Gov. Kristi Noem threatens budget veto if sales tax cut is temporary
“It would create instability in our business and our tax environment as it creates an uncertain future,” Noem said of the two-year sunset clause.
PIERRE, S.D. — South Dakota Gov. Kristi Noem is raising the stakes heading down the final legislative stretch, releasing a video Feb. 28 that indicated a strong potential for a veto of the general budget if the current version of the sales tax cut makes it into the budget.
“They’ll present me a budget soon, and I’ll have to decide if it’s worth my signature or not,” she said, “I've proven in the past that I am willing to make hard decisions, and I will again, especially if it is something that respects our Constitution and the will of the people.”
The video comes just one day after the Senate Taxation committee put a two-year deadline on a cut of the sales tax from 4.5% to 4.2%.
Hurtling toward the final week of the session, which will see lawmakers finalizing the budget for the next year, a nearly five-minute video posted on social media by Noem criticized a move by the Senate Taxation committee to add a two-year shelf life to the three-cent sales tax cut.
If the legislature pursues a temporary tax cut and instead embraces a spending spree, it will hurt our families and our businesses.— Kristi Noem (@KristiNoem) February 28, 2023
They should pass the tax cut the people want: eliminating the sales tax on groceries. pic.twitter.com/6QlgT5pQzk
The revelation throws a wrench into what could already be tense negotiations between the Senate and House in what’s called a conference committee — a group of lawmakers from both chambers that come together to negotiate when each chamber passes a different form of a bill.
While Noem was already critical of the choice from the South Dakota House of Representatives last week to advance the permanent cut from 4.5% to 4.2% over her preferred cut to the sales tax on food, Noem still appeared ready to sign any tax cut that made it to her desk.
“I'm not leaving this session without cutting taxes,” Noem told reporters last week. “And it's going to be significant.”
However, the addition of the sunset clause yesterday, which Sen. Jim Stalzer, of Sioux Falls, the chair of the tax committee, indicated was the preference of Senate leadership, appears to have changed that calculus.
Under the current, amended construction, the three-cent sales tax cut laid out in House Bill 1137 would expire on July 1, 2025, two years after its implementation.
“It would create instability in our business and our tax environment as it creates an uncertain future,” Noem said of the change.
She further criticized part of the reasoning for the sunset clause — a potential 2024 ballot measure that removes the grocery tax altogether.
“My question to those legislators today is, then why not give the people of South Dakota what they want now?” Noem said.
Response from leadership in the House and Senate will be added as it becomes available.
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or email@example.com.