Gov. Kristi Noem pushes for revived grocery tax cut after frenzied day in legislature
“My concern is that these legislators really don’t want to cut taxes,” the governor said.
PIERRE, S.D. — A frenzied day of back-and-forth tax cut debate on Monday culminated with Gov. Kristi Noem convening reporters to push for her preferred option, eliminating the groceries tax, which just days ago seemed defeated.
Noem called out Republican leadership, who previously had called the grocery tax cut irresponsible, and pressed for her revived proposal.
“My concern is that these legislators really don’t want to cut taxes,” Noem said Monday, March 6.
The governor was capitalizing on surprise momentum from an 18-17 vote in the South Dakota Senate just a half-hour earlier in favor of the grocery tax cut despite leadership in the chamber speaking against it. The debate was rife with horse-racing analogies.
Sen. Herman Otten, of Tea, said passing the proposal would make the tax discussion the “three-horse race” it was always destined to become.
“It’s win place show, and, right now, this one's in the show," responded Senate Majority Leader Casey Crabtree of Madison, suggesting the governor's plan had the least support of the three.
And, rounding the final turn into an all-out sprint, a three-horse race it will be.
All along, the South Dakota House of Representatives has been clear that a permanent drop in the sales tax from 4.5% to 4.2% is their preference. On Monday afternoon they voted to indicate that for the third time, passing an amended Senate Bill 104 by a 68-1 vote.
"We studied the issue for a month, we held numerous committees and decided on a broad-based tax cut that will help every single South Dakota,” House Majority Leader WIll Mortenson, of Pierre, said. “We want to cut taxes on food, fireworks and fencing supplies. We would not have proposed a $104 million tax cut if we couldn't afford it this year, next year and 10 years from now.”
The Senate, in turn, appears to want a more muted version of that proposal: the original sales tax cut, House Bill 1137, which was amended to both decrease the size of the tax cut and add in a sunset clause two years after implementation, is headed to negotiations between the House and Senate.
Speaking with reporters, Noem reinforced criticisms that taxpayers would notice little in concrete savings under this option.
“It'll be minimal compared to repealing the sales tax on groceries,” she said. “It's easier to move in the future.”
The second horse, a $425 rebate to every owner-occupied, single-family home in the state to help cover rising property taxes, is set for negotiation between the two chambers beginning Tuesday morning.
Noem scorched this policy, too, noting that it does nothing to actually reform the state’s property tax system.
“What they did was pass a rebate program to send people checks,” she said. “It's not very conservative. It's not very Republican. South Dakota doesn't do that and then try to sell it as property tax reform.”
Later in the press conference, Noem left open the possibility of vetoing a budget containing the tax rebate, mirroring a video from last week with similar comments about a temporary sales tax cut.
And, finally, the food tax rounds out the three-horse race.
During debate in the Senate, several oft-invoked criticisms were levied yet again at the grocery tax. Sen. Ryan Maher, of Isabel, said it would disrupt the “broad-based” nature of the sales tax. Senate President Pro Tempore Lee Schoenbeck, of Watertown, dismissed polling from the governor’s office on the issue as a “push poll,” which Noem disputed.
But a broad coalition including Senate Democrats, conservative Republicans and just enough moderate votes to push it over the edge, keeps the Noem-backed proposal alive.
“South Dakotans want a tax cut that's fair, that doesn't pick winners and losers and that makes sure that they really do get some relief in this high inflationary environment that they're dealing with,” Noem said.
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or firstname.lastname@example.org.