Legislature Posts First Proposed Bills of 2011

What's that under my tree? Christmas bills! Yahoo! Start your RSS engines: the first pieces of legislation to be proposed in the 2011 session of the South Dakota State Legislature are in the e-hopper.

First in from the State House: two bills on the agricultural productivity tax (you know, the quasi-income tax now imposed on farmers in place of plain old property tax). House Bill 1001 changes shall to may in a couple spots (ah ha! So shall and may do mean different things!) and allows the folks in charge of this tax to incorporate more data in the calculations. HB 1002 clarifies the need for documentation and the kinds of data the director of equalization can use to assess taxes on ag land.

HB 1003 empowers the Interim Rules Review Committee to revert rules that impose "unreasonable" costs on local governments and school districts. If I'm reading the law right, the interim committee already has the power to revert rules for other reasons. But I wonder if this change will resurrect debates over costs that are better settled during session by the full body.

The Senate is a bit slower out of the blocks, with a couple of style and form changes. Senate Bill 3 has a little more substance: it clamps down on the use of South Dakota's state seal. Section specifies that the state seal may not be used for the following:

1. On or in connection with any advertising or promotion for any product, business, organization, service, or article whether offered for sale for profit or offered without charge;
2. In a political campaign to assist or defeat any candidate for elective office; or
3. In a manner which may operate or be construed as an endorsement of any business, organization, product, service, or article.

In other words, if this passes, Senator Russell Olson (R-8/Madison) will have to get the Bulldog Media folks to whip up a new header for his website:

Small but deadly: Senate Bill 3 would ban use of the state seal in political campaign literature.

Senate Bill 3 would empower the Secretary of State to come up with rules to "assure tasteful and high-quality reproduction of the seal." I welcome readers to compose their own punchlines.

The Interim Bureau of Administration Agency Review Committee put this bill together. They even had the foresight to pre-empt complaints of censorship. Says Section 7:

Nothing in this Act prohibits the reproduction of the state seal for illustrative purposes by the news media if the reproduction by the news media is incidental to the publication or the broadcast. Nothing in this Act prohibits a characterization of the state seal from being used in political cartoons.

Hey, Ehrisman! You're still good to go! But now let's see if there's floor debate on whether blogs meet the Legislature's definition of "news media."

There's much more fun to come from our hearty 105 in Pierre. Stay tuned!

MHS Publishes Early Voting Schedule: No Tickets Required

I see the Madison Central School District has posted a list of absentee voting opportunities. Permit me to post the schedule hear in clean and simple text to spare you the trouble of clicking on the school's needlessly bandwidthy PDF:

Date	Event	Location	Time
12/20	Middle School band/choir concert	High School Auditorium	7:00 p.m.
12/21	Boys basketball	Cafeteria	4:45 p.m.
1/7	Girls basketball	Cafeteria	4:45 p.m.
1/10	Boys basketball	DSU Fieldhouse	4:45 p.m.
1/12	Open voting	Elementary Commons	12:45 p.m.
1/13	Girls basketball	DSU Fieldhouse	5:00 p.m.
1/15	Gymnastics	Cafeteria	Noon
1/17	Forum	Cafeteria	7:00 p.m. after Forum
1/18	Open voting	Elementary Commons	3:00 p.m.-6:00 p.m.
1/20	Boys basketball	DSU Fieldhouse	5:00 p.m.
1/21	Wrestling (Madison Square Garden)	Cafeteria	6:00 p.m.
1/25	Forum	Cafeteria	7:00 p.m. after Forum

Dang—I already missed a couple!

A couple things occurred to me last night about the school district's early-voting scheme. First, the school can't conduct early voting at a basketball game... or at least not on the other side of the ticket table. Suppose concerned citizens want to observe the voting, as they are entitled by state law to do. Suppose they're on a tight budget and can't afford a ticket to the basketball game. If school business manager and election officer Cindy Callies sets up a voting table on paid side of the ticket booth, she creates a barrier to poll watchers, not to mention potential voters.

There can be no price of admission to access any polling place. That's why, in the above schedule, the polling during high school games is listed at the cafeteria or the auditorium. But there still had better not be any electioneering near that voting table!

Note also that it's a bit tough to make to observe the polls when the school district doesn't include a closing time for its early polls. Keeping democracy honest is hard work, but on January 20th, for instance, it would be nice to know if voting will run for just an hour or if I should pack a snadwich and expect to be there for four hours.

Absent from the school's new gym/renovation information site is a list of workplaces that have requested early voting sessions. If any such sessions are scheduled, we should expect similar public notification.

Note, business owners, that if you invite Mrs. Callies to hold early voting at your business, you'll need to open your doors to any person who wants to come in and watch or even vote. That's our right. You can't call Mrs. Callies and say, "I have five employees who want to vote; please bring five ballots down." If folks on the street hear that you're conducting an early vote at your office, and they want to drop in and vote at that time as well, you have to let them in, and Mrs. Callies has to bring enough ballots for such a contingency.

