Home > South Dakota > SD Ag Summit Part 5: Transportation Issues

SD Ag Summit Part 5: Transportation Issues

July 13, 2014
Jim Schmidt, Sen Mike Vehle, & Mike Steenhoek speaking in Deadwood. Photo by Ken Santema

Jim Schmidt, Sen Mike Vehle, & Mike Steenhoek speaking in Deadwood. Photo by Ken Santema

It’s time for part 5 of my posts coming out of the Governors Agricultural Summit in Deadwood, South Dakota. This post will focus on the session labeled Keys to Agricultural Development: Roads, Rails, & Rivers. If I were to give a subtitle to the session I would label it Senator Vehle’s Push for a Higher Fuel Tax.

The three panelists participating in this session were:

  • Jim Schmidt – Commissioner for Lincoln County
  • Senator Mike Vehle – Chairman of the South Dakota Senator Transportation Committee
  • Mike Steenhoek – Executive Director for the Soy Transportation Coalition

The video of this session can be found here (one and a half hours long). In this post I will focus on a few takeaways from the session.

Jim Schmidt

Schmidt stated that maintaining the transportation infrastructure is critical for South Dakota to remain competitive. He noted our road infrastructure is aging and deteriorating. But too much of his time was taken talking about “revenue enhancements”, otherwise knows as taxes. He says politicians are always saying No to new taxes and that is causing problems with our infrastructure. I think Schmidt’s comments are misleading. True South Dakota has very few outright tax raises, but our legislature and Governor find all kinds of fees and penalties to raise; which are essentially the same as taxes.

Schmidt then goes on to state that Counties are the local branch of government in South Dakota. It is counties responsible for roads, bridges, medical, rent subsidies, elections, public safety, etc… He then goes on to say there are only four sources of revenue for counties: property taxes, license registrations, wheel tax, and STIP funds. Schmidt blasted any counties that did not enact their wheel tax. He basically says counties that do not enact their wheel tax deserve the roads the get.

At the core of this presentation is the assertion that counties simply don’t get enough revenue to support their infrastructure. I actually tend to agree. But I disagree that the State should be involved and raise taxes on behalf of the counties. If the counties truly do need more revenue (which I believe they do), then the people of the counties should be free to find various ways to raise those revenues. A statewide tax increase that gets redistributed through the counties makes no sense. Let the voters of each county decide what is best for them. Unfortunately that is not what Schmidt was asking for. Instead I feel he is pushing for the higher fuel taxes that Senator Vehle wants.

Schmidt also made one comment I disagree with. He said that grinding roads back to gravel is going backwards. I disagree. Each road should be looked at on a case-by-case basis. I can think of at least a few roads right here in Brown County that should never have received oil. For low population areas gravel works much better than black top. Each county should look at what is best for each road, and not what some progressive politician thinks is better.

Senator Mike Vehle

There are a lot of things I would like to say about Vehle’s presentation, but I am only going to make a few comments in this post. Instead I will have to be spread my thoughts about Vehle’s push for fuel tax increases out over multiple posts. Last week I attended the Transportation Committee’s meeting in Aberdeen. I will expand upon Vehle’s fuel tax push in that post. His presentation in this Summit is worth watching though to see the current shape of roads and bridges.

I’ve heard Vehle speak on this a few times. Each time he likes to open up by saying everyone wants good roads, but nobody wants to pay for them. I actually disagree with him on this point to an extent. I think there are more problem with HOW government wants to pay for them. Vehle said multiple times that there were various ways being looked at to increase revenue for roads. But the only one he ever seems to push is higher fuel taxes.

Vehle gave an overview of the road conditions in South Dakota. I won’t go into the numbers. Basically to sum it up: our roads are failing. Nobody is going to disagree with him. Watch the video of the event to get the actual numbers.

Vehle is very unhappy the Federal Highway Trust Fund is about to run out. I personally think this is a great thing. I find it more of an opportunity than a threat. The state and counties can use this situation to remove their dependence upon the federal government to maintain the road infrastructure. That should be a winning opportunity in a conservative state. Should be….

Finally I will mention that Vehle thought the stimulus money was good because it gave a lot of money to the sate for infrastructure improvements. That fails to look at how much the stimulus further devalued the dollar. Again, a good conservative state should be looking at ways to handle its own infrastructure.

I’ll stop talking about Vehle until my post about the Transportation Committee hearing in Aberdeen.

Mike Steenhoek

Steenhoek made an interesting comment that the cost of infrastructure is what gives the US a competitive advantage in the world market. He went on to say the US is a “spending nation” as opposed to an “investment nation”. I would tend to agree. Our government in particular loves to spend money. But little of that money appears to be on investments. I will add one observation I’ve made about taxes and infrastructure in government. Somehow it has gotten in politicians minds that the only way to raise money for roads is through fuel taxes (user taxes). But money from the general fund can be used for anything, except transportation. It is odd that politicians are so single focused on just one tax being fixed with the users. Fuel tax may be the best way to go (I don’t know), but it seems odd that few politicians or special interest groups are willing to look at other options.

Throughout his presentation Steenhoek would mention fixed gas revenues (taxes) couple with rising transportation infrastructure costs. To fix this Steenhoek would index the fuel tax to inflation and put tax hikes on ‘cruise control’. That sounds all well and good. It would be much easier to do that than try to raise taxes on a continual basis. Personally thought I believe such a system would become viral in government taxation. I believe our state government would see the increased revenues and tie other taxes, fees, and penalties to inflation. Such a path would lead to a continual expansion of the state. I don’t know what the best answer is, but I am quite sure having a perpetually growing fuel tax is NOT the answer.

One interesting item brought up by Steenhoek was removing roads and converting them to cropland. I can think of many places in eastern South Dakota this can be done. The current grid system of roads in Eastern South Dakota is overkill in some areas. Simply removing some of those roads will save the counties some money, and allow for more farm-able land. I’m not sure if such a system would ever happen. But it is worth looking into.


I didn’t really think this session was all that interesting. Actually the whole session was nothing more than a pitch for Vehle to raise fuel taxes. I was hoping the session would focus more attention on the production requirements that are driving the need for improved infrastructure. It seems all three panelists were focused on raising revenue. True, revenue will probably have to be raised. But is growing the State’s power to raise taxes going to fix the problems local producers have moving product? Or would it make more sense for the State to cede more authority to the Counties and let the people of each County decide what is best for them? Should the producers that are tearing up the county roads have to help with a greater percentage of the revenue increases? I’m not sure about any of that. But I don’t think the three panelists cared about any of that either. They just want more fuel taxes and to have those fuel taxes increased in perpetuity.

PS. Yes, I am somewhat annoyed at the approach taken by Sen Vehle. I think a lot of it has to do with the smug look he got on his face anytime someone mentioned that Vehle should have been allowed to raise fuel taxes before.

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