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The Republican-controlled Legislature passed a bill last year at the governor's urging to provide grants to companies to get them to expand or relocate to South Dakota.
The state Democratic party, however, said the estimated $16 million a year in grants would be better used to help fund schools. It gathered enough signatures to put the measure on the ballot for a public vote.
The grants would have been paid for with 22 percent of the receipts from the contractor's excise tax.
South Dakota for years has had a program that refunds construction taxes for large industrial projects, but it expires at the end of this year.
