PIERRE, S.D. (KELO) — State lawmakers have given final approval to legislation letting South Dakota municipalities charge higher local taxes on people who stay at hotels, motels and other lodging units.

The decision now is whether Governor Kristi Noem wants it to become law.

Senators voted 19-16 on Thursday for HB-1109. It would let municipalities choose whether to charge up to $4 or 4% per night.

The occupation tax has been capped at $2 since the Legislature established it in 2005.

The House passed the increase 45-23 on February 1.

About 15 cities currently levy some form of the tax, according to the legislation’s lead Senate sponsor, Republican Tim Reed. He said those who use it often spend the revenue on promotional activities that attract visitors.

“This is about continuous improvement of our state’s number two industry, tourism,” Reed said.

Republican Sen. Jessica Castleberry said those promotional budgets don’t stretch far enough. “We must stay competitive or our residents and our businesses will both lose,” she said. “This is a small increase that will have tremendous impact.”

But Republican Sen. Jack Kolbeck opposed the increase, calling it “an extra tax.”

Republican Sen. Ryan Maher said people who live in South Dakota’s rural areas have to pay it when they stay overnight in urban areas for health care and other services. A $200 hotel room can cost $240 or $250 when all of the various taxes are added, he said.

“We don’t have any other options,” Maher said.

Republican Sen. Randy Deibert said the occupation tax provides relief to local taxpayers in the communities that choose to charge it. “It’s a great tool,” he said.

Republican Sen. Helene Duhamel said it helps tourism. “It’s a golden goose. It’s a revenue generator,” she said.

Republican Sen. Brent Hoffman didn’t support it. “Just because you don’t call something a tax doesn’t mean it isn’t one,” he said. “This is clearly a tax, a tax increase.”  

Republican Sen. Jim Mehlhaff previously served on the Pierre city commission. He said the tax can pay for other improvements, such as Hyde Stadium where baseball is played spring, summer and fall. “I think it’s a good investment in the quality of life,” he said. 

Republican Sen. Bryan Breitling pointed out that lawmakers haven’t allowed county government to charge a sales tax. “It’s a balance issue,” he said. “I just don’t think that’s fair.”