The school district has already lost one supporter with its gaming of the vote. I hope the school will compensate for its questionable vote-stacking by keeping the process as transparent as possible.

Poll: MHS New Gym/Renovation Bond Issue Well Short of 60%

If Madville Times readers have anything to say about, the school will have a hard time passing its bond issue. In the latest Madville Times poll, I asked "How will you vote on Madison's $16.98 million new gym/high school renovation bond issue?" Your responses over the past week:

Yes	73 (44%)
No	74 (45%)
Still thinking	16 (9%)

Total Votes: 163

That's pretty tight, but given that it takes 60% to pass the bond issue, these numbers suggest the school district has some convincing to do.

Now of course, the margin of error for Madville Times polls is bigger than any gym MHS will ever have, so keep your grains of salt handy. For instance, back in September, my poll on the county commission race got the winners right, Pedersen and Wollmann, though in different order. On the other hand, my poll was way off on the local sheriff's race: the tie between Lurz and Wyatt wasn't too far off, but my vote totally underrepresented Sheriff Hartman's support.

But consider: I was off on the sheriff's race because I suspect my readership underrepresents the older crotchety crowd that likes the status quo. If my school bond poll underrepresents that crowd, then the bond issue is in real trouble.

Lange: SD Can Learn from Minn. Statesmanship, ND Criminal Justice

Last week I noted the difference in fiscal politics between Minnesota and South Dakota. That essay arose from a conversation with my neighbor and outgoing state legislator Gerry Lange. In the following guest column, he exapnds the view to include North Dakota:

Recent headlines here in Madison and in Minnesota highlight our two states’ sharply contrasting value systems. Here in South Dakota, our leaders are telling us we’ll have to cut ecucation funding to balance the budget! There in Minnesota, the finally-elected new governor, a multi-millionaire heir of the Dayton fortune, is acting like a statesman with “noblesse oblige!”

Rather than slashing education and vital services, he’s calling on his own class of affluent “winners” to come up with more income tax to patch their budget holes. How could sister states be so different? Could be a matter of their preferring a number one quality of life where it’s worth the trade-offs: more taxes for better wages, better infrastructure, and no taxes on food, clothing, auctions, and building contracts.

National government publications are rich with “best practices” from other states. As legislators, we brought home numerous “success stories” from meetings all over the country. One of the best that could save us millions is as close as North Dakota! They’ve been doing “electronic monitoring” and intensive probation for quite a few years. Results? 1000 fewer in prison than here, and a ten percent recividism compared with some fifty percent in most states.

Most of our leaders in Pierre know this, so it’s puzzling as to why we don’t adopt this successful approach. Do South Dakotans really believe that converting colleges to prisons has been a better strategy? Do tax-fearing voters really prefer to balance the budget on the backs of our kids?

—Gerald Lange, December 2010

Reich Reviles Rotten Reaganomics Rehash -- Congress Passes Stimulus II

Senator Tim Johnson was on SDPB Dakota Midday Tuesday insisting that he had no choice but to vote for the $858 billion Stimulus II that the Republican leadership and President Obama worked out. Funny: Senator Tom Harkin from Iowa thought he had a choice. So did twelve other Senate Democrats, six Senate Republicans, and one Senate Indy-Socialist (roll call vote #276 here).

South Dakota's last Democrat in Washington needs to read more Robert Reich. America's best darn former Secretary of Labor critiques exactly this false "have no choice" excuse. Reich says we ought to have the courage to choose something other than a rehash of failed Reaganomics:

Supply siders are also fond of claiming that Ronald Reagan’s 1981 tax cuts caused the 1980s economic boom. There is no evidence to support this claim. In fact, that boom followed Reagan’s 1982 tax increase. The 1990s boom likewise was not the result of a tax cut; most of it followed Bill Clinton’s 1993 tax increase.

Nor did George W. Bush’s tax cuts trickle down. Between 2002 and 2007 the median wage actually dropped. And Bush’s record of job creation was pathetic relative to Bill Clinton’s, when taxes were higher. Under Clinton, America added 22 million net new jobs. Under Bush, barely 8 million [Robert Reich, "The New Tax Deal: Reaganomics Redux," blog, 2010.12.16].

Holy cow: our gal Stephanie and my man Dennis both voted aye! Michele Bachmann and Anthony Weiner voted nay. We should have more votes with alignments like that.

Wow: two empirical examples of significant tax increases followed by better economic growth than we got after the Bush tax cuts... ineffective cuts that we are now extending.

I know, it's all over but the shouting. But there are economic lessons we aren't learning... and I intend to keep shouting them.

Online Poll: Vote Now: MHS New Gym/Renovation!

