In the next few years, South Dakota’s state treasury is expected to start receiving a large annual windfall of cash that belongs to people who don’t live here.
If experience holds true, much of this money, known as unclaimed property, probably won’t ever be claimed. Knowing the odds, the Legislature and the governor reached final agreement in the past week to take a gamble and start spending a large chunk of it.
That begins less than two years from now. A stream of the money will be automatically channeled into the new Building South Dakota fund. It will pay for incentives for economic and community development.
The timetable calls for 25 percent, or about $7 million, of the unclaimed property money to be transferred into the fund during the 2015 budget year.
That will be followed by 50 percent, or about $15 million, in the 2016 budget year. The 50 percent share will continue annually after that.
“It doesn’t cost us anything. It doesn’t cost the banks anything. It’s one of those things that comes along with us being a welcoming state for banking,” said Republican Sen. Bruce Rampelberg, a retired banker from Rapid City.
He said Republican Sen. Corey Brown of Gettysburg brought the idea forward and made it the centerpiece of a much broader plan.
Brown folded together other legislator’s proposals, ranging from assistance on agricultural processing roads to housing shortages and families new to South Dakota who don’t speak English. He brought Democratic leaders into the planning meetings and discussions.
Republican Rep. Scott Munsterman of Brookings introduced an approach for projects to receive some local sales-tax relief. He convinced the Republican and Democratic leaders of the House and the Senate to sign on as co-sponsors.
Munsterman’s legislation was eventually set aside as Brown’s own bill became the hub.
“The compromise happened the second or third week of the session (in January). After that it was collaboration,” he said.
Brown shared his idea with Munsterman during the second week of session about tapping the unclaimed property revenue.
“I almost fell out of my chair,” Munsterman said.
The incentives money that will be paid from the fund will be spread across five purposes.
Work force education will get a 30 percent share; infrastructure grants, 25 percent; housing development, 25 percent; local economic development partnerships, 15 percent; and the final 5 percent for grants and loans to business projects costing less than $20 million.
There wasn’t much argument over the splits.
“Everybody was focused on the model,” Munsterman said.
One reason, he said, was that lawmakers know they can “turn the dials” in the coming years to steer money toward specific needs.
“I am ecstatic about it. I really am,” Munsterman said.