David Becker, Legislative Research Council, distributed budget information (Document #3). The Governor's Office of Economic Development (GOED) provided a summary of their FY 2003 Budget Request (Document #4) and a handout called Building South Dakota (Document #5).

Chris Braendlin, Commissioner of the Governor's Office of Economic Development, started his presentation by going page by page through Document #5.

He reviewed the economic impacts of the last year. South Dakota has been negatively impacted in the areas of technology, travel, and tourism. The Office concentrates on companies promoting consolidation and retention.

Mr. Braendlin and Toby Morris, Governor's Office of Economic Development, in response to questions, described the Office's role in the refinancing of the Fetro project. Mr. Braendlin said it has been a challenging, cooperative effort and Representative Burg was complementary as to how well the process had worked.

Mr. Braendlin said there have been structural changes in the Office, with the aim of having all representatives answering to one person and consolidating some programs under one division.

He continued, reviewing the Goals of the Governor's Office of Economic Opportunity. In response to a question from Senator Dennert as to whether the state was promoting low-waged jobs, he said he could only speak for the Office of Economic Opportunity and that the REDI program tries to bring in companies that offer good paying jobs with living wages. Mr. Braendlin continued, describing the Office's marketing campaign and Web traffic. He also reviewed the GOED key indicator's, as detailed in the handout.

As described in the handout, he explained the responsibilities of the six regional representatives and presented a regional map for the committee's review.

He reviewed the REDI fund. In response to a question from Representative Burg, he said the Office is concentrating on the quality of jobs, versus the number of jobs created. Mr. Braendlin said there is less than a 1% loss from REDI loans and advised that the program mostly gives out loans, not grants in response to questions from Senator Madden and Senator Kleven.

Representative Clark had a question as to whether REDI was promoting the building of the South Dakota work force and wondered how many new people were moving into the state because of the REDI program.

Mr. Braendlin advised that 75% of the companies REDI works with are in-state companies and that REDI assisted companies are hiring South Dakotans. In response to Senator Kleven, he advised that

number of jobs, job quality, capital investment, the impact on the community, retention issues, etc. are all elements looked at in REDI fund loans. Since the inception of the REDI Fund, wages have increased from $6.03 in 1987 to $12.12 in 2001.

Mr. Braedlin then reviewed the MicroLOAN South Dakota program, reviewing a map of loans approved to date. In response to a question from Representative Pummel, he said there is a maximum of $20,000 ) on these loans over a five year period of time. He continued paging through the handout. He further explained the Venture Capital Investment program in response to a question from Senator Drake.

In reference the Workforce Development page of the handout, he said that the Office is sitting down with the technical institutions and universities and advising them of the companies that will probably come into South Dakota in the next three years, so that they can plan their educational programs, so the trained workforce will be there.

In response to a question from Senator Drake concerning the Governor's Math Science and Technology Council, Mr. Braendlin described the purpose of the program and advised that the program is funded by a grant that the University of South Dakota received from the National Science Foundation, and the state has no plans to staff the program. Also in response to a question from Senator Drake, he said there has been success with the Value Added Subfund projects and described where the six subfund projects were located. According to Cheri Rath, GOED, there are about six projects in the next year where the Office hopes to see big rewards.

Mr. Braendlin emphasized that the Davisco Foods International business is truly a high tech project. He also brought out that when companies come into South Dakota, they are interested more interested in the region than the community.

In response to additional questions Mr. Braendlin explained that the underemployment of South Dakotans is a selling point.

Ms. Marty Davis, Governor's Office of Economic Development, further explained the REDI fund. She explained the program has six full-time FTE's and thirteen board members. The Office has a history of eight unfilled FTE's from way back. Concerning these eight FTE's, presently the Office has contracts for4 FTE's, 1 FTE is being advertised, and 3 FTE's are not being advertised.

Senator Greenfield requested a listing of the average and median salaries for the Office. He also noted that $70.33 had been reverted from last year. She answered additional questions for Senator Greenfield regarding a community development block grant program. The Office will report further information back to Senator Greenfield on this program.

Senator Dennert had a question concerning the Future Fund. Mr. Braendlin reported that the balance

in the Future Fund is actually about $12 million and that several upcoming projects could draw the REDI fund down.

Ms. Marty Davis answered Representative Clark's question by saying that administration costs for REDI funds comes out of the REDI program.

The Office will provide Representative Clark with a breakdown in the Future fund workforce development and also the REDI fund administrative costs for 2001.