New animal-disease lab on thin ice for state funding

Farm Forum

PIERRE – South Dakota’s state veterinarian said Tuesday he doesn’t know whether the governor will recommend funding next week for the new animal disease laboratory.

Dustin Oedekoven told state Animal Industry Board members that sources of money aren’t clear because state tax revenue hasn’t met expectations for the past four months.

Gov. Dennis Daugaard is scheduled to deliver his budget recommendations to the Legislature Dec. 6. Those recommendations would be for next fiscal year that starts July 1, 2017.

Oedekoven said he doesn’t know any more whether the governor can proceed with $10 million in one-time funding that was previously discussed.

He said $2.7 million has been spent so far on planning and design.

The Legislature last winter appropriated $1.8 million to help pay for the preliminary work.

The initial estimated cost for the lab was $68 million. It would be built at South Dakota State University in Brookings as a replacement for the animal disease lab already there. The current lab would be renovated after the new facility was built.

Oedekoven said Tuesday that $6.7 million has been trimmed from the project cost by delaying renovations of the existing lab.

He said one version of the funding plan called for $46 million of bonds that would be paid back over time from owners of livestock. He said raising the fee on livestock feed to $1 per ton could cover bond payments, based on 3 million tons of feed sold per year in South Dakota. The fee currently is 2 cents per ton.

A tax on anti-parasite medicine for animals currently helps pay for the lab’s operating costs.

Increasing the fee charged on pet food labels is also under consideration to help pay operating costs, Oedekoven said. The fee is $50 for two years now.

“There’s not a lot of appetite for using state general funds … on those bonds,” Oedekoeven said.

He said raising veterinary inspection fees at livestock auction markets might be another possibility. That would affect primarily cattle, with about 3 million head sold per year through physical auction markets. No one in the room knew how many head are sold by video, which wouldn’t be covered.

Jerry Vogeler of Fort Pierre, who represents livestock auction markets at the Legislature, said there would be limited contributions from swine and dairy producers and nothing from poultry producers through an auction tax, even though their sectors would benefit from the lab’s work.

One reason for the proposed new lab is to raise biosafety standards to Level 3 from the current Level 2. Approximately 100 faculty, researchers, adjunct professors and graduate students work in the lab.

Oedekoven said South Dakota is “in a tough situation” as far as the funding for the project.

“This revenue issue is a wrench in things,” he said.

The project isn’t out of the budget yet, he said, but he would have been more confident three months ago. He asked for a recommendation from the board.

Board member Steve Rommerein of Alcester, a pork producer, said increasing the fee on livestock feed doesn’t have a lot of support from the producer groups but he supports the project however the funding package winds up.

“Let’s just make it happen somehow,” he said.

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