South Dakota counties looking to upgrade jails, courthouses and other buildings want authority to use a sales tax to pay for the work rather than rely on property taxes.
State lawmakers on the Senate Local Government Committee agreed Wednesday evening. Returning in the late afternoon after the Senate concluded work, committee members voted 4-3 to recommend the full Senate consider the idea.
Currently state law sets a 4.5 percent general sales tax throughout South Dakota. State law also gives the option to municipalities to impose lower rates, and many communities use them.
A sales tax isn’t available to South Dakota counties, however. Senator Al Novstrup, an Aberdeen Republican, hopes to change that.
Novstrup led off testimony Wednesday morning for SB 65. It would allow counties to charge up to 0.5 percent sales for construction or care of courthouses, jails, incarceration reduction facilities, offices or space for caring for the poor.
A county-wide vote would be automatically triggered when a county commission decides a sales tax is necessary for a specific project.
Counties also could charge the tax to help pay for a regional jail facility in another county.
Various county officials testified about difficulties convincing voters to support higher county property taxes to pay for projects such as updating, maintaining or replacing century-old courthouses and jails.
A sales tax would apply to a broader group of people and could allow a county to more quickly pay down revenue bonds than property taxes would. The sales tax would end when the bonds were paid.
The Senate will consider the legislation next week. Tax increases generally require approval from two-thirds majorities, which are 24 of the 35 senators and 47 of the 70 House members.
Governor Kristi Noem, who took office January 5, pledged no new taxes or tax increases during her campaign last year.
Two-thirds majorities are needed to override a governor’s veto.
Senate co-sponsors include Democrat Troy Heinert, of Mission, and Republicans Bob Ewing, of Spearfish, Brock Greenfield, of Clark, Art Rusch, of Vermillion, Lee Schoenbeck, of Watertown, Wayne Steinhauer, of Hartford and Jordan Youngberg, of Madison.
The lead House sponsor is Representative Nancy York, a Watertown Republican who attended the hearing.
Other representatives who are co-sponsors are Republicans Hugh Bartels, of Watertown, Roger Chase, of Huron, Fred Deutsch, of Florence, Bob Glanzer, of Huron, Tim Goodwin, of Rapid City, Lana Greenfield, of Doland, Dayle Hammock, of Spearfish, Timothy Johns, of Lead, David Johnson, of Rapid City, Carl Perry, of Aberdeen, Tim Reed, of Brookings and Marli Wiese, of Madison.