S.D. lawmakers review governor’s plan to spend some of COVID-19 funds on small businesses

Capitol News Bureau
KELO Money

PIERRE, S.D. (KELO) — A legislative panel spent several hours Thursday sorting through Governor Kristi Noem’s plan to use some of the $1.25 billion of federal COVID-19 aid to help South Dakota businesses hurt by the pandemic.

The Legislature’s Interim Appropriations Committee made more than a half-dozen changes. It was the first time the Republican governor took feedback in an official setting from lawmakers on COVID-19 spending.

“We’re just trying to get some guardrails up here,” said Representative Chris Karr, a Sioux Falls Republican who is appropriations co-chairman. “Something to go off of.”

The panel’s suggestions will be presented to five of the Legislature’s joint policy committees that start holding public hearings next week: Agriculture and Natural Resources; Education; Commerce and Energy; Health and Human Services; and Local Government. The reactions will be considered when the appropriators meet again September 30.

The governor wants to take applications October 12 and close October 23. The committee left that intact but adjusted many items on the governor’s worksheet.

The appropriators initially disagreed on whether the program amount should be $200 million, $400 million or some other figure. They voted 11-4 to recommend $400 million.

The panel voted 13-2 to support the governor’s proposal of $100,000 maximum benefit per business. “I think the $100,000 is a good number to work with,” said Senator John Wiik, a Big Stone City Republican who is an appropriations co-chairman.

The committee reduced the governor’s proposed threshold of $50,000 gross revenue from 2019 and recommended $25,000 instead, 10-6. “$25,000 seems like a viable number,” Senator Ryan Maher, an Isabel Republican, said. Another recommendation was that a business must show at least a 25% reduction in revenue.

Other recommendations from the panel included limiting eligibility to businesses with maximum gross revenue of $38.5 million and opening the revenue-comparison period to six months of March through August, rather than the governor’s proposed three months of March through May.

“A specified three months is going to make it very difficult for agriculture,” Representative Randy Gross, an Elkton Republican, said.

Businesses and other organizations would need to show they had less net revenue over the six-month period this year in comparison to the similar period last year.

Representative Hugh Bartels, a Watertown Republican, said cash flow from operations should be considered, but amortization and depreciation should be excluded from the equation. The long-time banker said it would basically be what’s shown in a business checkbook. The panel agreed 16-0.

Legislators remain divided on whether a special session is needed. House Speaker Steven Haugaard sent a letter to the governor last month carrying the names of 46 representatives seeking a special session. The Senate hasn’t taken a formal position.

The governor’s finance commissioner, Liza Clark, said the governor’s authority to accept and spend the COVID-19 AID without the Legislature’s oversight comes from a 1919 state law on federal funds.

Representative Taffy Howard, a Rapid City Republican, countered that a 1974 state law requires the governor to first seek the appropriations committee’s authority. Clark said the 1974 law doesn’t apply in this instance.

Congress authorized governors to spend the aid.

Clark showed the committee that $114 million had been spent for government purposes as of Wednesday. She said some amount between $600 million and $700 million remains after various other commitments are subtracted. There is a December 30 deadline to contract out the money.

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