South Dakota State of the State Address 2004

Pierre, S.D., Jan. 13 - Following is the full text of South Dakota Gov. Mike Rounds 2004 state of the state address:

Thank you. Thank you. As I said last year, you're in my time zone here right now. Lieutenant Governor, Mr. Speaker, legislators, fellow public servants, and the people of South Dakota, I want to start today with just two words, THANK YOU. Thank you to the people of this great state for giving me the privilege of working for you. Thank you to the legislators and fellow public servants for giving me the honor of working with you. And, thank you, a particular thank you, to the men and the women of the Armed Forces in the United States, in Iraq, and around the world and their families here at home for the sacrifices that they make so we can enjoy the freedoms found in America today.

In the past year, South Dakota has mobilized over 2,500 National Guard and Reserve soldiers from 25 different units in 30 different communities in our state.

Over, 1,800 National Guard men and women are currently deployed. Before you today there is a beautiful gift. It's an eagle and it has been presented to the people of South Dakota by the National Guard Bureau as a way of saying thank you as the employer of over 40 different men and women that are currently serving in active duty in the theatres of operation for the United States of America. I think this beautiful eagle should be shared. So what I would ask, with the permission of the leaders in the House and the Senate, if the legislature would please keep it in your chambers during the session and share it between the two- between the House and the Senate-and then we will have a prominent location of display for this beautiful gift representing for all the people in South Dakota their participation in the protection of the freedoms that America holds so dear today. But if you would hold it here and then pass it to the Senate, then we will display it proudly for the rest of the year.

Whenever we meet together in legislative session, I hope our goals will always be to work hard and to work together to make South Dakota an even better place-first of all, for all the people that live here now, for all the future generations who will call South Dakota home, and, especially, for the people who will be coming home to live again in South Dakota after they have fought for us in far away places.

We must also never forget those who have served us in the past. This past year, we hosted the first ever Veterans Summit in South Dakota so that we could listen to the concerns of veterans and improve veterans programs. This recognition of our veterans should continue on. In particular, we want to talk about Korean War veterans this year. This last summer in Huron we began a time of celebration of commemoration with the ending of the Korean War. But this recognition of these men and women who offered to sacrifice, I think we agree that it's long overdue. What we would like to do is to recognize the 173 South Dakota soldiers who died in Korea and the over 12,000 Korean War veterans that live in South Dakota today by dedicating part of a memorial location right down here by the Flaming Fountain in which we add a statue, a statue that commemorates the many men and women who served in the Korean War. We will do that on Saturday, September 18th.

But along with recognizing those individuals who have offered their sacrifices in the past, I think also, with your permission, it's good that we look at a veterans bonus, and as I indicated in our budget message earlier, I would propose a veterans bonus this year for those veterans who have served since the last time that we offered the veterans bonus. And, furthermore, I think we'll find wholehearted support through that. I think there's something else we can do as well. We'll have young men and women that are serving right now in our National Guard that are going to be coming home again and they've missed out on something. They've missed out on, many cases, the opportunity for an education for themselves. We have a veterans program, a bonus opportunity here in which we offer 50 percent tuition waiver in our state's universities for South Dakota residents who are also members of the National Guard. What I would like to do is to expand that to any young man or woman even if they are a resident of another state but who currently serves with our South Dakota National Guard overseas, and invite them to also participate in that Tuition Reduction Program simply as a way to first of all bring attention to this opportunity, second of all as a way to say thank you, and to try in a small way to make up for the disruption in their life and the sacrifice they offer in protecting the freedoms that we hold dear today.

Last year, I had the privilege and the responsibility of first of all discussing with you an Inaugural Address and then also in the State of the State address several different ideas that I thought it important that we pursue. I want to thank you for the cooperation that we had in the last legislative session, and during the special session, and during the rest of this year. We had proposed 23 separate bills or initiatives as part of our plan. You agreed with me and passed 21 of those 23. I want to thank you for that. But in addition to that, you also had many good ideas and of the hundreds of proposals that you offered, the vast majority of them we were able to work through and to allow it to become law, making improvements in the way that our state government does business, and making improvements for the people that live within this state. Last year, in the Inaugural and also in the State of the State, I listed some of the basic concepts in which we all believe. During this session, I hope we can continue to rely on those basic concepts of good government. We protect those who cannot protect hemselves-the very young and the very old. We protect society from those who would harm us, and we provide a quality education for our children because they are our future. And, while we are doing these basic goals, these basic tenents, we always must be vigilant to protect the rights and the freedoms of the individuals who have elected us to govern them.

