PIERRE, S.D. (KELO) — A plan to reduce South Dakota’s state sales-tax rate to 4.2% has moved another step forward in the legislative process, but the proposed cut from 4.5% would now would last just two years.

The Senate Taxation Committee on Monday endorsed the proposal from Republican Rep. Chris Karr after adding the sunset provision.

The amendment to HB-1137 would cause the tax cut to automatically expire June 30, 2025, and return to the 4.5% rate.

Republican Sen. Joshua Klumb said the amendment was a precaution. An initiated measure calling for grocery purchases to be exempt from the state sales tax could make the 2024 election ballot. Lawmakers don’t know whether the state government treasury can afford both tax cuts.

The tax panel’s chair, Republican Sen. Jim Stalzer, said Senate Republican leadership asked him to bring the amendment.

The latest revenue projections from the Legislature’s Joint Committee on Appropriations point to a $397 million surplus. Karr’s tax cut would cost an estimated $104 million. Governor Kristi Noem’s grocery-tax cut would cost about the same.

The House Appropriations Committee endorsed Karr’s proposal and set the governor’s plan aside last week. The House of Representatives voted 66-3 for Karr’s broader approach, sending it to the Senate, despite the Republican governor’s warning that the grocery-tax repeal looked likely to pass if it makes the 2024 ballot.

The Senate tax members on Monday then forwarded Karr’s plan to the Senate Appropriations Committee for further consideration.

“If appropriators feel confident, they can take this back off,” Stalzer said about the sunset amendment. 

Karr told senators he hadn’t been consulted about it. He said senators need to do what they think is appropriate. “At this time, I don’t support this amendment,” he said.

Should the grocery-tax repeal not make the ballot, or should voters reject it, the sunset means the Legislature would need a two-thirds majority to reinstate Karr’s cut. “It would be binding,” Klumb said. That will be an opportunity for the Legislature to re-evaluate it, too, he said.

It wasn’t clear Monday whether the sunset amendment also could need a two-thirds majority for Karr’s cut to pass.

The Legislature in 2016 raised the state sales tax rate to 4.5% from 4% with the additional revenue going to K-12 teacher salaries and property-tax relief. To get the increase passed, the House added a provision known as the Partridge amendment that called for the sales-tax rate to be gradually rolled back for every $20 million of additional tax revenue paid by remote sellers.

Karr’s bill also repeals the Partridge amendment. He said the rollback has never been used.

Republican Sen. Herman Otten was one of the tax committee’s members who said Monday that the Partridge amendment helped win his support for the 2016 tax increase. ““I believe it holds me honest to my intent and my vote,” Otten said.

Klumb agreed. He said Karr’s legislation fulfills a promise he made in 2016 when he voted for the tax increase. “I honestly didn’t think in my remaining time in the Legislature that I’d get to vote on a bill like this,” Klumb said about Karr’s bill. 

Republican Sen. Al Novstrup also was a yes vote for the 2016 tax increase. “I believe this was a commitment we made,” he said about repealing the Partridge amendment.

Stalzer’s sunset amendment, Novstrup said, gives the Legislature “an opportunity to fix it if we overshot the mark.”