Hey! Click through Twitter or your RSS reader and vote in the latest Madville Times poll. I'd like to know "How will you vote on Madison's $16.98 million new gym/high school renovation bond issue?"

As always, the Madville Times encourages educated voting. Learn more...

1. ...by taking the video tour filmed by yours truly on November 22;
2. ...by reading Madison High School's Renovation Project page;
3. ...by checking out the MHS Facility Project Facebook page;
4. ...and by browsing the best (and only!) local blog coverage of the project, including counterproposals from concerned citizens who are just as interested in boosting the quality of Madison education as anyone else.
   

Poll runs until Dec. 22, Wednesday morning breakfast time. Share the link with your fellow Madison Central School District registered voters and click now!

Adelstein on Balancing Budget: Raise Sales Tax

Good grief: if Dakota War College keeps slacking off, will I have to start getting my news from Gordon Howie's wingnut blog? That's scary... but it's the case this morning.

In a public discussion attended by hardcore Black Hills Tea-o-crat (rhymes with theocrat) Ed Randazzo, State Senator Stan Adelstein said Saturday he plans to float a bill in the 2011 session raising the state sales tax by one penny. Adelstein would impose this emergency tax for just three months of the year for three years. The temporary extra penny would raise $50 million a year to help erase South Dakota's looming budget shortfall.

Adelstein notes this plan has the added benefit of getting 26% of its money from tourists.

Mr. Randazzo hyperventilates over the plan with his usual Glenn Beck bromides. Randazzo opposes tax increases that allow the growth of government. He misses the point, however, that Adelstein's tax increase would only allow the reduction in cuts of state government.

Randazzo then opens his rich trove of wingnut contradiction by saying "We must cease the dependence on the 'trainload of money' from Washington to balance the budget." In Ed's fantasy-land, South Dakota is entirely self-sufficient and doesn't depend on Uncle Sam to meet its statewide needs for roads, farm aid, Social Security, Medicaid, Indian education and other reservation services.

At least Senator Adelstein is willing to look at South Dakota's fiscal situation with honesty and guts. Tune out the wingnuts, Pierre, and pay the bills!

Raising Taxes "Nuclear Option" in SD, Path to Governor's Mansion in MN

South Dakota faces a projected budget deficit of $74.8 million, about 6% of our projected FY2010 general fund expenditures. But asking South Dakotans to pay, say, a half-penny sales tax increase to cover our expenses is deemed "the nuclear option."

How does paying for the services we need become more unthinkable that cutting state aid to K-12 education 5%?

Maybe we could osmose some political courage by spending more time at the Mall of America. That thriving commercial establishment is in Minnesota, which faces deficits of $3 billion this year and next. That's 16% of Minnesota's state budget. How do they propose to close that fiscal gap?

Wealthy businessman Mark Dayton campaigned for governor on a platform of taxing himself and his rich compatriots more. He advocates creating a new income tax bracket for individuals making more than $130K and couples making $150K (yeah, that's rich around here). He advocates a new property tax bracket for homes worth over $1 million. He'd also tax predatory credit card companies.

Dayton would also make a whole whack of spending cuts, but he puts the tax increases at the top of the page, and additional revenue outpaces savings four to one, acknowledging, perhaps, that it's better to pay the piper for services citizens need than cut government services and inefficiently shift costs to local governments and individuals.

The Minnesota Chamber of Commerce finds such proposals abominable, but Dayton campaigned openly on these tax increases and won the governor's chair. Not by much, but he won.

Are Minnesota and South Dakota really that different? We were both settled by the same hardy, taciturn German and Scandinavian stock. We both deal with harsh winters and the disappointment of the Minnesota Vikings (or out in the Hills, the Broncos). How can we be so different in politics?

Governor-Elect Mark Dayton shows us that a prairie state doesn't have to fight deficits with one fiscal hand tied behind its back. Governor-Elect Dennis Daugaard should pay attention.

Keep Fighting, Dems: Obama-GOP Tax Deal Entrenches Plutocracy

Dennis Kucinich is not planning to challenge President Barack Obama in 2012. Maybe we can draft Robert Reich, who justifies efforts Kucinich and other rowdy Dems may make to beat the Obama-GOP tax-rate deal into better shape:

If the Democratic Party has stood for anything over the years it is to maintain and restore upward mobility for the majority of working Americans, ensure that the playing field isn’t tilted in the direction of the privileged, and limit the power of the richest among us to entrench themselves and their heirs into a semi-permanent plutocracy.

Continuing the Bush tax cuts of 2001 and 2003, including a sharp cut in the estate tax, violates these core principles. Doing so in the midst of an economic emergency that demands bold measures to rescue America’s vast middle and working class adds further insult. For President Obama and former President Clinton to tell America there’s “no other choice” or that “this is the best we can do” — when Democrats remain putatively in control of the House, Senate, and the presidency — is misleading [Robert Reich, "Why Democrats Should Disregard Bill Clinton's Endorsement of Obama's Tax Deal," blog, 2010.12.11].