Last year, as I stood before you, I said that together we will balance our budget, that we will improve the operations of state government, that we will create more economic development, that we will fund quality education, that we will implement a prescription drug program, and, we will develop a mutually beneficial relationship with our Native American tribes and people.

Today, I am proud to stand before you because, working together, we've moved forward on all these issues. We've been successful, and it's only the beginning. Together, we can do even better in the future. One way that we build a better world is by helping each other. Your work last year is proof that we can be successful.

I'm very concerned about the proposal to repeal the entire sales tax on food. Our programs that you supported in the past are in jeopardy if the sales tax is repealed. It's a $42 million loss every single year.

In other places around the country, they've looked at the sales tax, they've looked at what it does. Let me give you some information on what happens. Forty-five states have a sales tax today. Eighteen of those states tax-they include the sales tax on food. Twenty-seven do not have a sales tax on food. Forty-three states have a personal income tax. Forty-six states have a corporate income tax. South Dakota has neither. Of those 27 states that do not have a sales tax on food, 23 of them, or 85 percent, have a personal income tax, and 24, or 89 percent, have a corporate income tax. I know that when we talk about sales tax and policy, many times we do our best not to include a discussion about income tax. But I believe this spawns an income tax debate. And it has proved to be one of the primary alternatives in states that do not continue to have a broad-based sales tax approach. I believe an alternative is the sales tax relief for the working poor that we outlined earlier in our budget address. I'll work with you. I believe very strong that until such time as there are other alternatives that are acceptable, we have to remain strong in supporting a very healthy sales tax base within South Dakota in order to continue those programs that are critical for the very poor, for the injured, and for our young children.

Last year, you approved the Senior Prescription Discount Card that was a proposal that we had made to you. The card did not provide savings to everyone because some people already had a better program, but many, many card-holders have realized significant savings since it began. In the last 6 months, over 105,000 claims were paid. The savings to the card users was over $825,000, and that's an average of 17.7 percent below the pharmacies usual and customary prices. Over 35,000 people are currently using the discount cards. This was truly an excellent program. It filled a gap that I think the program designed to fill until such time as Congress would respond and do a national plan. Congress has finally taken action. Thank you, first of all, for working with us to create a state-sponsored plan. And I also have to say thank you to the pharmacists from across the state who cooperated with us in this effort. We told them to begin with that this would be short-term and that as soon as Congress responded, we would begin to phase this proposal out. Because of the recent passage of the Medicare Prescription Drug, Improvement and Modernization Act by Congress, the Governor's Prescription Drug Card, with your permission, will be phased out as soon as the new Medicare cards are available. Until Congress acted, we did the right thing for South Dakotans. I want to thank you once again for working with us to create that plan. But I also want you to know that we need to discuss pharmacy benefits management. There are two possibilities. We have benefit managers that negotiate as a middle man between consumers and between the pharmaceutical companies themselves. But today when they do that as part of their negotiating agreements, they will receive rebates back from the pharmaceutical companies based upon the volume and the types of pharmaceuticals that they are able to market. I believe that it's appropriate as one possible alternative that we should make those types of transactions transparent so that individuals within South Dakota can see where the opportunities are for the pharmacy benefit managers to make additional profits and where there are incentives to move individuals from one type of a prescription to another. Or as an alternative to that, I believe it would be appropriate for this legislature to pursue the concept of allowing the creation of our own public pharmacy benefits authority in which we could go out and negotiate directly with the pharmaceutical companies to provide the best possible contractual arrangements for our state employees, for those involved in larger groups, and if possible the individual plans that would have an interest in working with us. I don't know which is right, I do know that we should pursue both options, take careful, a very careful, look at both, and decide whether or not one or the other would work for the people of South Dakota in continuing to reduce the cost of pharmaceuticals to individuals who live here in South Dakota.

In the special session last year, you also worked with us to help create the Risk Pool to help South Dakotans who lose their health insurance through no fault of their own. In the past 5 months, almost 400 people have signed up for the Risk Pool coverage. Again, working together, we stepped up, took the challenge, and responded. And I'm pleased to report to you today that that Risk Pool is working and it is working the way that you intended it to work.

Also during the last year, the people in our departments and agencies have helped thousands and thousands of South Dakotans in many different ways. I'd like to give you just a few examples of the type of work that these people in these departments are providing.

