KELOland is reporting that a legislative committee voted to send projects that would bring jobs and revenue that could help alleviate tax burden in our state to North Dakota and Nebraska. Again.
Am I talking about CO2 pipelines? No, silly. We killed the revenues and investment that such a project was going to bring to the South Dakota economy last year, and they’ve already left for greener pastures. Today, House State Affairs voted against providing tax incentives to kill more investment in our communities – the mega-million dollar data centers that want to come here.
The same types of tax incentives all of our neighbors are offering. But South Dakota apparently won’t:
The prime sponsor, Republican Rep. Kent Roe of Hayti, said the incentive would attract large data centers to South Dakota. Roe said data centers would pay substantial amounts of property taxes at a time when many people are complaining their property taxes are too high. He noted that 40 states offer sales-tax breaks to data centers, including South Dakota’s six neighboring states.
and..
Voting yes to kill the bill were Republicans Jessica Bahmuller of Alexandria, Spencer Gosch of Glenham, Hansen, Leslie Heinemann of Flandreau, Karla Lems of Canton, Schaefbauer, Overweg and Scott Odenbach of Spearfish, and Democrat Erin Healy of Sioux Falls. Voting no were Emery, Jamison and Republican Tim Reisch of Howard.
And people wonder why their taxes keep going up, and their kids keep moving away? Because when projects want to come here and pay sales tax on the power they’re going to buy, property taxes on the buildings they put up, payroll taxes on the people they hire to build and staff the places, plus much of the same for the people they bring into the community, people won’t cut them a tax break on computer equipment to go in the buildings?
With the anti-development attitude the NIMBY’s and BANANA’s leading the legislature have, instead of calling South Dakota the Land of Infinite Variety, we should change the slogan to South Dakota. No.
I have a question. We know that North Dakota, Nebraska, and Minnesota have personal and corporate income taxes. Do these data centers create income that is taxable in those states? Just wondering if that’s why other states are quick to waive sales taxes.
I don’t have the answer to your question, but did want to state that I’m 99% sure North Dakota does NOT have state income tax for individuals. How their corporate tax system is set up I don’t know.
North Dakota DOES have a state income tax for individuals. https://www.tax.nd.gov/individual
In doing just some cursory research on my question that I figured someone could answer very quickly, I come up with this. Because of they are so capital intensive, the developers of these projects prefer to have the sales tax exemptions as it saves them more than paying a little corporate income tax. In a business like this, there would likely be some sort of apportionment calculation as to how much income was attributed to that particular center.
In North Dakota, corporate income tax is as much as 4.5%. We don’t have all the data here but would be interesting to learn how much income tax they would collect each year on these centers. That answer may help us understand why it is North Dakota has exempted sales taxes on these projects. Assume the same would apply in Nebraska and Minnesota. So would the data centers accept a corporate income tax to get their sales tax exemptions in South Dakota?
Yes. Yes they would. We tout no income tax as a big incentive but it really isn’t. Because of it, we can’t offer other incentives oftentimes, which are more beneficial to corporations in either the long or short term, depending.
Would make sense then. All if that initial capital is expensive, so getting a sales tax exemption is a big deal. On the income front, they probably don’t pay much for years because of the huge depreciation they can take on the project. But eventually there would be a revenue stream for the state I suspect. Big difference then between South Dakota and North Dakota in that regard.
Oh no, not that terrible tax that you pay on what you make .
Maybe we’re finally tired of being last in teacher pay, school funding, education, and other services…data centers don’t create jobs or other economic impacts…
Without some other industry to help generate revenue we’re going to continue to be last in teacher pay, school funding, education, infrastructure, and other services. Ag and ag business cannot continue to shoulder the burden – there’s only so much of that to go around.
Jobs at data centers: data center technician, facility engineer, network engineer, project manager, cloud engineer, security analyst, maintenance technician, production leader, the list goes on and on. The majority of which average over $100,000.00 a year. That is money coming into a local community, spent at other businesses and increasing sales tax revenue. A data center that is valued at $10,000,000.00 (which is the low end of the average) would bring in an estimated $100,000.00 of property tax per year. Guess how schools are funded and teachers are paid? Saying that data centers dont create jobs or other economic impacts is an extremely ignorant perspective. And the exact reason that the mindset of shutting down these kinds of economic development incentives will only make teacher pay, school funding, education, and other services worse.