Among the things I appreciate about Reich's call to principle is that he acknowledges that he admires his former boss and the current Commander-in-Chief as "good men." Yet he disagrees with them, civilly and passionately... just as we could in a good healthy primary. Hmmm... Reich-Kucinich 2012? Weiner-Paul?

Proposed Education Cuts Bad for South Dakota: Who Should Pay?

What's wrong with Governor Rounds's proposed budget for education? Aside from the usual GOP view of education as expense rather than investment and a determination to cheat our kids of educational opportunities, plenty:

1. While kids get a 5% cut, administration in the state Department of Education gets a 3.3% boost, $342K more than this year.
2. The FY2012 per-student allocation is $100 less than it was in FY2009. Rounds would set schools back three years.
3. The budget anticipates a 20% drop in students taking Advanced Placement courses. If we want competitive graduates, we should be pushing more kids to take AP, and backing that push with bucks.
4. The number of school districts offering post-secondary dual-credit courses drops from 20 to 6. If that's a local decision, that's bad. If that's a state budget cut, that's worse. And yes, the governor is proposing a quarter-million-dollar cut to dual-credit support.

While doing dishes last night, my wife posited two ways out of this budget mess. We can make our kids pay for it, by permanently hamstringing education funding and denying them the educational opportunities they need to compete for admission to the best colleges, scholarships, and jobs. Or we can make Wal-Mart pay for it by imposing a corporate income tax.

Our kids or our corporations: who should pay?

---------------------------
p.s.: New Dept. Ed. data show fall 2010 K-12 enrollment at 123,629. Multiply those kids by the $240 per student by which Rounds would reduce the funding formula, and that's $29.7 million in cuts.

pp.s.: If you think a 5% cut from Pierre would save you money, think again: the SD Budget and Policy Project reminds us that your local school district (and health care providers) will come a-shifting those costs to you one way or another.

Obama-GOP Tax Deal Hands $360K to Richest 0.1%

Harvard's Dr. Mankiw mostly likes the tax deal between President Obama and the still-minority Republicans. He also points to some useful number-crunching from the Tax Policy Center that breaks down who gets what from extending the Bush tax cuts for the next two years. Compared with current law—i.e., the taxes everyone would pay if we let all of the deficit-busting Bush tax cuts expire at the end of this year, as originally intended—the top 0.1% of income earners each get $360,469 more in their pockets each year.

$360,469. That's enough to cover the salaries of Kristi Noem and John Thune. Normal annual pay for members of Congress: $174,000.

The way I calculate it, the 259 richest Americans could take their gains from this tax deal and buy every member of Congress.

But they seem to have already done that.

Or let's slice that locally. About 400,000 South Dakotans file federal income tax returns. 0.1% of them would be 400 taxpayers. (South Dakota's own Fortune 400—that is a list I'd love to see.) 400 × $360,000 = $144,000,000.

$144 million more dollars staying in the richest South Dakotans' pockets... at the same time that Governor Rounds wants to cut $23 million from K-12 education. Hey Dennis! I think we just found our replacement for the stimulus dollars to fix the state budget deficit!

Guest Column: Axe New Gym, Spend $10M on MHS Needs, Not Wants

When I toured my alma mater last week, Madison High School principal Sharon Knowlton said more than once that the proposed $16.9-million new gym and renovation project is the only way to accomplish all of the architectural changes the high school needs.

Orland organic farmer Charlie Johnson begs to differ. Below is his commentary, which appeared in last night's print MDL:

First of all, let us provide a few facts before the discussion. A bond issuance is collateralized by the taxable value of real estate within the taxing entity. There is no deferment for cases of unemployment, poor crop years, declining income, sour economy, etc. The bond commitment is for 25 years. Most home mortgages taken out today do not extend out that far. A $16.9 Million bond issue averages about 48,000 per MHS student (16.9 million /350). For every registered voter in Madison school district, the average commitment is $2600 (16.9 million/6500).

By estimation, property tax levies will increase 11.3% (2/11.3) on bare agricultural land in Orland Township. The increase just on school levy will be 26.5% (2/9.1). For an owner occupied home in Madison the increase in levies will be 9.7% (2/20.6). The increase in school levy will be 21.9% (2/9.1). These percentages could change slightly in future years as property valuations fluctuate and tax requests by all entities change. It would be an accurate statement to say that property tax increases will be anywhere from 8% to 20%-perhaps more. The impact will vary from agricultural land to commercial to residential. The same can be expected for property located within Madison versus property in one of the townships. Keep in mind also the capital outlay fund and levy (3 mills) is committed in large part for 12 more years to pay for the recently built elementary school.