In the Department of Human Services, we helped 982 people start the transition from injury back to work. We had the highest employment rate in the nation for people who are blind or visually impaired. With a lot of help from retailers, South Dakota became one of only nine states that reduced our underage tobacco sales to below 8 percent.

In the Department of Social Services, while many states are cutting their Children Health Insurance Programs (CHIPs), South Dakota continues to serve more and more children every year. We've gone from helping 32,000 children in 1998 to helping over 60,000 today. Our office of Child Support Enforcement collected record-high $72.2 million for the children of South Dakota.

In the Department of Health, to combat the flu, the Health Department directed a special outreach to the vulnerable 6 months to 23 months age group. They were vaccinated as well as their siblings and parents. The Health Department also managed the West Nile Virus surveillance and response in South Dakota, including testing, case investigation, provider and public education, and aerial spraying. To reduce the illnesses and deaths next summer, the Health Department is securing $700,000 in funding to help communities buy mosquito control equipment and chemicals. The department will also be working with the cities and counties this winter and spring so that larviciding and adulticiding can be done at the right times and done effectively.

In South Dakota, water development is very important. I want to report to you that progress is being made on the Lewis and Clark and the Perkins County water projects. During the summer, our congressional delegation was working hard on funding for this year. I'm very happy that President Bush stepped forward and not only funded what we wanted for this year, but also proactively supported a total of 3 years of funding for these two projects. The President made an unprecedented 3-year commitment to the two projects. So, instead of cuts, President Bush is giving us the money we need for at least the next 3 years. Ladies and gentlemen, that shows that he cares about South Dakota and rural America.

During the last year, you've continued to show your support for agriculture in this state. The result has been good. We've had over $200 million worth of ethanol plants come on line in just the past year. That's a substantial capital investment in our ag economy that will provide higher corn prices for our farmers for many, many years. You also passed a special Wind Energy bill that caused the creation of a $42 million investment on a wind farm near Highmore. That one wind farm has twenty-seven 1.5 megawatt generators. FPL, the owner, is paying landowners and paying property taxes to support the county and the school district. It's a win-win situation for everyone.

Furthermore, during this same year, the Value-Added Subfund loaned more money this past year than ever before. Over $1 million is being used right now for feasibility and marketing studies for various projects. The Dakota Prime initiative is essentially a "seal of approval." It's a plan that producers can use to increase the quality of their beef and thereby make it more marketable and profitable. The name is generic. The concept is what we're trying to move forward. The state, in this concept, would act as the verification or certification agency. The ultimate goal behind the concept of Dakota Prime is to create the idea in the minds of millions of consumers that South Dakota beef is the best there is and we can prove it. That's the way we will get a higher value for every single unit produced within our state. The Department of Agriculture is working with four marketing groups on this initiative. They have plans to put forth proposals for a voluntary approach with producers who want to be able to prove just how good their livestock really are.

When dairy promotion is talked about in South Dakota, we see nothing except opportunity. Even though many dairy farmers are retiring and other states are having real difficulties in increasing the number of dairy farmers that will operate in their states, South Dakota is seeing opportunity. Because of new plants coming on line within our state and increased demand for the product, today, we have a need in the very near future for more than 65,000 more dairy cows in this state alone. It's an opportunity we cannot afford to pass up. And yet at the same time, while we talk about dairy and we talk about the opportunities for our ag producers, and adding more value to their product, whether it be through ethanol or whether it be through wind farms in local agricultural areas, or in the concepts behind the promotion of Dakota Prime, we still have hanging over our heads BSE-that disease which is prevalent, or has been prevalent, in Europe, and that disease which has shown up in Canada in some of their livestock, which have been transported into certain areas of the United States. I understand the importance of country of origin labeling, and while we have to continue to pursue at the national level the concepts of country of origin labeling as soon as possible, this opportunity for South Dakota to continue to identify its beef is as good if not better than beef anyplace else in the world provide us with marketing opportunities that we should pursue. We start by being able to identify the livestock which is bred here, born here, which is backgrounded here, which is fed here, and which eventually will be processed here so that we can go back to the consumers in the United States of America and show them the entire story behind the livestock, which is being produced right here in our state. Once again, this is an opportunity to add value to this fine, high quality product that we produce right now today.

In doing so, one of the possible routes that we have to explore in our Department of Ag is taking a lead, along with several other states in the Upper Midwest, the possibility of identifying our livestock. Our Department of Ag is taking the lead in an optional program that would allow livestock identification where our producers want to participate. They're working with eight other state agriculture departments and their state veterinarians, the U.S. Department of Agriculture, and the U.S. Animal Identification Plan. The purpose is to track the animal from birth. This is something that must be explored further and with other states and in cooperation with the federal government. This will be an excellent tool to isolate and prevent the spread of disease, and it will allow producers to really understand the history of any livestock he or she wants to buy to bring in or to show exactly the history of the livestock that are produced on their own property.

