personal Responsibility

KSFY reports that South Dakota has some of the lowest credit card delinquency rates in the nation, which is great news in this rough economy.

Individuals within this state are living within their means, cutting back appropriately, and not living to excess. Our culture of personal and fiscal responsibility is helping deaden the effects of the national financial crisis. Keep it up South Dakota!

We intend to bring the same kind of fiscal responsibility to Pierre. We cannot continue to spend every dollar we earn, fund ongoing expenses with one-time money, or look to the national government for help. We need to spend less than we earn, put some away for tough times, budget for desired expenditures, and cut back in areas that are ineffectual, wasteful, or can be better served through the private sector.

None of the state’s spending practices would work for us as individuals…so why should we expect a different outcome on a governmental level?

Graduation and the Economy

Recent college graduates are finding it harder and harder to find jobs in this rocky economic climate, according to the Argus Leader. Businesses are in economic lock down; hiring only as necessary and looking to more experienced, trained individuals who know the ropes to decrease new hiring costs.

Luckily, recessions are part of a cycle and are only a temporary setback for graduates. If South Dakota as a whole can maintain or improve its business-friendly atmosphere, businesses will regain their confidence in the system more quickly and be ready to progress sooner…thus opening up the job market faster for fresh grads to get their foot in the door of a long and successful career that they have worked so hard for.

Employment Stability

I can’t quite say it enough, but once again, the economic opportunities that our tax and business environment afford us as individuals is really a great thing, and it’s giving us great publicity during these tough economic times. A recent article in the LA Times displays the headline “What Recession? Places like Sioux Falls, S.D., Prove Resilient.”

During good times, many other states have chosen to tax their citizens and businesses more and more and set up extensive and inefficient social welfare programs. When rough times hit, states find they do not have the tax base to afford all the programs they have promised to their citizens. Oppressive business taxes also cut into business’ ability to hire more people and also avoid layoffs. Whereas we had a unemployment rate of 4.6 percent (February 2009), states like Michigan and California are around 12 and 10 percent, respectively.

Our modest social services, combined with a business-friendly environment, low taxes, and a very neighborly attitude have given us the means to help us help ourselves and our neighbors, as well as limiting how high our unemployment rises in bad times.

To put it in perspective, even during the peak of the United States growth and good times over the past few years (2005, 2006, 2007), national unemployment fell to a low of 4.6 percent, which is what South Dakota’s ROSE to in the midst of a severe recession.

Plugging the Budget Holes...

With recent news of the passage of the American Recovery and Reinvestment Act of 2009, otherwise known as the stimulus bill, the budget situation is quickly changing in our state.

Many of the dollars coming in have strings attached, where certain dollar amounts have specific sectors where the money is required to be spent. Here is a brief overview of some of the different areas where our stimulus check will be required to be spent, click here. Areas where money will be directed include water and highway infrastructure development and many various areas of temporary assistance.

In light of this, the Argus Leader reports that our state budget situation is looking a little brighter. Many of the cuts to state programs Governor Rounds proposed will not necessarily have to happen. Read more here…

Although it is great that the stimulus is allowing us to keep some good state programs, it is uncertain how much of a “stimulating” effect this will have on our economy. Using stimulus money to plug budget shortfalls might save some jobs associated with those programs, but it certainly isn’t creating any new ones the best I can see. Furthermore, where will this put our structural deficit in 2011? $100,000,000 or $150,000,000? If we do not get ‘projected’ sales tax revenue increases to ‘bridge’ to, we will be left with a much larger hole than we saw this legislative session. What is our plan or strategy to boost sales tax? Is this a bridge to nowhere?

It is time to prioritize our needs and pay for what we can within our means. Budgeting for outcomes through the use of benchmarks and performance measurements are essential tools and need to be used.

A Place To Retire...

Sioux Falls was recently rated one of the United States’ top places to retire, according to KELO. Thanks to our non-existent state income tax (and low taxes in general), retired folk have found Sioux Falls and greater South Dakota a great place to retire when drawing upon retirement income.

The U.S. News & World article cited several other cities, all with similar low-tax burdens on the retired community. Of particular concern to us, though, is that this influx of older, retired persons combined with the outflow of younger, working individuals creates a vast need for retirement homes, with a shrinking productive tax base to help support such projects. We need to keep our youth here in order to minimize the age gap, enabling us to care for our senior citizens who find South Dakota a perfect place to retire.