A former friend and county commissioner, Bud Giles, on many occasions pointed out that there is a difference between wants and needs. He stressed also there was importance to know the difference. Elected officials have the responsibility to aggressively address the needs while prioritizing wants as time and resources become available. Like most projects, the MHS facility project is a combination of wants and needs. We need to provide safety and function of the school building by improving lighting, ventilation, wiring, plumbing, and other upgrades. We want to improve programs by relocating and expanding rooms, adding additions, and building a new gym. There is no excuse for failing to take care of needs. There is nothing wrong inherently wrong in bringing discussion to a well planned, prioritized list of wants. Reality is that you have the money. Never should accumulating wants be placed on top of needs in an attempt to justify the latter.

Within this sobering commentary, I offer a 4 part recommendation to the MHS facility project.

1. $16.9 million is too high and unrealistic. Cap the bond issue at $10 million. Even at that figure, we are doubling up on debt for the school district. Is it prudent for the district to implement a financial step that most households and businesses would not consider? If the facility project carries on a higher figure, it must do so with private money or other sources.
2. Regardless of how the bond issue is decided, take the responsible steps to provide safety and function of the building by taking care of the upgrades that are needed. Many of the voters who opposed the spectator gym in 2007 felt the need for improvements at MHS was more important.
3. In the area of wants, consider a fine arts annex to provide more room for band and chorus. Do not destroy a perfectly good wooden floor gym as a spiraling attempt to justify a new spectator gym. Adult recreation programs use the present gym space extensively. Providing practice times for all sports at all grade levels, boys and girls is a premium and plus for proper programming. Eliminating a fantastic gym floor is wrong regardless of whether a spectator gym is built or not.
4. The spectator gym is a definite want and should be funded with other sources. Supporters of a spectator gym may want to consider a partnership with the city of Madison to develop a vision of a true events center that will attract and cater to events throughout the year.

Regardless of the outcome of the bond issue, the sad commentary is that education as a whole will continue to suffer as funding levels fail to provide enough money for adequate salaries and resources for our educators. We are asking an 18th century tax system to provide for 21st century education and it is failing miserably. If only persons eligible under the times in the 18th century were allowed to vote on the facility project bond issue, the bond issue in Madison would be decided by whites who were male and property owners. How about that for progress?

Sincerely,
Charlie Johnson
Madison,SD

Bush Tax Cuts Don't Trickle Down: Who Said That?

The following indictment of trickle-down economics comes from someone of a little higher pay grade your favorite liberal South Dakota blogger:

"The rich are always going to say that, you know, 'Just give us more money, and we'll go out and spend more, and then it will all trickle down to the rest of you.' But that has not worked the last 10 years, and I hope the American public is catching on."

Who said that in a discussion of the need to extend the Bush tax cuts to save boost business and coddle capitalism?

Dennis Kucinich? Well, he has said things like that since the beginning of the Bush tax cuts, but the above quote isn't his.

The Socialist Party of America? No, the quote isn't from them—they have somewhat larger visions of economic reform.

Ariana Huffington? Well, her website republished the quote, and she'd agree, but the words above aren't hers.

Who says trickle-down economics doesn't work? A man in a position to do a lot of trickling: Warren Buffett.

Buffett must be having too many secret meetings with George Soros to plot the downfall of America, right?

Thanks, Barack: More Small Biz Offer Health Insurance

Repeal this, Kristi:

Some small businesses are benefiting from portions of the [health care reform] law, which includes a tax credit beginning this year that covers as much as 35% of a company's insurance premiums.

According to a report by Bernstein Research in New York, the percentage of employers with between three and nine workers and which are offering insurance has increased to 59% this year, up from 46% last year. The report relies on data from a September survey by the nonprofit Kaiser Family Foundation [Janet Adamy, "Health Benefits Appear on Rise," Wall Street Journal, 2010.11.02].

The tax credit isn't a full fix: health premiums are still going up, and small businesses have to do more paperwork to get Uncle Sam's help. But in a bad economy, shops with fewer than ten employees are exactly the businesses we would expect to have the hardest time offering benefits for their workers. Yet thanks to President Obama and health care reform, more of those smallest businesses are getting a tax credit that allows them offer their workers health insurance.

Go ahead, Kristi. Tell us why you don't like that. Tell us why reducing taxes and expanding small-biz health coverage is a bad idea.

----------------------------
Health care reform hasn't cut into insurer profits yet. A new report from Health Care for America Now finds that the big six insurers are insuring fewer people but allocating more money toward administrative overhead and profit:

On average, each of the six now devotes 20 cents on the dollar to non-medical services, compared to 16.5 cents last year and, according to HCAN, 5 cents in 1993.

March's healthcare overhaul will require insurers to spend at least 85 cents of every premium dollar on patient care. Those changes take effect next year [Elise Viebeck, "Health Insurance Companies Likely to Break Profit Records for 2010," The Hill:Healthwatch, 2010.11.16].