In the last year, you have also supported local and statewide efforts to improve economic development. During this year, we have also changed the rules of the REDI Fund to provide more money to regional revolving loan funds. $3 million has been distributed to the six regional loan funds. The Economic Development Finance Authority also became a better vehicle for economic development. In 2003, the number of loans from this fund doubled, and we can now provide up to $5 million in bonds for large capital-intensive projects. But I think it is important that we go farther. I will be recommending that you pass a new law this year that would allow us to use a very limited amount of REDI Fund dollars for high opportunity ventures. This would allow qualified venture capital companies to invest REDI Fund dollars in projects and businesses that have the potential for high return which will contribute to South Dakota's economy by providing more capital and for creating more high quality jobs. Time and time again, we are asked to provide equity funding for small businesses or new ventures, and there is no program in the state that provides this today. This will be a vehicle to use REDI dollars on those projects. The goal is to provide additional equity funding to small businesses in South Dakota that may not yet qualify for conventional financing, but have a need for facilities, equipment, or operating money to get their concepts and ideas off the ground.

As many of you know, we have been working very hard to secure the donation of the Homestake mine so that it could become the premier underground research laboratory in the world. Yesterday, I signed the agreement in principle with the Homestake Mining Company that provides for the conditions and timelines for the transfer of the mine to a Science and Technology Authority.

To answer your questions and give you any information you want, we are sponsoring a special meeting for legislators and the public next Tuesday, that's January 20th. We're going to do it at 1p.m. at the Rigg's High School, just 3 blocks away from here in their fine arts location. At this meeting, there will be an xplanation of the new emphasis on research and intellectual property development that we are proposing for our public universities. In my budget proposal, I've asked for more money for university research and also for the commercialization of that research to create more and higher paying jobs in South Dakota. With your approval, we will create a research and commercialization office to boost research at our universities. It will be opened before the next school year. We will also develop a new policy for intellectual property so that our faculty will have more incentives to do job-creating research. We will also help take those new ideas from the drawing board to the marketplace. Initially, this will involve at least 10 faculty and 20 graduate students.

Also at this meeting next Tuesday, there will be a panel of scientists to discuss the benefits of establishing the Homestake Underground Lab. And, I will propose legislation to accelerate the process of making the Homestake Underground Laboratory a reality.

Here's the sequence of events that should happen to make the Homestake Underground Laboratory a reality. During this session, I will be asking you to create the Science and Technology authority. The authority is needed to both accept the donation of the mine and to operate the infrastructure of the mine. Think of the mine as a building. The authority will take care of the building so that the scientific tenents can concentrate on doing their experiments in the laboratory found inside the building. During this session, I will also ask you for indemnification and immunity for funding and funding to accelerate the entire mine conversion process. The indemnification and the immunity are part of the agreement in principle, and the full text of the agreement in principle, our authority legislation, the indemnity legislation, and the immunity legislation will all be available if not today by tomorrow at the latest, along with a copy of all of the properties that are proposed to be transferred free of charge from the donor to the authority. This will give you an opportunity to review it, to take your time and put together the questions that you may have, and then with that as a background to attend this meeting next Tuesday and to listen to what the scientists suggest as the reason why you should move forward on this major development opportunity.

We will need to put this together in a fairly rapid fashion because these scientists are excited. They see opportunities. They also recognize that the National Science Foundation has to act on our plan in order to get the funding so that it can become a reality. To expedite the conversion and to make the project more enticing to the National Science Foundation so that it makes the underground laboratory one of its top priorities, I am asking for $10 million in a onetime appropriation. We will also need $3.5 million for a one-time payment to buy 10 years of insurance and to operate the authority for its first year in operation. Please remember that we already have $10 million from the federal government for protecting the integrity of the mine. That money will be used for removing the water and preparing the mine for creation of the laboratory.

If you approve these requests this session, we will work with the scientists to complete the design of the underground facilities, and we will join with the scientists in presenting the design to the National Science Foundation for approval. If the National Science Foundation approves, we will then secure funding from them, Barrick and Homestake will transfer the mine to the authority, bonds will be issued by the authority for the conversion, and then the conversion will begin. When the conversion is done, we will open the new Homestake Underground Laboratory for scientific use.

