Last year's celebrated war of words between Minnesota Governor Rudy Perpich and his South Dakota counterpart, William Janklow, may have marked a new low point in rhetorical rivalry between neighboring states, but lately the response has been action, not acrimony. In Minnesota, Perpich has promised to reduce the state's personal income tax, pumped $25 million into its economic development budget (up from $4 million six years ago), pushed for a reduction of the sales tax on capital equipment, and helped set up tax-creditworthy enterprise zones in 11 border-town communities.

Janklow, in turn, has become something of a media darling, earning feature profile treatment in The Wall Street Journal and Time magazine, among other publications. His biggest coup: changing state law to eliminate the interest ceiling and thus enticing Citibank to move its entire credit-card division from Manhattan to Sioux Falls.

Janklow also authorized legislation to change banking regulations that prohibited banks from buying insurance companies, and pushed South Dakota into the railroad business by buying 1,316 miles worth of used track from the Milwaukee Road rail network. Another stratagem -- selling 20,000 acre feet (out of 54 million in storage) of Missouri River water to coal-slurry pipeline operators -- has met with marked resistance from downriver states, but Janklow seems unperturbed, and unabashed, at all the controversy he has stirred up. He and Perpich even spoke kindly of one another after sharing a December trip to China.