South Dakota Gov. Dennis Daugaard has vetoed H.B.1228, a bill that would have provided tax refunds for energy projects costing in excess of $50 million.
The governor pointed out a number of flaws with the bill. First, he said, the legislation had not been fully vetted, and the legislature did not have sufficient time to determine if the legislation would really benefit citizens.
‘No fiscal note was prepared, and important information was not provided during the committee or floor debates,’ he wrote in his veto statement.
Second, Daugaard said the legislation is "unnecessarily discriminatory" – especially against medium-sized wind farms.
"It is not good policy to exclude wind farms smaller than $50 million from these tax breaks, especially since there is already a 20 MW wind farm being planned near Belle Fourche that would be competitively disadvantaged by this legislation," he wrote.
Third, the governor noted that the legislation is "at best, confusing."
"In reality, it is a continuous appropriation labeled as a tax refund," Daugaard wrote. "The amount of the "refund' has no relationship to the taxes paid.
"Two projects with the same nameplate rating totals – whose costs vary for other reasons – will pay different excise and sales tax amounts yet be entitled to the same "refund,'" he continued. "This is an appropriation, not a refund, and a two-thirds vote should have been required for passage in the first instance."
Finally, Daugaard said he vetoed the bill because it was poorly timed.
"I agree that we should have incentives in place to further develop our state's wind resource," he wrote. "However, we need a comprehensive policy to address the disincentive in our tax code for all large development opportunities. Given the uncertainty surrounding Referred Law 14, I am uncomfortable changing our approach toward just one type of large project before knowing the will of the voters."