We need a proactive strategy to show younger individuals all that South Dakota has to offer…it seems that our youth realize the benefits of our state in their later years, when they eventually return here, creating the void between the numbers of younger and older generations in our state.

Practical Education...

Lutheran Social Services has seen a 25 percent increase in demand for their credit counseling services, according to a report by KSFY. Money is tight and all of us are trying to make the right choices, whether it is managing credit card debt or our retirement accounts. Read more here…

Part of the reason that we as a society make poor economic decisions is rooted in our education system. Many of us find ourselves in tough economic situations simply because we are not taught the fundamentals of smart money management. High schools require four years of English, three to four of math, and around 3 years of science, but where are the requirements for an economics or financial class? Economics affects us every day, and as we’re seeing now, we as a country do not make wise economic decisions. I do not think it is too much to ask to require one to two years of classes that guide students in wise decision making and will help them in their everyday decision making for their entire lives.

South Dakota currently only requires 0.5 units of an economics/personal finance class as a graduation requirement, compared to 1 unit of fine arts, 0.5 physical education, 3 of social studies, etc. Click here for the full list…

English, math, and science are very critical classes to be competitive in the 21st century economy, yet a tremendous amount of creative individuals outside those fields will innovate and utilize new discoveries and technology to create small businesses. Others find themselves working for these small businesses. Either way, three years of science will not help small business individuals much when they do not have the knowledge to manage accounts or invest wisely. More entrepreneurship, the spirit that makes this country great, would be possible if schools would also, in addition to the critical fields of math and science, teach competencies needed for wise economic decision making in personal and business life.

The Argus Leader reports that the jobless rate in Sioux Falls has increased to 2.9%, a report that shows that some of the economic woes plaguing the nation as a whole are starting to hit home a bit. In addition, the state’s unemployment rate as a whole is up to 3.4%.

In times of uncertainty, I always find it helps to look for good in any situation. Notice that our state unemployment rate increased to 3.4%. Many states would give anything make their unemployment rate go down that far even during good times.

Here in South Dakota, we need to count our blessings, as things could be far worse. Nationally, the unemployment rate was 6.7%, as of the end of November. We’re fortunate to be better off than the rest of the country, thanks to our low tax burden and a friendly business environment.

Thinking Ahead...

Governor Rounds announced Tuesday that he is placing a hold on executive branch spending, including a limit on out of state travel, new office purchases, and new hires within the executive branch. All this is an effort to prepare for an expected lull in sales tax revenues, 20% of which the state receives around the holiday season. Read more here…

Preparing for the worst and conservatively estimating revenues is crucial toward creating a sustainable budget and keeping the state out of the red. We went through this very same thing in 2001 and 2002 with the City of Brookings. Tough times call for tough measures, and that includes reducing expenditures rather than using reserves. For the past several years, our state has been liberal in using reserves to ‘balance’ the budget. It is times like these that previous poor fiscal practices catch up with us.

Governor Rounds is doing the right thing, and we need to support him.

An Update on The I-29 Corridor…

I was interviewed by the Argus Leader for updates on the I-29 Corridor. I wanted to emphasize participation and the fact that Sioux Falls is important to the overall study. Two key points from the article I would like to point out:

Slater Barr, president of the Sioux Falls Development Foundation, said, "Anytime you are trying to do some strategic thinking as a region, that is a good thing.''

And Dwaine Chapel, executive director of the Lake Area Improvement Corp."We felt the regional approach to economic development made a lot of sense,'' he said. "Instead of working against communities, work as a team to create regional opportunities.''

Read the rest of the article at the Argus Leader online…

As the article states, we hope Sioux Falls comes on board because they are a key player in this region. I believe strongly that by forming partnerships among our I-29 communities, we can effectively bolster economic development in the region, subsequently providing benefits for the State of South Dakota as a whole.

Once everyone is on board with this strategy, it will be possible to realize the cumulative benefits of every community working together… and by utilizing this mentality, every community wins.

Corridors have been effective tools in economic development strategies, some of which I wrote about in a previous post.

