PIERRE, S.D. (KELO) — The two chambers of the South Dakota Legislature agreed Monday to keep negotiating over the size, type and duration of a tax cut — and all three proposals are now back in play.
Democrat Red Dawn Foster cast the tie-breaking yes late Monday afternoon as the state Senate voted 18-17 to bring back the governor’s plan to eliminate the state 4.5% sales-tax on groceries.
That came after the House of Representatives on Monday morning had declined to accept a $425 property-tax credit on owner-occupied homes that the Senate passed last week. Then the Senate on a 33-2 vote Monday afternoon sent a smaller reduction of the state sales-tax rate back to the House.
The tax talks likely will revolve around the conference committee that the two chambers appointed for the property-tax credit, HB1141. From the House will be Republicans Will Mortenson, Taylor Rehfeldt and Kirk Chaffee. The Senate will send Democrat Reynold Nesiba and Republicans Casey Crabtree and Lee Schoenbeck.
Republican Sen. Herman Otten revived Governor Kristi Noem’s grocery-tax elimination when he asked for “a third horse” to be considered, too, as an amendment to HB1094. It also would repeal an amendment from 2016 that was added to get the sales tax increased to 4.5%.
“Let’s just move this forward,” Otten said. “If we don’t have the option out there, it can’t be part of the discussion.”
But Schoenbeck argued that he has “almost no constituents” who want the grocery tax eliminated. Crabtree, the Senate Republican leader, said the grocery-tax repeal had been twice defeated in the House.
But Nesiba, the Senate Democrat leader, said the grocery-tax elimination should be part of the discussion. “We have three days left,” Nesiba said.
Said Otten, “Let’s not let the fear of a tax cut get in the way of cutting taxes.”
The Senate’s latest plan on the general sales-tax would lower the rate to 4.3% from the current 4.5%. The House version of HB1137 at 4.2% would have cut an estimated $104 million. The 4.3% rate would cut about $69 million, according to its lead Senate sponsor, Republican Ryan Maher. The two-year sunset remains on it.
Noem has repeatedly cited a February public-opinion survey, paid by her campaign fund, showing strong support for eliminating the tax on groceries. But Schoenbeck on Monday referred several times to it as “a push poll.”
Noem took questions from reporters at about 5 p.m. Monday in her office. Responding to Schoenbeck’s point, she cited a variety of polls that asked about repealing the grocery tax, including one conducted for KELOLAND News last year.
She left open the question of whether she would sign into law a property-tax refund. Noem said state government should be “treating everyone the same.”
“So over and over again, people in South Dakota have indicated that they want any kind of a tax cut to go to them, that they want one that’s fair, that doesn’t pick winners and losers and make sure they really do get some relief in this high-inflationary environment that they’re dealing with,” Noem said.
Regarding her recent poll, Noem said, “Those were incredibly powerful results. So people can define that poll however they want to. The fact of the matter was, was that questions in that poll asked people what they preferred in a tax cut, and overwhelmingly it was something that supported grocery-sales repeal.”
Noem said she questioned whether legislators really wanted to cut taxes. She said the cutting the general sales-tax rate a small amount wouldn’t be as noticeable as eliminating the sales tax on groceries. Both would remove an estimated $104 million or more from state government’s revenue stream.
“That’s why I feel like they just don’t want to do the hard work of really cutting taxes. If we eliminate the sales tax on grocery store items, it’s gone,” Noem said.