(The following article by Terry Woster was posted on the Argus Leader website on May 20.)
PIERRE, S.D. — Legislators and Gov. Mike Rounds should decide together how to use $41 million earned from the sale of a state-owned railroad line, a Sioux Falls legislative leader said Thursday.
Republican Sen. Bill Earley said the money to buy the track in 1980 came from a temporary increase in the state sales tax, so proceeds of the sale should go to the general fund, not a railroad trust fund.
“I think there needs to be some agreement between the (Rounds) administration and the Legislature, and particularly the Appropriations Committee, about how we’re going to use these funds,” said Earley, vice chairman of the budget panel in the Senate. “I can tell you I’m having Legislative Audit look at it, and my recommendation is going to be that we have a subcommittee, probably of the Appropriations Committee, that does a review.”
Rounds said the sale isn’t final until a federal agency approves it, and proceeds will be subject to the Legislature’s appropriations process. When the sale was announced late in April, a lawyer for the state Transportation Department said the proceeds would go to a trust fund to be used for railroad infrastructure improvements.
In 1980, as South Dakota faced a string of railroad line abandonments, then-Gov. Bill Janklow proposed that the state sales tax be raised temporarily to raise money to buy a core line, a network of track deemed essential to shipping in the state.
The state bought the line for $15 million. Included was a provision allowing the company that operated on the line, BNSF Railway, to buy the track. The company did that this spring.
Sioux Falls Republican Sen. Dick Kelly agrees with Earley that discussions need to take place about the use of the sale money.
“We have issues in education with funding, we have scholarship funding issues, we have a lot of issues out there where $41 million would do a lot to help,” Kelly said. “The money to buy the railroad came from sales taxes, and the proceeds from the sale ought to go back into the general fund in some way, to support programs. I don’t have any problem with the sale of the railroad. Where the money goes, I’m very concerned about that.”
The state doesn’t need a larger rail trust fund when, because of the sale, it has less rail property, he said.
“Let the Legislature decide what to do with it,” Kelly said.
Last week, Sen. Clarence Kooistra, R-Garretson, said legislators should have had more input into the sale itself.
He also urged lawmakers to get involved in deciding how to spend the sale money before the governor and his staff finished their budget proposal for the next fiscal year.
The governor annually presents his budget plans to legislators in early December.
Rounds said Thursday there’s time for legislators to talk about how any sale proceeds are used. He said in a statement that the sale is still subject to court and federal Surface Transportation Board approval. That’s not likely to occur until late fall or early winter, the governor said.
“Like any other income to the state, the proceeds will be subject to the appropriation process,” Rounds said. “Since the appropriations process for the coming year is complete, any attempt to utilize or commit these funds would require approval by the full Legislature.”
Earley said he wants more information on what future needs the state sees for the railroad holdings it still has.
“Do we need to keep some of that money for railroad expansion or whatever as we move forward?” he asked. “I don’t have all the information I need to answer that.”
That’s why legislators and the governor’s representatives need to communicate about the money, he said.
But the taxpayers should experience a benefit from the sale, he added.
“Since the original equity came out of tax money, taxpayers should (benefit) from whatever we’re going with the results of the sale,” Earley said. “I’m looking at some avenues of what we might do.”