You may have noticed that this project has had two or three different names over the course of the events in the last 3 years. We are now calling it the Homestake Underground Laboratory for two very important reasons. Number one, we want to recognize this facility and the value of it by the Homestake Mining Company and its parent company, the Barrick Gold Corporation. But, just as importantly, by using the name Homestake, we hope to honor the memories of all the generations of miners who have worked in that mine for so many years. It has played such a huge part in South Dakota's history.

I had the opportunity to attend a meeting of scientists in Los Angeles a little over a month ago. I went down there to convince them that the Homestake project was alive and well. My intent was to share with them information about Homestake and about our desire to see it become a national laboratory and to talk about our excitement and our strong belief in the future of this plan. But I got a whole lot more than I delivered. Because what I found among the scientific community was an infectious, a very infectious, desire to move forward in the area of research and the opportunities that it offers to the state of South Dakota and to our children and to the Upper Midwest. When it comes to the type of development that we dream about, but we very seldom have the opportunity to actually promote, I found scientists talking about such things as proton decay and they talked with one another in such as fashion that it was very clear that, although I didn't know what they were talking about, they most certainly did, and they convinced me, they convinced me, that the opportunities that we have in making this a reality-the upside-is so much greater than the risk that we have in one-time investments that we cannot let this get away. This is a once in a lifetime opportunity. We've taken the first step. This is only the first step. We have to be able to show our enthusiasm and our support and our understanding as to the importance of research for research sake and development because we understand that in this new economy if our children are to have the kinds of jobs and opportunities that we want them to, that this type of a facility is one of the finest, one of the finest, advantages that we can give them as a gift for generations to come that we can't let it go. So I am here to make that extra special plea, if you have questions, if you have any doubts at all, don't sit quietly by, raise them, allow the scientists to come here to explain to you, catch the enthusiasm, enjoy the infection that they offer that can do nothing except help our state for generations to come. And so with that, I will do anything I can to answer the questions that you have. I'll work with you, but when we get done at the end of this legislative session, we have to provide every opportunity for our children to take advantage of the research and development possibilities that a facility like this can offer.

Let me go on, during the last year we talked about the need to reach out to South Dakota's American Indians-you responded, you offered us tools and opportunities. You passed a new law to allow for nursing facilities to be constructed on American Indian reservations. The Cheyenne River Sioux Tribe has been very active in the planning and development of their Elder Village Nursing Home project. Land has been identified and plotted. An architect has been selected. Policies and procedures and staff development plans are underway. Construction could start as early as this spring or summer. The Hagen-Harvey Memorial Scholarships, as of January 15 in just two short days, the board for those scholarships will meet to select seven individuals who will each receive a $1,000 scholarship their first year, $1,000 scholarship for the second year, a $1,500 scholarship for the third year, and a $2,500 scholarship their fourth year for a total of $6,000 over 4 years set up so that Native American children have the opportunity and something to shoot for when it comes to scholarships available to them to pursue higher education in our state.

During the past year, we have signed four tax agreements with different tribes. We have signed comprehensive tax agreements involving more than one tax with the Cheyenne River Sioux Tribe, the Standing Rock Sioux Tribe, and the Rosebud Sioux Tribe, and we have also signed a motor fuel tax agreement with the Oglala Sioux Tribe. The Department of Revenue will be submitting a legislative proposal to allow the state to enter into tax compacts with tribes that include the wholesale tax on tobacco products.

We have also changed prison policies in the Department of Corrections. We created a tribal contact person at each prison so that the tribes and Native American people can deal directly with one person at each institution. Each tribe has also created one person in the tribe to deal directly with prison issues. We have also implemented funeral furloughs once again to the reservations. We are holding quarterly spiritual conferences at both Jameson Annex and the penitentiary in Sioux Falls. We have extended the time for pow wows. We are also allowing Pipe Keepers to contact tribal representatives via the staff telephones. We are offering two new Native American classes in prison: a Lakota Language Class, and the P.I.P.E.S. Class, which is also known at the Red Road approach to Alcoholism. We are actively working with tribes to identify Native American families to participate in the Department of Corrections' Foster Care program.

In the Game, Fish and Parks Department, we continue to work with the tribes and the Corps of Engineers to make sure religious and cultural sites along the Missouri River are treated properly. George Mickelson was governor when I first became a state senator, and I remember his second inaugural address when he talked about the need for reconciliation. We need to build on this legacy of reconciliation through cooperation, communication, and mutual respect.

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