Health care CEOs also have the highest median pay in the country, $10 million.

Health care reform can't come soon enough.

Smoking Ban and Taxable Sales: We'll Have That Data Shortly

South Dakota's smoking ban took effect Wednesday, expanding freedom for South Dakotans. My wife and I are already looking forward to smoke-free dinners at the Moonlite and other venues whose smoke previously would have sent us out the door without ordering.

The question remains: will the smoking ban hurt business? I still don't think so, based on various anecdotal and empirical examples and my own reasoning, and the fact that opponents of the ban, like State Senator Russell Olson, resorted to desperately stupid arguments. The Federal Reserve Bank of St. Louis also agrees with me (another reason my cousin Aaron will want to "END THE FED!!").

But we won't have to guess. We'll get our first bit of hard data next month, when the state Business Tax Division publishes the State Taxable Sales Comparison for November. Last month, statewide taxable sales in eating and drinking places were up 2.7%, $2.5 million, over October 2009—rather slow, given October taxable sales across all sectors were up 8.7% over October 2009. We'll also be able to look beyond monthly snapshots and consider fiscal year comparisons. FY 2010 showed a measly 0.6% growth in taxable dining-and-drinking sales over FY2009, though that sector still outperformed the overall 1.5% decrease in taxable sales.

FY	gain in taxable dining and drinking sales	gain in overall taxable sales
2010	0.6%	–1.5%
2009	2.1%	1.8%
2008	5.5%	7.3%
2007	4.6%	4.8%
2006	5.3%	6.8%
2005	6.8%	6.0%
2004	4.7%	7.4%
2003	3.2%	3.3%
2002	5.7%	1.1%
2001	3.6%	4.6%
2000	5.5%	7.2%

Table 1: Change in South Dakota taxable sales by fiscal year

If we're really ambitious, we'll even be able to look at data city by city and look at eating establishments and drinking establishments separately. (Hey, Department of Revenue: any chance you could start posting this data in quick and easy HTML tables or Excel spreadsheets instead of those big honking PDF files?)

And even if I'm wrong, even if the revenue reports for the bar and restaurant sector show a decline in business that we can trace to the smoking ban and not to more people staying home to enjoy homemade rhubarb wine from their organic gardens while they watch movies on Netflix on their expanding broadband connections, any revenue decline will have to offset more than the hundreds of millions of dollars in health care cost savings as more people get the hint and kick the cancer sticks.

We'll also have to measure any revenue losses against some quantification of the freedom gained by more South Dakotans to relax and work in more places without smelling like butts.

Simpson-Bowles Plan: No Magic Bullets, Just Long, Tedious Discipline

The co-chairs of the President's fiscal reform commission, especially former Republican Senator from Wyoming Alan Simpson, are straight-shooters who are done kissing butts to get elected. If anyone can propose strong medicine for the federal budget, these guys can. Yet even these relatively free radicals are proposing balancing the budget no sooner than 2037. Under their proposal, we keep borrowing more for 27 years. Now that's a disappointment.

Even these fiscal hawks acknowledge that the economy is too shaky to start their plan until FY 2012. In the whacky world of macroeconomics, America is too poor right now to cut its budget. We revert FY2012 spending back to FY2010 levels, cut 1% a year through FY2015, then allow spending to grow at 2% a year. If inflation runs at historical levels of 3.43%, then by 2040, our annual spending would be about 30% behind spending levels that would keep pace with inflation. That's a valuable change for our grandkids, but it takes long-term discipline to get there.

Where do we start with the cuts? Simpson and Bowles offer suggestions that hack $100 billion from defense and $100 billion from domestic spending. The big-ticket savings:

Defense:

• Overhead savings proposed by Sec. Gates: $28 billion.
• Reduce Pentagon procurement: $20 billion.
  
• Freezing noncombat military pay at 2011 levels for three years: $9.8 billion.
• Reduce overseas bases by one third: $8.5 billion (HS policy debaters! Check your Inherency arguments!)

Domestic:

• Eliminate 250,000 contractors: $18.4 billion.
• Eliminate all earmarks: $16 billion (even Rand Paul doesn't have the guts for this idea).
  
• Freeze all federal pay for three years: $15.1 billion.
• Cut federal workforce 10%: $13.2 billion.
  

More disappointment: the plan takes until 2040 to get the national debt down to 34% of GDP, just a little better than the 36% debt-to-income ratio recommended for regular folks shopping for mortgages. We spend the next three decades carrying more debt that responible homeowners ought.

The plan notes that right now, our federal outlays are 23.8% of GDP, while federal revenue is only 14.6% of GDP. The plan calls for aligning outlays and revenue by 2040 at around 21%. Look closely at those numbers: as I read it, for every dollar we reduce spending, we still need to raise revenue two dollars. The plan actually reduces and simplifies rates: one option drops the income tax rates for the top income bracket from two rates of 36% and 39.6% to one rate of 23% and reduces the corporate rate from 35% to 26%. But those decreased rates are contingent on whacking all deductions. Another option lowers rates less and leaves in some deductions, but cuts things like mortgage deductions for second homes and mortgages over $500k (oops: there goes the Lake Madison vote).

