Legislative Report By Sen. John Reedy Numerous members of the Farmer's Union were our guests in Pierre this week. As always, I was grateful to listen to and learn from the experiences of so many family farmers.
A very sweeping tax reform proposal will almost certainly be considered by the House State Affairs Committee this week. This proposal, House Bill 1001, would change the way that we evaluate property for tax purposes. Currently, property is assessed for taxation at 85 percent of its present market value. When property values increase, taxes increase. You may have heard of Proposition 13 in California. House Bill 1001 is very similar. It would limit the valuation of a property for tax purposes to the actual, most recent sale price of the property. Subsequent assessments would be limited to a 3 percent year maximum increase.
The advantage of this proposal is that it would provide a very high degree of predictability for property owners. We would never again be hit with surprising large assessments.
I felt especially fortunate to have so many independent producers in town because we had several crucial ag-related bills in communities. One of these bills was SB 95 which would require packing-houses to post publicly the prices they pay for livestock. Similar legislation is currently being considered in Nebraska, Minnesota and Iowa. Traditionally, we have sold livestock in this country at open auctions where all sellers have accurate price information. In recent years, however, we have seen more and more of our livestock being sold on a contract basis for a secret price. Currently, we sell about 57 percent of our hogs on a contract basis and at least 30 percent of our cattle.
There is nothing wrong with farmers and ranchers selling livestock on contract. Contracts, when fair, can provide much needed certainty. The problem is price secrecy. Not only do packers refuse to report the prices they pay for livestock under these contracts, but they also demand that farmers and ranchers keep these prices secret as well. As a result, our independent producers do not know what the true market prices are for their livestock. An individual farmer only knows what he gets on his own contract. He has no idea how much other producers are getting. Without knowledge of true market prices, independent producers are a severe disadvantage when they try to negotiate a contract or decide when to go an auction market.
Some people out in Pierre argue that relations between farmers and packers is a federal issue. I believe strongly, however, that the state legislature has the primary obligation for doing what is right for South Dakotans.
The debate regarding state and country road funding is continuing. Two proposals are currently being considered: 1) a doubling of the license plate fee, and 2) an increase in the gas tax. If I had my druthers, we would need neither, but the fact is that our back-log in local road repair is our most pressing fiscal problem.
An increase in the gas tax would tax those who use the roads the most. Furthermore, many people travel trough the state during the summer but do not reside here. According to current estimate, tourists would pay 25 percent of any gas tax increase. Currently, all gas tax money goes straight to Pierre. If we can direct some of this money to local communities, then we could start to repair more of our local roads.
Road financing is a difficult issue, and I sincerely need to know what you prefer. If you do not like any of the current proposals, let me know that too.
I and other legislators will also be working together to reverse the effects of current state policy. We are going to support a bill which will permit loans from the state's Revolving Economic Development Initiative fund to go only to those corporations which agree to pay wages 10 percent above the local average for a given job. With this legislation, we hope to put the state back onto the path of promoting higher wages instead of lower ones.
Health care is always a major concern during each legislative session. I am currently monitoring a proposal that would require all insurance companies to provide certain benefits to people with diabetes. One in twenty South Dakotans has some form of diabetes. Although some insurance plans offer very good coverage for diabetics, not all do. Because of the growing number of diabetics, 32 states have already passed legislation setting certain standards for the insurance industry. Although diabetes can be controlled, the problems resulting from uncontrolled diabetes can be very severe. I will study this legislation closely to see if it will help patients to better manage their diabetes and thus keep total medical costs down.