A strictly free market would make businesses free to ignore South Dakota

Yahoo

2 days ago

State Reps. Jon Hansen, R-Dell Rapids, and Karla Lems, R-Canton, speak to the press after they announced their campaign for governor and lieutenant governor at an event in Sioux Falls on April 24, 2025, at the Military Heritage Alliance. (Makenzie Huber/South Dakota Searchlight)
South Dakota Republicans could be choosing from a crowded field when they make their choice for governor in the 2026 primary. With as many as five candidates in the race, would-be governors will need to find a way to distinguish themselves from the pack.
The first announced candidate for that race was Speaker of the House Jon Hansen, a Dell Rapids attorney. He declared his candidacy for the Republican nomination in April.
Hansen was the first candidate for governor to come from the new MAGA wing of the South Dakota Republican Party—referred to as 'grassroots patriots' in his announcement speech. His campaign platform contains many of the topics his wing of the party has made a priority: cutting government spending, allowing school choice, protecting private property rights, opposing abortion and tightening election laws.
First candidate for governor focuses on property rights, spending and halting 'corporate welfare'
Another topic that Hansen touched on was ending 'corporate welfare.' That's the name he has given to the practice of using taxpayer dollars to boost private business. His example of corporate welfare gone bad was Tru Shrimp. The company was given a $6.5 million loan of state and local funds six years ago to build a facility in Madison. While the company did manage to change its name to Iterro, it has yet to break ground.
'I think it's just unnecessary government mingling, and it's risky business, and they're wasting our taxpayer dollars to do it,' Hansen said in a South Dakota Searchlight story. 'It's the sort of stuff that we want to say 'no more' to. Let's get back to the free market, low tax and low regulation.'
South Dakota got serious about using state dollars to entice and build business in 1987 when Gov. George Mickelson helped to create the Revolving Economic Development and Initiative Fund. Mickelson was able to convince the Legislature to implement a 1% sales tax increase that would sunset once it had raised $40 million for the REDI Fund. Since then the Governor's Office of Economic Development has made loans and grants worth millions of dollars to new and existing businesses and industries in the state.
Taking state government loans and grants out of the marketplace would certainly be one way Hansen could approach his new role if he were elected governor. That tactic, however, fails to consider the fact that a financial boost from the state is sometimes what it takes to get the free market interested in investing in South Dakota.
Putting an end to low-interest government loans would certainly put the state at a disadvantage when it comes to competing with other states for business and industry.
A recent news release from the GOED showed just how invested the state has become in helping businesses grow. The news release noted a $3.4 million grant for the Big Stone Energy Storage Project thermal energy facility, a $2.6 million grant for a Bel Brands expansion and a $250,682 grant to Dakota Line Energy for a lagoon digester.
The news release said the grants would result in $419 million in capital expenditures and create 180 full-time jobs. In essence, the state is betting $6 million in hopes of getting a $419 million payoff. That kind of 'government mingling,' as Hansen called it, seems to offer pretty good odds. It is, however, as he noted, 'risky business.'
At its heart, investing in economic development will always be a bit of a gamble. That's why we expect government officials to place safe bets, though there is always the chance for a bust like Tru Shrimp. That's the nature of any gamble.
Hansen won't be the only 'patriot' in the Republican primary for governor, with Aberdeen businessman and political influencer Toby Doeden also declaring his candidacy. If 'corporate welfare' is going to be an issue in the GOP primary, the people who like to use state loans and grants to boost their local economies have got to do a better job of telling about the benefits of government investment.
One way to do that would be to keep telling their story after the initial news release has been issued. Beyond the cliched photo of local officials with hardhats and shovels for a groundbreaking, taxpayers deserve regular updates on capital expenditures and job creation. This would add a layer of government transparency to the use of tax dollars. It would also soften the criticism from people like Hansen when an outfit like Tru Shrimp is slow to pay off on its state investment.
Politicians often like to tout the benefits of the 'free market.' By curtailing state grants and low-interest loans, that market will be free to invest in states that are more financially welcoming.
In 1987, the state's economy was badly in need of a jump-start, and it got one from Gov. Mickelson and the REDI Fund. Since then, that gamble has paid off more often than it's gone bust. What Hansen calls 'corporate welfare' has been a usually sound investment for South Dakota.
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