Fiscal prudence, less red tape puts South Dakota at front of pack

When people around the country think about South Dakota, the first image that comes to mind is probably Mount Rushmore. Though we're proud to be the home of Gutzon Borglum's masterpiece, the truth is that we are much more than the stone-carved presidential tribute. South Dakota is also a great place to do business.

We have long strived to make our state business-friendly, and people are beginning to notice. As a number of independent groups that conduct state-by-state studies are rating our state at the top, businesses are looking to South Dakota.

South Dakota Gov. Dennis Daugaard
Source: The State of South Dakota
South Dakota Gov. Dennis Daugaard

In 2013, CNBC named us America's Top State for Business. This year, the U.S. Chamber of Commerce put South Dakota at the top of its list for business climate.The Small Business and Entrepreneurship Council recently ranked our state No. 1 for business policies and entrepreneurial friendliness. We're also the third best-run state in America, according to Barron's.

While some states are still trying to recover from the recession, South Dakota has more jobs today than ever before. During the recession, we lost about 8,000 jobs. Since January 2011, we have added almost 14,000 jobs, placing us among the 15 states that have regained all jobs lost during the recession.

South Dakota's nominal GDP grew 6.8 percent from 2012 to 2013, compared to 3.47 percent growth nationally. South Dakota's nominal percentage increase was the fourth highest in the nation.

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We're seeing success in South Dakota because we believe in allowing businesses to prosper. We have no corporate income tax, no personal income tax, no business inventory tax, no personal property tax and no inheritance tax. This puts more money in the pockets of our businesses and citizens, creating a more favorable environment for growth.

Things are just as impressive when it comes to actually doing business in South Dakota. The costs of doing business—utility costs, unemployment insurance costs, workman's compensation costs, land costs, labor costs—are low. Productivity of our workers is high. In fact, many multistate employers with locations here tell us their South Dakota location is their most productive.

In our state, we don't place unnecessary hurdles before our citizens or entrepreneurs, and things aren't overly complicated for people who are trying to know and obey laws. It's the nature of government to add to the body of laws. We tend to perceive productivity as the amount of legislation that is passed.

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But when it comes to laws, more isn't always better. There's merit in throwing out regulations no longer needed and repealing over-burdensome laws. That's exactly what we've done in South Dakota. When I took office, I began a "red tape review" to eliminate unnecessary statutes and rules. To date, under this initiative, we have eliminated over 400,000 words of red tape.

Since we became a state in 1889, the South Dakota Legislature has balanced the budget every year. We don't do it with accounting gimmicks, either. We don't push one year's expense into the next. We don't use one-time windfalls to fund ongoing expenses. We never issue general obligation bonds. And we don't raise taxes.

"Thanks to our history of fiscal responsibility, it is likely South Dakota will continue to be the place to do business."

Many states are starting to balance their budgets again. But far too many of those other states have long-term liabilities—unfunded pension obligations and large general obligation liabilities. In South Dakota, we have neither of those things. Our state's pension is more than 100 percent funded. Other states will eventually be forced to confront those liabilities—probably at the expense of entrepreneurs and businesses.

Thanks to our history of fiscal responsibility, it is likely South Dakota will continue to be the place to do business. Businesses plan for the long term. When considering moving or expanding, they need stability and certainty. They need to know that government won't get in their way. That's what we can offer here in South Dakota.

For more information on doing business in our state, visit our economic development website at sdreadytowork.com.

—By South Dakota Gov. Dennis Daugaard