2001 Pros & Cons and Attorney General Explanations
Title: An amendment to Article XIII of the South Dakota Constitution
authorizing the creation and administration of a trust fund for proceeds of the
sale of the State Cement Plant.
Attorney General Explanation: The South Dakota Legislature has authorized
the sale of the State Cement Plant for approximately $252 million dollars.
If adopted, Constitutional Amendment A places the net proceeds from this sale
into a trust fund. The South Dakota Investment Council is required to invest the
trust fund. Twelve million dollars from the trust fund will be annually
transferred into the state general fund. The principal of the trust fund may not
be expended except for this $12 million annual transfer. If there are additional
earnings on the trust fund after the $12 million annual transfer, the
Legislature is required to make a limited annual appropriation to support
education.
If Constitutional Amendment A is not adopted, the net proceeds of the Cement
Plant sale will be deposited in the state general fund.
A vote "Yes" will place the net proceeds from the sale of the State Cement
Plant into a trust fund, provide for investment of the fund, and authorize
annual transfers of money from the trust fund.
A "No" vote will result in the net proceeds from the sale of the State Cement
Plant being deposited into the state general fund.
Pro -- Constitutional Amendment A
A "Yes" on this amendment will place more than $200 million from the
sale of the state's cement business into an untouchable trust fund that
will provide annual financial benefits for South Dakotans now and in the
future.
Each year, a minimum of $12 million in interest earnings from the
trust fund will be transferred to the state treasury to help hold down
taxes. Any additional interest earnings may be appropriated in support
of education and other state government agencies. After 2006, the
Legislature is limited in the amount it can spend and the unspent
interest earnings will be added to the trust fund so that more interest
can be earned to hold down taxes and support education.
In summary, a "Yes" vote for this amendment will provide at least $12
million every year to the state treasury to help hold down taxes, more
money to support education and additional interest earning opportunities
for both the holding down of taxes and the support of education.
Submitted by: Governor William Janklow, 500 E Capitol, Pierre SD
Con -- Constitutional Amendment A
This proposed constitutional amendment does very little to support
education, although it proclaims to do so. The net proceeds from the
sale of the Cement Plant will be $227 million. Annual payments from the
fund are limited to 5% of the fund value. Thus, the trust fund does not
support education until after the fund grows to $240 million.
Even after the fund grows to $240 million, payments to education will
be modest, at best. For example, if the trust fund grows by 8% per year,
the total payment to education during the first 5 years is merely $3.5
million. In comparison, South Dakota presently invests more than $600
million for K-12 education every year. If the fund grows by 10% per
year, total additional education funding during the first 5 years is
only $6.7 million.
The mathematical formulas in this constitutional amendment will cause
the fund to grow to excessive levels if the South Dakota Investment
Council continues to achieve its historical returns on its investments.
If the fund grows by 13% per year, it will contain almost $500 million
in 10 years, yet can never reduce taxes by more than $12 million per
year. Government should not stockpile public monies and continue to levy
taxes.
Finally, the Constitution is not a proper place for mathematical
formulas regarding disposition of state investments. Legislatures in the
distant future must retain flexibility to provide answers to questions
that cannot today be foreseen. Decades from now, the state's most
important needs might be environmental, or agricultural, or medical.
Since we cannot predict the future, we should not place mathematical
formulas in the state constitution and limit the choices available to
future generations.
Send the legislature back to the drawing board. Tell them to write a
law that protects the principle and uses the income wisely.
Vote no.
Submitted by: Former Representative Mike Wilson, 301 Alta Vista
Drive, Rapid City, SD 57701. Wilson represented District 32 in
1999-2000.
Title: An amendment to Article XII of the South Dakota Constitution
authorizing the creation and administration of trust funds for health care and
education.
Attorney General Explanation: Constitutional Amendment B establishes two
trust funds. The health care trust fund would be established with funds from the
intergovernmental transfer fund. Money in this trust fund is dedicated to health
care related programs. The education enhancement trust fund would be established
with present and future tobacco settlement funds, proceeds from any sale of the
right to receive payments from the tobacco settlement, and funds in the
youth-at-risk trust fund. Money in this trust fund is dedicated to education
enhancement programs.
The Legislature may appropriate additional money into these trust funds. The
South Dakota Investment Council is required to invest these trust funds.
Beginning in fiscal year 2003, the Legislature is required to distribute
money from the trust funds. A three-fourths vote of the Legislature is required
to appropriate the principal of the trust funds, or to use the trust funds for
other purposes.
A vote "yes" will establish the health and education trust funds, provide for
investment of the funds, and authorize the distribution of money from these
trust funds.
A vote "no" will leave the Constitution as it is.
Pro -- Constitutional Amendment B
South Dakota has received two windfalls with intergovernmental
transfer funds from the federal government and funds from tobacco
companies as the result of a national lawsuit.
There are tremendous pressures to spend these monies until they are
gone forever and not reap permanent benefits for the people of South
Dakota.
The Governor suggested and the Legislature agreed that these monies
should be tied up into trust funds so that the people of South Dakota
will receive FOREVER the benefits of the interest earnings from
the trust funds for education and health care.
A "Yes" vote on Constitutional Amendment B will create the Education
Enhancement Trust Fund and the Health Care Trust Fund. The earnings from
these two trust funds will then be spent by the Legislature each year on
education and health care programs that benefit South Dakotans.
Please vote "Yes" on Constitutional Amendment B.
Submitted by: Governor William Janklow, 500 E Capitol, Pierre, SD
Con -- Constitutional Amendment B
Amendment B is a proposal to create two separate trust funds.
- One for depositing federal Medicaid dollars. (to be used by the
Legislature for health related programs)
- One for tobacco settlement dollars. (to be used for educational
enhancement programs)
These two separate and distinct issues are joined together in
Amendment B, forcing the public to cast but one vote.
The trust funds are unprotected in stark contrast to the existing
school trust fund which is a permanent fund, the principle of which can
never be invaded. Amendment B trust funds can be invaded by a 3/4th vote
of the Legislature, thereby removing any permanent protection and
subjecting them to the political whims of future Legislatures.
The public has not been given the opportunity to have input on this
important issue. The Legislature was given its first view of this
proposal on the next to last day of Session. Changes were made to this
bill and a vote was taken in minutes. There remain technical problems
with Amendment B:
- The State Treasurer is directed each year to take an
undisclosed amount of money out of the trust funds and transfer
it to the state general fund to be spent by the Governor or
legislature.
- There is no requirement that the State Treasurer take only
interest earnings for spending.
- Health care related and education enhancement programs are
terms far too ambiguous for prudent spending of the trust
monies.
Our Constitution is the cornerstone of our rights. Amending it is a
serious matter which requires careful and deliberate thought. It should
not be dealt with in the last minute, behind closed doors, and exempt
from public scrutiny and participation.
We need to take time and address these issues in a responsible
manner. Vote NO.
Submitted by: Senator Patricia de Hueck, 906 N. Madison, Pierre, SD
57501. Senator de Hueck represents District 24.