Teacher pay is not correlated with incentives given for economic growth or even correlated with taxes collected. The 3 states that collect the least from its tax payers are Wyoming, South Dakota, and New Hampshire. Wyoming and New Hampshire are both in the top two thirds for teacher pay, and New Hampshire is awfully close to cracking the top third in teacher pay. South Dakota is third from the bottom in teacher pay. Wyoming along with the other states that boarder us have data center incentives. You can tell a state’s true priorities by their budget and education and teacher pay just aren’t as high priorities for South Dakota as people think.
The thing about incentives to is that the way they work in South Dakota is that the state/county/city are not physically giving anyone any money. The incentive is given through tax breaks, which those taxes, we weren’t even collecting those taxes in the first place. That land was just sitting there collecting no or very little taxes to begin with. And with these incentives specifically, we weren’t going to give tax breaks for their PROPERTY tax, which equates to literal millions of extra dollars in collected taxes for the counties, cities, schools, etc. Do you know how much property tax in South Dakota goes to the state? Zero. It stays local. All of it.
Teacher pay is not the problem and your property taxes will NOT go down without economic growth.
We have a lot of economic development, we just don’t tax anything to cover needs of government. Look at all the TIFs all over the state. We incent businesses to come here, at the expense of our schools, counties, law enforcement, etc.
The tax break was to be for 50 years, and the stated life of this data center equipment is 100 years. Based on how rapidly technology changes and improves, a data center will itself be obsolete in less than 50 years; .not proven yet but a pretty safe bet. Who will be left holding the bag for the debts, buildings, etc when this technology is no longer viable and the data centers are gone?
What debts? That’s a silly argument. It’s a sales tax break for equipment they use.
Like most businesses, if their model changes, they sell buildings, which are then used for other purposes. Or does your town have an abandoned telegraph building that you can’t get past?
Rep. Roe in testimony at House State Affairs on February 4, at about 1:17 on the stream, when asked why the 50 year window for tax exemption, he said that would get them about halfway through their expected 100 year life cycle of building and infrastructure.
When asked about decommissioning in 100 years, or if they go belly up as asked by Rep. Lems, Rep. Roe said he couldn’t answer that.
Physical buildings are typically built based on a 100 year life. There is not a piece of computer equipment that is reliable longer than 10 years. I think you are confused.
Ok, I misused the word equipment. My point still stands. This technology will be obsolete in 50 years.
Who’s holding the debts & assets 50yrs from now? Pretty safe bet the shareholders.
When did business common sense leave the room?
Why do republicans now think they have to micromanage everything?
Republicans have a handle on business issues. It’s the NeoPubs and Populist MAGA you gotta crack the code on. They’re the wacky outliers you keep ignoring, to your recurring failure. Figure them out or keep losing.
I guess I missed the part in the bill where taxpayers are on the hook for debts, buildings, ect. If your argument would be viable, everyone would still be pulling a plow with a horse.
Data center equipment does not have a 100 year life span. Where did you get that? It’s replaced every five years or so.
Gee, how about trying this foreign concept of compromise?
The state needs to be competitive with our neighbors. If 50 is too much how about 10?
Rep Jamison, I believe it was, proposed an amendment to the bill tiering the bill to 10 yrs for smaller data centers, 25 for middle/larger and 35 years for hyper-centers (please forgive me if the terminology isn’t exact). That was denied. Rep Emery motioned to at minimum let it get to the floor of the house for debate, and Jamison supported that to give the tiered amendment an opportunity to be debated. But they denied that too. Pretty clear their unwillingness to even entertain compromise.
You can thank Speaker Hansen, MRANTIDEVELOPMENT, for this disaster. He loaded up the committees to specifically defeat bills that would bring great development (and tax dollars) to South Dakota.
So embarrassing listening to the discussion from the no votes. Smog from the diesel generators? Really?
They would rather have no development and no taxes than a break on the sales tax on their technology and millions of dollars in property taxes and sales taxes from the electricity. Most of the jobs are high paying jobs in rural areas that we are starving for. The facilities are small with no pollution. The utility companies are comfortable with the plans and are explaining how rates will actually go down. This is no brainer kind of stuff.
There aren’t gates on water and power at our border so our neighbors will be happy to take what we won’t including our kids who need jobs.
Yes! Exactly! Especially “So embarrassing listening to the discussion from the no votes. Smog from the diesel generators? Really?” They’re grasping at straws to find reasons to oppose this and they haven’t given a really good reason yet. The state revenue secretary isn’t capable of deciding whether or not a data center meets the qualifying criteria? That’s insulting! The fact they wouldn’t even let it hit the floor of the House for debate should trigger alarms. What is going on at the Capitol?
