PIERRE — The state Board of Economic Development adopted a major change Monday regarding refunds of sales, use and construction-excise taxes for big business projects.
The refund applications that business developers file will remain confidential — but only until they notify the board in writing they want action.
Then the board will make decisions on those requests, in open session, within 15 to 60 days.
Those final decisions will be in writing. Specific details about each project, including all of the state and local assistance will be published on a state website.
“We recognize this is just the start,” Jeff Erickson of Sioux Falls, the board’s chairman and a retired banking executive, said.
The refunds will be available to projects that cost more than $20 million or have equipment upgrades exceeding $2 million.
Residential housing, transient lodging, health care facilities, pipelines, retail businesses and building that aren’t subject to property taxes won’t be eligible.
Subjecting the refund applications to a public board is a big departure from the policies of the past decade, when an automatic formula was used.
So is publicizing the details for each project including the jobs to be created, as well as a statement about why the project wouldn’t have been built otherwise in South Dakota.
For many years, members of the general public including legislators were barred by state law from knowing anything about the amounts or recipients of individual refunds.
Later, the law was relaxed somewhat so that the recipients and amounts were revealed after refunds were paid.
That came after a newspaper reporter won an appeal to an administrative hearing officer who ruled the names of the refund-permit holders weren’t confidential under the ban.
The new process erases much the secrecy of the old approach. Now the decisions will be made in meetings open to the public.
The changes come as part of new operating rules adopted by the state board Monday for the Building South Dakota programs created earlier this year by the Legislature.
The next and possibly final stop for the proposed regulations is the Legislature’s rules review committee. That panel of three senators and three representatives next meets May 20 and June 4.
Under the old system the tax refund became larger as the project cost increased. The new program provides a refund equal to 2 percent.
The board also adopted rules Monday regarding a grant program for local government bodies and nonprofit development corporations, a grant program for infrastructure improvements such as roads to projects, and other new grant-making powers to assist business projects.
Money for the Building South Dakota programs will come from unclaimed property, such as money left behind in accounts by customers at banks and utilities that is later collected by the state treasurer.
Millions of dollars are expected to become available annually for economic development purposes under the concept that was first developed by state Sen. Corey Brown, R-Gettysburg.
The legislation calls for the state treasurer to put 25 percent of unclaimed property revenues into the Building South Dakota fund starting July 1, 2014. The share increases to 50 percent annually on July 1, 2015.
Housing and education programs also will receive portions of the Building South Dakota money.
To qualify for tax refunds, construction must commence within six months of the board’s decision, unless the board sets other conditions. Refunds won’t be paid to the businesses until projects are complete.