Staffing costs drive fee increase for program meant to deter livestock theft

The Brand Board is responsible for tracking livestock ownership in South Dakota counties west of the Missouri River, where cattle are more likely to roam across wide open spaces. Inspectors check to make sure that horses, cattle and mules sold or moved from those counties belong to the people who sell or move them.

Livestock sold at markets in western South Dakota are inspected for ownership when they arrive. Livestock sold privately also need inspections. At markets, the per-animal fees are withheld from the sale price and remitted to the Brand Board.

The new fee will be $1.45 per head starting Oct. 1.  Brand Board Executive Director Debbie Trapp told lawmakers they need the additional funding to pay for the ownership inspection program.

“This change is needed due to increasing personnel and operating expenses, and the brand board operates entirely on funds generated by the programs it administers,” Trapp told lawmakers.

Over the past two years, the board had to rely on $900,000 from its other programs to maintain the ownership inspection program, according to Brand Board Vice President Cory Bierle, “and we’re still behind.”

With a projected number of livestock inspected at 1.5 million, the fee is expected to generate an additional $601,000 through the remainder of the current fiscal year and $675,000 per fiscal year going forward. The state fiscal year runs from July 1 through June 30.

Though the number of animals is decreasing, “the numbers that we still have are there, and they all still need to be inspected,” Bierle said. “And we have to have the staff on hand inspect the ones that are present.”

Livestock inspection fees largely pay for staffing and staff-related expenses. The state Bureau of Finance and Management increased its per-mile reimbursement for state employees from 67 cents to 70 cents a mile last year.

There are 12 full-time inspectors, four of whom are regional supervisors, as well as office staff and livestock investigators. All are considered state employees, who typically receive annual lawmaker-approved salary increases. The most recent increased state employee pay by 1.3%. The board also employs 129 part-time local brand inspectors.

The board gets most of its funding through brand renewal registrations, which are $90 fees that livestock owners pay every five years to maintain the brands they use to identify animals as theirs. In recent years, the board’s needed to dip into those funds to pay for the inspection program.

Opponent says ranchers can’t afford fee hike

Rick Fox, a rancher from Hermosa, spoke in opposition to the change. He said it could be delayed a year to provide some financial relief for producers affected by the drought. The change would cost him about $400, he said.

“Most ranchers don’t have any kind of reserves. If their hay fund is low, then you’ve got to get it from a different fund or borrow the money,” Fox said. “The Brand Board has a pool of money sitting there that they can borrow from.”

Sen. Howard said that “now is not the time for a 45% increase,” citing financial struggles of West River ranchers.

Brand Board leaders said the increase represents an amount the Department of Agriculture and Natural Resources, South Dakota Stockgrowers Association and South Dakota Cattlemen’s Association could agree on.

The Brand Board still hasn’t reached the legal cap on how much it can charge per head for the inspection fee. Earlier this year, lawmakers and the governor set the cap at $1.65 per head.

“And based on projections,” for ongoing costs to the program, Trapp said, “chances are, we will be back in a few years, probably to increase it again towards the cap.”

Fox, the rancher who opposed the fee increase, told lawmakers that the ownership inspection program is “the best theft deterrent we have.”

“If I was not to brand my cattle, I’d be a little nervous about if one gets gone somewhere,” Fox said. “That’s our return address.”