Corridors – Tools For Economic Growth…

Corridors, or clusters of industry/innovation/creativity/retail along a certain route, are an excellent example of ways to attract business and residents to an area. The Red River Valley Research Corridor in North Dakota is a prime example of creative and forward thinking.

Currently, South Dakota is planning a corridor of its own, along I-29. This initiative aims to inter-connect our state's largest city, several research and teaching universities, and much of our population base.

Another corridor is in its nascent stages out west. The TRExpressway, part of the Ports to Plains Trade Corridor, looks to connect Mexico, the United States, and Canada. This move has the potential to accommodate a vast number of travelers through the western edge of South Dakota. This initiative, along with I-29 and I-90 systems will bolster South Dakota’s transportation infrastructure potential.

If completed, the TRE would be part of the Great Plains International Trade Corridor, a proposed four-lane divided highway system that promotes trade and transportation nationally and internationally, said Cal Klewin, director of the Expressway Association.

Read the Rest of the News Article from The Dickinson Press Here.

But recently, with budget constraints and virtually no highway money, can South Dakota afford such an endeavor? These initiatives hold an abundance of potential, but not if we are narrow in our thinking and un-sustainable in our approach.

It is important that we remember what our priorities are, and what is economically beneficial to invest our money in. Governor Rounds warned on October 23rd about the possibility of taxes going up. This is due to the fact that we aren’t reigning in our spending in good years. Subsequently, we get hit especially hard in less fortunate years. Our government should be prioritizing through a collaborative framework for sustainable development in South Dakota along all fronts.

That way, we can ensure appropriate investment in our infrastructure to allow for increased prosperity for South Dakota.

Cut Services, Raise Taxes, OR... Reorganize Our Thinking?

Everyday I pick up the paper or read the news online and more often than not, I am reading about how state government has decreasing funds with which to provide services to the residents of South Dakota. This is aside from the lack of road money and a lawsuit over the adequacy of school funding. On Sunday, an article elucidating the potential turmoil of the upcoming budget prompted me to write this article.

Can we, as a state, continue to cut services that are already financially strained, such as roads, bridges, infrastructure, and education? What is the role of our government here in South Dakota and how does that role fit into the economic liberties we enjoy?

I believe there are three ways we can go about mitigating this obstacle. First, we can simply cut services to residents of this state. Second, we can impose new taxes and raise old ones to boost revenue. Third, we can reorganize ourselves to fit the 21st century. The same operating procedures and systems created over 100 years ago to meet the needs of industrialism are no longer adequate and our financial position reflects just that.

I cannot vouch for anyone else, but I would choose option three. Albert Einstein noted that, "We cannot solve problems by using the same kind of thinking we used when we created them." In other words... let's get a little creative...

It Is Our Responsibility Is To Live Within Our Means…

Several newspapers this past week have reported the concerns facing the strapped budget in South Dakota. If you take time to review the last 7 years worth of state budgets, you will discover, like I did, that we have been already borrowing millions of dollars from our reserves to augment a longstanding structural deficit. And this is not all due to recent financial frustrations brought on by the morose news from Wall Street.

Our state ‘balances’ its budget every year… or does it? Does balancing your budget refer to making sure you have money covering your expenses, no matter where it comes from? Or does it mean only using recurring revenue for recurring expenses, and one-time revenue for one-time expenses? What is our state’s fiscal policy to insure we are not spending beyond our means? When we ‘predict’ our revenue, are we being conservative, or is this a projection determined by how much we want to budget to spend?

The duty of the government of South Dakota is to provide valuable services to the residents of this state. Abraham Lincoln once said: “The legitimate object of government, is to do for a community of people whatever they need to have done, but cannot do by themselves in their separate individual capacities.”(Lincoln On Democracy p. 64) In my mind, this would relate to services and infrastructure we determine we need over time. The question we have to ask ourselves in state leadership is what should government pay for and what shouldn’t it pay for? When faced with tight budgets, tough decisions must be made. Will we be tough enough to make them in hard times, when we apparently weren’t disciplined to do it in the ‘good’ times? Will we be willing to innovate and be creative in our approaches to long term solutions for our state’s development?

