PIERRE — As taxpayer relief and job incentives go, the best idea of the 2013 legislative session never stood a chance.
That was the proposal from Sen. Tim Begalka to phase out South Dakota’s 2 percent contractor’s excise tax.
One reason it was sent to the Senate Appropriations Committee and dismissed probably was Begalka, R-Clear Lake, himself. He isn’t one of the powerful and influential at the Capitol.
Or so some people think.
He was powerful enough back home in his legislative district, however, to dispatch a Republican primary challenge last June from then-speaker of the House Val Rausch of Big Stone City.
And he was powerful enough to turn aside a second strong challenge in November, defeating one of the Democratic Party’s best legislators in Rep. Steve Street of Revillo.
His district covers the northeast counties of Grant and Deuel and rural parts of Codington and Brookings counties. One of the biggest taxpayers in South Dakota is in his district: The Big Stone power plant.
The Legislature this year is cleaning up a major tax break that was extended to the Big Stone plant so that it doesn’t face property taxes for a long time on the hundreds of millions of dollars of environmental upgrades being required there.
Rep. Jim Peterson, D-Revillo, and Begalka are the main sponsors of that legislation.
Peterson was one of the co-sponsors of Begalka’s attempt to repeal the contractor’s excise tax.
So were senators Ernie Otten, R-Tea, and Larry Lucas, D-Mission.
Missing from the Begalka bill were any Republican legislative leaders. If anything, he probably was hurt in that regard.
His lead sponsor in the House was Rep. Stace Nelson, R-Fulton, whose three years so far as a legislator have been a series of showdowns and arguments and irritations of the House Republican leaders, including last year’s mess, when Rausch had to put Nelson in a different desk.
Other House co-sponsors included Republicans Steve Hickey of Sioux Falls, Dan Kaiser of Aberdeen, Don Kopp of Rapid City, Betty Olson of Prairie City, Lance Russell of Hot Springs and Jim Stalzer of Sioux Falls.
Most of those function on the margins or completely outside of the Republican mainstream leadership in the House.
His other co-sponsors in the House were Democrats Scott Parsley of Madison and Peterson. Parsley makes his living as a top official for East River electric power cooperative, which distributes power to about half of the rural-electric territory in South Dakota.
Reducing and eventually eliminating the contractor excise tax would be a huge benefit to the electricity industry in South Dakota.
It also would be a huge benefit to every person who has a construction project.
The contractor’s excise tax in reality penalizes three groups of people:
- It hits the unfortunate who must make repairs on their home or business or property.
- It hits taxpayers in a roundabout way by charging more on government construction projects, whether it’s a local school funded through a long-term bond issue or highway work.
- It hits the innovators and risk-takers who want to open new businesses or expand existing ones.