Capitol Connections March 18, 2019

| March 25, 2019

Capitol Connections March 18, 2019

Never let it be said that a dream is a waste of one’s time…

Also, never let be said that we regret that the 2019 Legislative Session has come to a close (except for Veto Day, which we hope is uneventful).  

Thanks to dire warnings about a blizzard scheduled to descend upon Pierre in the middle of last week, the legislators got busy and held the 39thLegislative Day from 12:30 a.m. until 3:00 a.m. on Wednesday.  Their final orders of business were to pass the bill allocating $1 million to the governor’s Second Century Habitat Fund, make some adjustments to last year’s appropriations bill, and approve the FY20 budget.  

Looking back, a total of 475 bills and joint resolutions were introduced this year.  Fewer than half – 46% – made it through both chambers.  The governor vetoed two bills before legislators left town; both vetoes were upheld.  Legislators will need to return to Pierre on March 29 to consider any additional vetoes and to officially adjourn sine die.  Who says Latin is a dead language?

In all, SDCA fared quite well this legislative session.  After several challenging years when we were working on major legislative initiatives, this year was relatively quiet.  Here are some key items we worked on:

2+2 Veterinarian Program – Students wishing to pursue a degree in veterinarian science now have the opportunity to complete the first two years of veterinary medical education through SDSU, with classes in Brookings and clinical options at university laboratories and at nearby facilities. The final two years will be completed at the Minnesota CVM in St. Paul and the University of Minnesota will grant the DVM degree. 

CAFO taxes – a pair of bills, HB1223 and HB1234, proposed capturing the contractors excise tax from new CAFO construction and directing the money to either the local school (HB1223) or the county where the facility is built (HB1234).  Neither bill survived its first committee hearing, but not all is lost.  Thanks to a conversation with the new head of the Governor’s Office of Economic Development, an existing program within GOED will be used to direct construction taxes to affected counties.

Teen Drivers – South Dakota is the only state that lets 14-year-olds drive on public roads.  Insurance groups and AAA brought in a bill to lengthen the time for an instruction permit before a young driver could get a regular driver’s license.  The original bill was amended to create exemptions for school, work, agriculture, and church activities.  After narrowly passing the Senate and limping out of House Transportation committee, the bill was tabled at the request of the prime sponsor.

School Capital Outlay Taxes – First a disclaimer:  South Dakota’s school funding formula is incredibly complex.  Follow-up disclaimer:  We know more about this complicated formula than we ever thought necessary, and will be happy to bore you with the details if you only ask.  

Currently, there is a three-part limitation on how much school districts can levy for capital outlay taxes.  Two bills were introduced this year to start getting rid of those limitations, allowing for potentially rapid growth of capital outlay taxes.  Both bills died, but the conversation continues.  Again, we will be happy to explain this to you in excruciating detail, at your request.

Land Assessment – a pilot study was created to look at “most probable use” ag land tax assessments.  SDCA, along with most of the commodity groups, supported. 

Brand Registration Fees –As passed, SB149increases the amount authorized for certain brand fees and to authorize a brand registration application fee and an expedited registration fee. The proposed increases will allow the brand registration program to meet its financial obligations over the next 5 years.  SDCA supported. 

Country of Origin Labeling Resolution – HCR 1007 encouraged state legislators support country-of-origin labels and encourage action on the federal level as well.  The resolution was amended to state support for “voluntary” COOL but failed to pass the Senate.

Fake Meat Bill - SB68 statutorily defines certain acts as misbranding of food products as it relates to intrastate shipments of meat.  SDCA supported, with the disclaimer that we wouldn’t normally support a hodgepodge of state food labeling requirements but wanted to safeguard our product while regulatory questions are hashed out at the Federal level.

Chemical Trespass- SB147 would have required commercial pesticide applicators to carry a $300,000 surety bond or $100,000 liability insurance to pay for damage from pesticide drift.  The bill was killed, but the story doesn’t end there.  The Ag Department agreed to form a work group to study the issue.

Industrial Hemp – This would have authorized the growth, production, and processing of industrial hemp.  The hemp would have to contain less than 0.3% THC, growers would need to be licensed, and growers would have to pass a background check.  

The bill sailed out of the House on a vote of 65-2, then died in the Senate…then was revived…and amended…and passed.  The House agreed with the Senate amendments and sent the bill to Governor Noem, who vetoed it within minutes.  The House easily overrode the veto on a vote of 55-11, but the Senate upheld the veto on a vote of 20-13.

Manipulated Manure – The current fertilizer inspection fee is $0.90/ton for commercial fertilizer and $0.80/ton for manipulated animal manure.  The money goes to the Ag Department for administering the fertilizer program, to the Nutrient Research and Education Council, and to help pay for the Precision Ag Center at SDSU.  This bill proposed setting the inspection fee for manipulated manure at $0.16/ton, based on its relative nutrient value.  The bill died in Senate Tax committee.

Robbing the Highway Fund– Two bills were brought in which would have dinged the State Highway Fund by millions (or billions, depending on how you read the bill) of dollars.  SB110 was an outright raid on the fund.  If passed, it would have siphoned off between $1.5 million and $1.4 billion to give to counties and townships.  HB1118 would have reduced the amount of money going into the fund by limiting the amount of excise tax on new vehicles.  Both bills were deferred to the 41st Day.

Electric Territory Integrity – This was a major battle between REAs and Municipal Utilities, and who gets to provide electric service in areas being annexed by a city.  Valiant attempts to find a compromise ended in a directive to create a 9-member interim legislative committee to try to broker a truce between affected parties.  

Appropriations Stuff – Which is the main show in town, really.  A large part of what do revolves around the budget.  Big picture:·      

• 10% increase for nursing home reimbursement rates  

• 6.5% increase for community support providers 

• 2.5% increase for education and state employees

• Still pending: what to do about the “Partridge Amendment” which is designed to ratchet back the sales tax rate based on internet sales tax collections.     

• FY2020 budget:
   •   $1.693 billion in general funds
   •   $1.754 billion in federal funds
   •   $1.415 billion in other funds
   •   $4.862 billion in total funds
   •   14,013.2 FTEs