Making tough decisions involves prioritizing and creating efficiencies first and foremost. And at the same time, strategic investments of effort and finances must be piled into education and economic development (education is economic development by the way, another story for another time). Much like a family budget, if you want to get ahead you have to reduce expenses and increase income. Strong fiscal management and aggressive economic development win at the end of the day. Some say that sounds idealistic and it can’t be done. Well, yes it can. You can begin by researching the spreadsheets of the City of Brookings to see how we came out of a recession with reverse growth in sales tax revenue to surplus budgets the last 5 years, including one projected for the end of this year: to the credit of our city council, our fiscal policy and staff administration. One example: our budget fiscal policy grows government spending at the consumer price index. That way it won’t outstrip the economy and you make hard decisions along the way, instead of when you are way over your head.

I don’t mean to be critical, but it is time we started to think differently about how we ‘invest’ our money in this state. Idealism never hurt anyone, when it is followed by a good plan. We need a strategic development plan that will grow our whole state and bold action by our state leaders to carry it through. A balanced approach; will we do it?

Access To Hunting Land On Rise On Rise…

On Sunday the Sioux Falls Argus Leader ran this story about increased hunting access for public hunting in South Dakota. The premise of the article was public/private partnerships among the state and non-governmental organizations like Pheasants Forever and Ducks Unlimited, as well as grassroots efforts but private citizens have given rise to this extraordinary use of South Dakota’s landscape. Hunting is a multi-million dollar industry in our state, with numbers growing each year on what both in-state and out-of-state residents spend on hunting and wildlife viewing each year.

Thanks to these partnerships and grassroots efforts, South Dakotans can now enjoy over 4 million acres of public hunting grounds. Currently, there is 1.2 million acres enrolled in South Dakota’s Walk-In Program through the Department of Game Fish and Parks… up substantially from a first-year enrollment in 1988 of 23,000. But recently with skyrocketing grain prices, farmers have taken land out of habitat preservation and put it back into production. Over 300,000 acres was lost in 2007, with several hundred thousand more on the docket for the next few years. This is important to the future of hunting in South Dakota because, “Basically our program (SD Walk-In Program) lives and dies with CRP,” as noted by senior wildlife biologist Bill Smith.

The federal Conservation Reserve Program is vital to long-term efforts to keep public hunting access, as well as the biodiversity of the South Dakota prairie intact. We should make every effort to encourage public/private partnerships, grassroots efforts, and financial compensation for preservation and/or usage of the state’s natural resources. These resources are imperative both to the state economy and our cultural heritage. Working together on these programs I believe there is no reason why this cannot be a win-win for our land hunting as the article suggests.

Our efforts should focus on the integration of usage… putting cattle on CRP land, possibly harvesting switchgrass and other biomass off the same land for use in making cellulosic ethanol, enrolling in the Walk-In Program. Integrating all these systems will allow our wildlife and natural habitat to stay intact, while farmers and ranchers earn income to support their families, and both in-state and out-of-state hunters can continue to use our beautiful South Dakota landscape to participate in traditional past times.

I agree with Rick Herrold, President of Pheasant Country LTD… “In order to hunt you need to have birds, and in order to have birds you need to have habitat.” Using this mentality, we should create a path in which we will all benefit from the natural resources of South Dakota.

Road Shortages Are A Symptom of A Deeper Issue...

It is time for us in South Dakota to talk about innovation; except this time we need the conversation to focus on how we are going to solve our challenges. This transportation issue is only on the front burner today… but education and economic development for the new economy are also hanging in the balance.

How about a plan with strategy developed to grow our whole state? Maybe a fair tax system not based upon income and a more efficiently run system? Could local control/authority to solve these issues on a regional and local level be the answer?

Last year our legislators in the Brookings area introduced Senate Bill 183, better known as the Transportation District Bill. This bill allowed local communities to partner together and gave them taxing authority allowing them the ability to develop and pay for a long term strategic plan for transportation improvements within their district. It brings assurance to the local citizens for referral measures to be allowed and in essence brings the transportation funding issue to a close. I would love to hear what you think about SB 183.

This way of thinking may just be the avenue to a better future for South Dakota…

When Set Revenue Meets Increasing Costs…

With the closing of the school funding lawsuit, and the commencement of committee meetings to study highway and transportation issues, we are left wondering about the future of education and transportation infrastructure in South Dakota.

