State Legislature passes bills on sales tax reduction, $8 billion state funding plan
PIERRE, S.D. – Three sales tax reduction bills went before the South Dakota State Legislature last week, as did an $8 billion state funding bill. Now, the budget and the surviving tax cut bill are in the hands of Gov. Kristi Noem.
Here is a rundown of those bills, as well as one addressing legislative spouses as lobbyists.
Legislators will return for the 38th and final day – Veto Day – on March 27.
Sales tax decrease going to Gov. Kristi Noem
A 0.3% decrease in the 4.5% state sales tax is going to Gov. Noem for her signature — or veto.
With a 70-0 vote on Thursday, March 9, the House passed a conference committee compromise to reduce the state sales tax from 4.5% to 4.2% for four years. House members cheered when the clerk announced the unanimous vote.
On a 31 to 2 vote, the Senate also approved the measure, HB 1137R.
If signed by Gov. Noem, the bill would create taxpayer savings of $104 million annually. The Governor has hinted she might veto the general budget bill because she prefers eliminating a state sales tax on food.
Noem told the statehouse media last Monday she didn’t think a savings of 30 cents per $100 was much of a benefit to taxpayers and again pushed for her proposal to end the 4.5% sales tax on groceries.
Unless changed by a future legislature, the fractional sales tax cut would sunset on June 30, 2027, and revert to 4.5%.
“This is the end of a long and winding road to cut taxes in a significant way in over 30 years,” said Republican House Majority Leader Will Mortenson of Pierre. “It wasn’t an easy road.”
Republican Rep. Chris Karr from Sioux Falls, who has championed the idea for several sessions, said the fractional decrease in the broad sales tax is “good tax policy.”
“We have an obligation to do this,” he said.
He said he’ll work in upcoming sessions to remove the “sunset” provision and “make sure it is a long-lasting, meaningful tax cut.”
$8 billion state government funding bill passes
Without much controversy, the South Dakota Legislature passed a nearly $8 billion state government funding bill on Thursday, March 9.
In a session that occasionally found itself embroiled over some members’ actions and words, the 37th Legislative Day ended with leaders from both parties speaking civilly about the process and each other.
Sometimes, the end of the main portion of the session runs late into the night with plenty of impatience from fellow legislators. But not the end of the 98th Legislative Session.
In passing the budget bill, SB 210, the state is providing:
- 7% more for K-12 and technical education;
- A tuition freeze at state universities and technical schools;
- A 7% increase in teacher pay;
- A 5% raise for health care providers;
- 100% reimbursement for community-based Medicaid providers, and;
- A 7% pay increase for state employees.
“Everyone here is a contributor to the budget,” said Democratic Rep. Linda Duba from Sioux Falls, a member of the Joint Appropriations Committee. “This is the most phenomenal budget in my five years here.”
After thanking his Republican leadership team – and the seven Democrats in the 70-member chamber – Republican House Majority Leader Will Mortenson said the body did great work.
“We have delivered a product the people of South Dakota will be proud of,” Rep. Mortenson said.
House kills bill prohibiting legislative spouses from being lobbyists
South Dakota’s House of Representatives defeated a bill Monday, March 6, that prohibited a legislator’s spouse from being a lobbyist as SB 197 failed 24 to 44. The bill had previously passed the Senate.
Bill sponsor, Rep. Linda Duba, said the bill was not targeting any specific legislator, but closed an ethics loophole.
She said legislative staff sometimes don’t know how to treat a legislative spouse who is also a lobbyist, as spouses have special access to the chambers that others do not.
Rep. Duba also said the bill was designed to prevent conflicts of interest and financial gain.
However, opponents said the bill targeted Republican State Sen. Julie Frye-Mueller from Rapid City. Her husband, Mike Mueller, is an unpaid lobbyist for South Dakota Citizens for Liberty.
Both were involved in an incident with a Legislative Research Council employee for which the Senate censured Sen. Frye-Mueller.
“What our good friend from Minnehaha County (Duba) is trying to do is to bring their dirty laundry over from the Senate,” Republican Rep. Liz May from Kyle said. “Don’t allow them to drag their mess here. These kinds of bills cause for a lot of hard feelings.”
May tried to amend the bill to have the measure apply to legislators’ spouses if they worked in any capacity for the State of South Dakota. That amendment failed 13 to 55.
Unless housed to another bill or there is some other legislative maneuvering, SB 197 is likely dead this session.