Other noteworthy recommendations in the Bowles-Simpson proposal:

• Rein in health care costs by cutting payments to doctors and drug companies, capping malpractice damages, and possibly adding a robust public health insurance option.
• Cut farm subsidies by $3 billion a year (good thing Kristi Noem just got a new job in Washington).
• Keep Social Security solvent by increasing the retirement age by one month every two years, to age 69 by 2075, with a hardship exemption for folks who can't work after age 62.

Folks who thought electing Kristi Noem and her fellow Teabaggers would bring instant fiscal reform and wipe out the deficit are in for the same rude awakening as the handful of Obama dreamers who thought the 2008 election meant we'd reached the Promised Land. Fixing decades of fiscal irresponsibility will require decades of unpleasant spending cuts and increased tax collection. Given the cynical backpedaling of even the most arch of arch-conservatives and the inability of Tea Party faves to take their small-government slogans seriously (Kristi Noem has already pledged her continued support for the expensive Lewis and Clark water system), I am not optimistic that the new GOP majority in the House will take the Simpson-Bowles plan seriously. The Republicans are too focused on 2012 to lay the groundwork for real deficit reduction that will take until 2040.

Lange: Local Philanthropy Could Ease Taxpayer Burden on School Bond Issue

There's a trend afoot in the South Dakota blogosphere toward group blogging. Not here! (I'm just bad at delegating.)

But I am happy to present the occasional guest column. Today, my neighbor and outgoing State Representative Gerry Lange takes a crack at the school bond issue here in Madison.

Letter to the Editor, Nov. 9, 2010, by Gerry Lange

The “full-court press” is on to “sell” the public on investing 17 million in a new gym and much-needed renovations at the high school. This is necessary in order to provide the first-class education that will attract young entrepreneurs into our community. I think most people understand this. What they don’t understand is why the total burden has to be loaded on property taxes, already plenty high.

A quick check at the courthouse before the last bond proposal enlightened me to the fact that land-owners and other businessmen with high valuations will pay way more than main street professional and business people whose buildings are valued much lower.

The last legislature tried to remedy the vast discrepancies in land valuations across the state by going to a “productivity” basis. It remains highly controversial, especially the provision to change the way grasslands are treated. The net effect sounds suspiciously like an income tax. The head of the Chamber came unglued when I brought this up at a meeting at the capitol during the last session.

Truly, if every piece of realestate paid according to “productivity,” then we would be back to Adam Smith’s 1776 advice that taxes be collected according to ability to pay.

Totally engrained in our present tax philosophy is that we must “look out for number one” and just vote NO. Every successful politician will tell you so!

On a brighter note, there is a model alternative to taxation. T. Denny Sanford, Buffet, and Gates provide good examples of how to fund worthy causes. Our own community is loaded with folks whose lifestyles wouldn’t change at all after a hundred thousand or even a million-dollar gift to the school foundation. It’s strictly a question of values. Interestingly, there’s a book out there that explains how happy you can be by sharing your resources with worthy causes. So bottom line: act to look out for number one! But in a more enlightened fashion.

Ag Productivity Tax Risks Revolt

...but GOP Sponsor Opposes Further Study

Remember a couple weeks ago when I asked our District 8 State Senate candidates about the possible farm revolt over the new ag productivity tax (also known as income tax done bass-ackwards)?

Bob Mercer reports in the Pierre Capital Journal on some of the reasons this new tax formula may induce farmers to bring their pitchforks to Pierre. Assessed values on crop land could go up 40% to 90% by 2018. The new tax law limits increases and decreases to 10% a year through 2017, but come 2018, counties could impose much higher increases to catch up with costs, a possibility Mercer says could cause a backlash among landowners. The ag productivity tax formula also assumes that landowners get 35% of the income from cropland they lease out, a figure several members of the legislative task force studying the tax say is unrealistically high.

You know, legislators, instead of guessing how much farmers might make on their land, wouldn't it be easier to simply tax them on the amount they actually make each year?

Senator Jim Peterson (D-4/Revillo) says that before we get our bibbers in a bunch, we need to compare the potential assessment increases with the valuations that would have happened under the old system. I hear from a neighbor that some farm land just east of Madison sold this fall for $6000 an acre. At prices like that, farmers might come out ahead on a tax system based on what the land actually produces rather than the speculative fancies of wealthy city dwellers.

