PIERRE, S.D. (KELO) — South Dakota’s sales and use tax would be cut from its current 4.5% to 4% in two steps over the next two years under legislation passed Wednesday by the state House of Representatives.
The 39-31 vote sends HB 1327 to the Senate for further action. Minutes afterward, Governor Kristi Noem told Capitol reporters that the Legislature’s revenue projections are too rosy.
The bill’s prime sponsor, Representative Chris Karr, R-Sioux Falls, chairs the House appropriations committee. He supported the revenue projections.
“I think this is the right time because the dollars haven’t been earmarked yet,” Karr told House members in a final statement before representatives approved the tax cut.
Karr would need to find eight more ayes for the 47 necessary to override a governor’s veto. The reduction would reverse the 2016 tax increase that then-Governor Dennis Daugaard urged lawmakers to pass.
Then-Representative Jeff Partridge, R-Rapid City, came up with the amendment that got the increase through the House six years ago. It calls for the tax to be reduced by 1/10th of 1% for every $20 million of sales tax revenue received from out-of-state retailers.
Daugaard wanted the increase to provide property-tax relief and raise teacher salaries.
Partridge now is the governor’s interim commissioner of finance and management. He watched the debate Wednesday from the House lobbyist gallery and heard discussion of his 2016 role.
“It wasn’t a promise. We put it in law,” Representative Liz May, R-Kyle, said.
Nearly all of the top House Republicans voted for the cut Wednesday, including Speaker Spencer Gosch, Speaker pro tem Jon Hansen and Republican assistant leader Chris Johnson. Two other prominent Republicans supporting it were Steven Haugaard, who’s challenging Noem in the Republican primary, and Taffy Howard, who’s running for the U.S. House Republican nomination.
House Republican leader Kent Peterson voted against it. So did House Democrat leader Jamie Smith, who’s running for governor, along with the seven other Democrats.
Representative Becky Drury, R-Rapid City, warned they were voting for an “ongoing” reduction of $70 million the first year and $140 million total. Drury raised the prospect of the November ballot question on expanding Medicaid eligibility that voters will decide. “If we vote in Medicaid, how are we going to pay for that?”
Representative Hugh Bartels, R-Watertown, said the economic good times that South Dakota has experienced during the COVID-19 pandemic aren’t going to continue. The retired banker recalled “stagflation” when people reacted to skyrocketing prices by buying cheaper goods and less of them.
“I’ve lived through it,” he said.
How They Voted
Yes – Aylward, R-Harrisburg. Beal, R-Sioux Falls. Blare, R-Ideal. Dennert, R-Aberdeen. Deutsch, R-Florence. Finck, R-Tripp. Fitzgerald, R-Spearfish. Goodwin, R-Rapid City. L. Greenfield, R-Doland. Gross, R-Elkton. Hansen, R-Dell Rapids. Haugaard, R-Sioux Falls. Hoffman, R-Eureka. Howard, R-Rapid City. Jamison, R-Sioux Falls. K. Jensen, R-Canton. P. Jensen, R-Rapid City. C. Johnson, R-Rapid City. Karr, R-Sioux Falls. Ladner, R-Hot Springs. Marty, R-Prairie City. May, R-Kyle. Mills, R-Volga. Milstead, R-Hartford. Mulally, R-Rapid City. Odenbach, R-Spearfish. E. Otten, R-Tea. Overweg, R-New Holland. Perry, R-Aberdeen. S. Peterson, R-Sioux Falls. Pischke, R-Dell Rapids. Randolph, R-Rapid City. Soye, R-Sioux Falls. St. John, R-Sisseton. Vasgaard, R-Centerville. Weis, R-Aberdeen. Wiese, R-Madison. Wink, R-Howes. Gosch, R-Glenham.
No – Anderson, R-Hudson. Bartels, R-Watertown. Barthel, R-Sioux Falls. Bordeaux, D-Mission. Chaffee, R-Whitewood. Chase, R-Huron. Cwach, D-Yankton. Davis, R-Burbank. Derby, R-Rapid City. Drury, R-Rapid City. Duba, D-Sioux Falls. Healy, D-Sioux Falls. Keintz, D-Eden. Koth, R-Mitchell. Lesmeister, D-Parade. Miskimins, R-Mitchell. Mortenson, R-Pierre. Olson, R-Rapid City. K. Peterson, R-Salem. Pourier, D-Pine Ridge. Reed, R-Brookings. Rehfeldt, R-Sioux Falls. Reimer, R-Chamberlain. Schneider, R-Huron. J. Smith, D-Sioux Falls. Stevens, R-Yankton. Thomason, R-Sioux Falls. Tidemann, R-Brookings. Weisgram, R-Fort Pierre. Willadsen, R-Sioux Falls. York, R-Watertown.