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SD Secretary of Ag Kim Vanneman says the county tax rebates for livestock development are an incentive, not a bribe. (Michelle Rook/AgweekTV)

SD state officials refute tax incentive for livestock development is a 'bribe'

YANKTON, S.D. — South Dakota's new sales and use tax rebate program is being described as an incentive for livestock development, not a bribe, by South Dakota Secretary of Agriculture Kim Vanneman.

"I think this is a great tool in the tool box for counties, for livestock development and we need to be able to do some of these things," Vanneman says.

The sales and use tax rebate programs are part of the South Dakota Jobs Grant and Reinvestment Payment Program and are available to encourage livestock development. In 2018, many counties turned down millions of dollars in capital investment related to livestock development. With the increased focus on agriculture at the Governor's Office of Economic Development and the ag development division relocating into the agency, the Office of Economic Development recognized an opportunity to address the issue.

The agency saw the opportunity to utilize two existing programs that have existed for several years and have been utilized in other industries.

"For the countries that see livestock development as a fit, this provides them an additional tool," says Steve Westra, an economic development commissioner. "The decision to pursue these projects is still completely under local control."

When a livestock facility is built in a county, the sales and other taxes from materials that are going into the unit will be rebated back to the county. The county can use those dollars for whatever projects they deem necessary.

Kathy Tyler, a Democratic former legislator and member of the grassroots organizing group Dakota Rural Action, derided the program in a story by the Rapid City Journal.

"I basically consider it bribery to the counties," Tyler, of Big Stone City, told the newspaper.

Yankton County Commission Chairman Dan Klimisch says they are looking at the details of the program. He said he doesn't think it's a huge incentive for the county, but says they'll look at any funding the can get.

"We want to keep all our options open," he says. "This is really a push by the state. It won't be a lot of money on a 2.400-head swine barn, the estimate is maybe $10,000 to $12,000." So, he says they are moving cautiously and hope the state isn't trying to take over local control on livestock zoning.

Even though ag development was moved out of the Department of Agriculture, Vanneman says they will still provide technical and other assistance to help grow the state's livestock industry. She says it's good for all sectors of the economy and it the type of program that has a long tail. "Long term the counties that want to partake in this and investors that are building the livestock developments that utilize this program. They're going to see benefits from that with those dollars going back to the county for infrastructure like roads or bridges, or whatever purposes that they need the money for," she says.

Westra notes the use of the Reinvestment Payment and South Dakota Jobs programs can stimulate growth in the ag economy at a time it is greatly needed. As an added benefit, he says there is a financial incentive for counties where these projects are located. Plus, the funding doesn't impact any of the already established local or state regulations regarding livestock development.

"It's a win-win for livestock development, for increasing the economic development that we have in our state," Vanneman says. "We know all counties are financially strapped and so it's good."