The legislative task force that discussed the ag productivity tax Monday got the state Revenue Department to agree to gather more data on the landowner lease-income percentage to see if the formula needs tweaking. Interestingly, the prime sponsor of the ag productivity tax, Senator Larry Rhoden (R-29/Union Center), argued against any further study:

The task force’s chairman, Sen. Larry Rhoden, R-Union Center, argued against collecting the additional data at this time. He said it’s better to let the system start to work.

Rhoden further warned that the data could merely fuel the arguments of opponents who fought against the new system when it was approved in the 2008 and 2009 sessions of the Legislature [Bob Mercer, "Tax Boost Likely on Ag Land," Pierre Capital Journal, 2010.11.09].

Don't study it, because data might support opponents' arguments? If that's Senator Rhoden's attitude toward studying problems, we should be alarmed about the direction the Legislature will take this year.

If the ag productivity tax is to be fair, it needs to be based on every bit of data we can collect. For the prime sponsor of the tax to advocate closing our eyes to available information puts landowners and taxpayers in danger of being fleeced by a badly designed tax.

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Update 2010.11.12 16:42 CST: Moody County neighbor and rural taxpayer John Walker suffers a rare bout of Madville Times concurrence. Mr. Walker is resting comfortably and is expected to recover fully... in time to lead a pitchfork parade to Pierre in January.

South Dakota Third Best for Retirement

I recall a visit to Carthage three summers ago in which a gal at the Straw Bale Museum talked about recruiting retirees to move to town as a major economic development strategy.

She was barking up the right tree: a new report from Money-Rates.com ranks South Dakota as the third best state in the nation for retirement. Based on life expectancy, crime rate, economic factors, and even climate, the only states found more appealing for retirees than South Dakota are New Hampshire and Hawaii. (Getting mentioned in the same sentence as Hawaii is almost always good... unless we're talking about new volcanoes.)

North Dakota is fourth on this list: North Dakotans pay more in taxes and living expenses, but they also live longer and currently have less unemployment. The report gives us a slight nod thanks to being a little warmer... but if you retire here, you'll still need to hire some strapping young lad to shovel your driveway out in the winter.

Iowa is the only other neighbor in the top ten, ranking fifth. Money-Rates.com doesn't make a full-50 list available, but given that none of our neighbors make the worst ten list, we South Dakotans appear to live in a pretty good neighborhood for retirement.

According to this report, Nevada is the worst place to retire. Vegas-land has the second lowest state and local tax burden in the nation (6.6%, compared to South Dakota's 7.9% and North Dakota's 9.2%), but the state has high crime, high unemployment, and below-average life-expectancy. Still, do you need to live longer when you can see Rod Stewart right now?

So add that to the economic development website, Carthage, and all you other South Dakota towns looking to boost your local housing market. Lots of old folks want peaceful small towns that are easy to get around in. They'll also create jobs, as they'll hire out more services, like snow-shoveling and RV repair. Build those straw bale spec houses, Carthage, and tell those retirees you are the new Florida!

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Update 2010.11.11: Mike Knutson at Reimagine Rural picks up the question of recruiting retirees for economic development. He notes that lists are good fun, but getting readers of those lists to up and move to South Dakota still takes a lot of good salesmanship and local work.

Chuck Clement, MDL, Continue to Run Interference for Big Spending Madison School Board

The propaganda from Chuck Clement and the Madison Daily Leader on behalf of the Madison Central School District continues. In previous coverage of our school board's proposal to build a new gym and renovate the high school, MDL has buried mention of key terms like new gym. Now Clement's coverage of the school board's approval of a public vote on $16.98 million shows more propaganda by positioning.

Madison Central business manager Cindy Callies guesses the new gym and high school renovation will cost taxpayers $2 per $1000 of property value. If you own a $150,000 house, that's $300. Farmers stand to pay an average $411 more per quarter section.

One would think that financial data would be top priority information for most readers and taxpayers. One would thus think the journalistic urge would be to place that information at the top of the story.

But what journalistic choice does the local booster paper make? We hear first that the school approved the $16.98 million bond issue (good). Paragraph 2 says we vote on Feb. 1 (good). Then paragraph 3 reports this vital news: "No person attended the school board meeting to speak for or against the resolution or ask questions of the school board members or district administrators."

Translation: None of you showed up to complain or ask questions, so you have no right to vote against what we want.

The specific cost information doesn't come until paragraph 6. In traditional journalistic terms, the placement of details in this story says it's more important for the Madison Daily Leader to continue its function as propaganda organ for the school district and create the impression of lack of opposition than it is to report on the specific details of the proposal that voters must study and decide on February 1.

I'll be attending a school tour in the coming weeks, even though I already know the building and its physical needs from years of experience. I'll be recording and reporting on my tour. And I'll be advocating the position that I've already formed: I'll support the bond issue when they drop the unnecessary multi-million-dollar new gym.

My coverage of this bond election will be fully biased and subjective. At least I can admit that. I look forward to the day when Chuck Clement and the Madison Daily Leader will admit the same.