In the Argus Leader on October 1st, Sanborn Central Superintendent, Lori Whitney, testified that in a few years, after the school has expended its savings trying to stay afloat, the school will be broke. Then it will no longer be a question of hiring teachers and buying laptops, it becomes a question of keeping the facility and the education system alive in the community.

Bob Mercer, in the Pierre Capital Journal, notes that highways in South Dakota face some serious challenges in the future. In his article on September 29th, he explains the highway funding system in South Dakota, and also why the State Highway Department will need an additional $128 million in operating funds to keep up annually. Is such an increase a possibility for South Dakota?

Many factors play into these issues, but I can see none more obvious than a set revenue stream colliding with operating cost increase (as illustrated by my rudimentary illustration above). In recent years, the energy costs for bussing students, heating and cooling facilities, lighting, road construction, fuel for machinery, etc. have shot through the roof across the United States. We have been able to shoulder the majority of this increase due to savings, subsidies, and tax credits. How long until those programs are no longer sufficient? As a result of these diverging streams, South Dakotans left in the middle are stretched and strained.

We need to actively work together to alleviate that stress. I believe we will need: a diverse and sustainable energy portfolio in South Dakota, an altering of our tax structure to keep the burden low but allow for increased revenue to be put to work by local governments, and an economic development plan specific for all regions of our state.

It will take some hard work and dedication, but those are not new concepts to South Dakotans.

Local Farmers’ Markets Boost Local Economies…

It may not seem like much… $2 for some tomatoes, but the revenue generated at farmers markets can really add up.

My wife is one of these shoppers. She looks for quality and price and finds both in this market.

Back in early August I attended the Buy Fresh, Buy Local meeting at the Swiftel Center. Pat Garrity of Yankton led the meeting. Pat proposes we build the ‘local market’ to 10%, which seems both easy to obtain, and beneficial as far as results go.

His 10% idea is to build a local famers’ market that could generate in revenue a mere 10% of the food bought in the area in one year.

Example: If we have 30,000 people, and they consume $200 worth of food per month, that equates to $72 million dollars a year. Ten percent of $72 million is $7.2 million… This is money that stays in the local economy. Now break down ten percent to what one buys personally. If one spends $100 every two weeks on groceries, that means he/she spends $10 at the local farmers market… or $5 a week.

This is a beneficial way to help the local economy, benefit local schools, encourage people to eat a little healthier, and also cut down on global energy usage needed to ship goods across the world. Local grocery stores can buy locally and distribute as well. This is a great strategy to help build our regional economies all over South Dakota.

Updates On the I-29 Corridor…

This week the community of Madison has embraced the vision of the I-29 Corridor and made the decision to contribute towards an in depth study of economic drivers along the corridor. This study will be the first of its kind in South Dakota and will help with future planning and decision making, ultimately leading to a more effective approach to economic development.

A big thanks to the community of Madison!!!

Inmate Population Is Down…

This year South Dakota’s inmate population is down according to an article from the Argus Leader. This is the second year in a row since the late 1980s that the population has actually decreased. This, as stated in the article, is due to prison programs that keep inmates who are convicted of nonviolent crimes out of jail, and working in their communities.

These programs are beneficial for the individual convicted, his/her family, and the state of South Dakota. They keep people in the workforce… which benefits South Dakota’s economy, and they do not remove mothers and fathers from whose work may be the only source of income for the family. I think programs like this for non-violent offenders are very beneficial because they save the state millions of dollars (as opposed to full-time incarceration).

Keeping them out of South Dakota institutions saves taxpayers money. According to information from the SD Department of Corrections Website:
In state fiscal year 2007, the average cost to house an inmate per day in an adult facility broke down as follows:

Mike Durfee State Prison - $44.5

Yankton Minimum Unit - $26.32

Rapid City Minimum Unit - $38.75

SD State Penitentiary - $53.22

Redfield Minimum Unit - $28.65

Jameson Unit C - $21.95

SD Women's Prison - $61.43

SDWP Minimum Unit - $28.11

The average daily cost to supervise someone on Parole was $4.29.

Also, by my own calculations using population numbers from the DOC website…

The cost per inmate is calculated from 2007 data. Population numbers are current to 2008. These quick calculations do not even account for parolees ($4.29 per day) .
In the Governor’s recommended 2009 budget, he has $83,403,757 going into the program from the general fund alone. Improving upon what we have will help cut these costs down even more.