Our 7 Diesel Generators at our large, large non-data center manufacturing facility run for a half hour once per week to test them………….No one complains about ours.
A single farm tractor produces much more emissions than a similar size diesel generator. Watch out farmers, Brandei will come after your tractors. Modern tractors (tier 4) have less emissions standards than a diesel generator and tractors are allowed to give off more particulate matter than a generator. What a weird line of questioning from her. I am so tired of Legislator’s saying they found something on the internet or they googled it……………Public school students are required to cite all sources, Legislator’s should too.
If we have to bribe them to come, maybe we don’t need them. We already have an extremely low unemployment rate. We aren’t desperately seeking more low-paying jobs.
It’s not bribe, it’s making an even playing field with our surrounding states. Low unemployment is because there are not enough high paying jobs for our youth to come back for. Don’t know of anyone seeking a low paying job.
These are not low paying jobs. These are highly skilled technical jobs and they pay extremely well. You are absolutely right though, we don’t need more low paying jobs. When we have a labor shortage it’s because our people are fleeing the state or not coming because we don’t have good paying jobs.
And how is it a bribe? We are giving them a tax break and they will ending up paying far more in taxes than their break especially in local taxes. This right here is how you get property tax relief! This is how you get more money for education. You must live in a big town because you don’t seem to grasp what a win this is for rural counties.
Low unemployment jobs because we have people eeking by at convenience stores and casinos.
Radke and her PAC cheering the defeat.
Restrict
All
Development
Kill
Expansion
The absolute best part of this is the house moderates now trying to bail on their support for this effort because of the costs, politically. Such a joke. So smart we will be last 4 ever. Congrats.
No one should ever consider building anything in South Dakota. We are not a serious state. Hansen sat there and relished evidently that we are the outlier. It fits his origin story which I get. But my kids and grandkids will pay the price. If you don’t see that, you are the problem. Go back to the horse and plow, otherwise you are taking advantage of others taking the leap you are stopping us from trying.
Go back 100 years and Hansen/Lems are a covered wagon manufacturer fighting for their lives to keep automobiles out of South Dakota. This is what we have become. Ask the Sully County residents in South Dakota if they loved their 13 percent property tax drop this year. And our Legislators wanted to fine the school district because they had an $800,000 windfall that caused them to go over their general fund surplus from 1 single small data center. We are in trouble unless voters wise up the next election cycle.
I live on my family’s homestead. A fricken corporate farmer put a grain bin farm with propane dryers that run 24-7 during harvest within 100 feet of my house. No relief for me. The farmer rakes in 100’s of thousands dollars of government subsidies that my kids and grandkids will continue to pay for. Jon Hansen saying South Dakotan’s pay their way, what a joke. You are picking winners and losers Sir and are the worst kind of crony capitalist. And our school grew enrollment during COVID because our Public School Board fought to get our school open in the Fall after you and Noem shut us down in the Spring. Families came here because our local boards fought to open schools. SO GLAD YOU ARE TERMED OUT.
It’s amazing the amount of entrepreneurial business that Hansen touts as being “organically grown.” What does that even mean. When you start researching these businesses, some have been built in TIF districts, Some received discounted start-up loans rates from the State. Let’s talk about SD’s 100% sales and use tax exemption that is available on qualifying machinery and equipment used directly in manufacturing. Let’s talk about the myriad of sales tax exemptions on ag machinery parts and irrigation equipment.
Ok, I misused the word equipment. My point still stands. This technology will be obsolete in 50 years.
Bring a data center to my county. They will pay the county over $1M just for the building permit, employ hundreds of high-tech workers to plan, design, build and outfit a major development. Our county would enjoy a massive economic boost for the first three years and after construction, the county enjoys having a single taxpayer covering 10% of the county budget. That means lower property taxes for the rest of the county residents. It’s a no brainer, but so are most of our legislators, so…
I am fairly certain the residents of my county will support a data center. We have seen the relief this has bought to Sully County.
Jon Hansen has no vision for our state. He has proven this as a career politician over the last decade. Under his watch, revenue is declining and property taxes continue to rise.
Melhaff absolutely dog walked Jon Hansen today in the Legislative Leadership Press Conference. Thank-you Senator Melhaff for saying all the quiet parts out loud. I can’t wait to see Jon Hansen try and debate anything other than what he is spoon fed.
UPSHOT: If corporations aren’t coming at us like hornets on a rotten apple, we don’t feel like we’re doing enough for economic development.
Corporate farms love SD. What is your point?