Note to readers: As part of coverage of the 2013 legislative session, the American News will provide on most days a list of 10 pieces of information helpful to understanding what is — and sometimes isn’t — happening at the state Capitol during the session’s three-month run. Today, we take an inside look at the contractor sales tax issue and some early committee work.
Q. Who is Henry Carlson?
A. He is the head of Henry Carlson Construction Company at Sioux Falls. He is scheduled today to be at the Capitol for a meeting with the Senate committee on taxation. Now age 87, Henry Carlson Jr. served two terms as a Republican senator from Sioux Falls in 1977-78 and 1983-84.
Q. Why would current legislators want to hear from him?
A. Carlson is credited with designing South Dakota’s contractor excise tax that charges 2 percent on the gross receipts of all prime contractors engaged in real estate improvements. The tax took effect in state law in 1979.
Q. Why is his insight timely?
A. As lawmakers consider possible economic development incentives, the tax is seen by some as a possible target for relief. Last year, South Dakota voters rejected the governor’s plan to divert 22 percent of the tax receipts into a fund for grants to be made by the state Board of Economic Development as incentives for large projects.
Q. How important is the contractor excise tax to state government?
A. The tax brought in nearly $65.7 million in fiscal 2011 and nearly $83 million in fiscal 2012. It is forecast to generate nearly $84.6 million the current fiscal year that ends June 30. It is the third-largest source of state general fund revenue after the state sales and use tax and video lottery.
Q. So what does the governor do now for incentives?
A. It turns out that Gov. Dennis Daugaard promised tax refunds last year to Bel for the Brookings cheese-plant project and to a filter-making company in Yankton, totaling an estimated $5 million. In Section 138 of House Bill 1060 this year, there is an amendment to the current year’s budget. It tells the state treasurer to transfer $5 million into the state’s Future Fund, which the governor controls for economic development-related grants.
Q. Will any other legislative committees meet today?
A. The House committee on education is hosting state Education Secretary Melody Schopp for a presentation on her department. Returning as committee chair is Jacqueline Sly, R-Rapid City. Her vice chairwoman is Jenna Haggar, R-Sioux Falls. They have nine freshman legislators on the panel.