PIERRE, S.D. — It may have been the accumulating snow threatening a lengthy stay in Pierre should lawmakers belabor a tax cut deal. Or potentially the growing pressure of delivering on a promised tax cut.
But no matter the reason, Republican leadership in the South Dakota Legislature finally broke through on tax cut negotiations on Thursday, March 9.
“This has been a special situation where the House and Senate have worked together, maybe like never before,” Senate Majority Leader Casey Crabtree, of Madison, said during the hearing. “That remained true even during the most difficult negotiations at the last hour.”
Thursday morning, the committee of six tasked with hammering out details on the overall sales tax reduction voted 5-1 in favor of lowering the sales tax to 4.2%.
In the spirit of compromise, lawmakers attached a sunset clause scheduled four years down the road, meaning the sales tax rate would increase back to the current rate of 4.5% in July 2027 without future action.
ADVERTISEMENT
“In the house, it's no secret we prefer a permanent tax cut,” House Majority Leader Will Mortenson, of Pierre, said during the committee hearing “But it takes two to tango. It takes two to cut taxes. So I'm proud of the process we've been through.”
The deal still requires the approval of lawmakers in the House and Senate later Thursday, as well as the signature of Gov. Kristi Noem, who last week expressed her disdain for the idea of a temporary tax cut.
“The more the sales tax rate is flexible and mobile, the easier it will be to raise your taxes in the future,” Noem said in a statement on Feb. 28. “I will not allow it.”
With the heavy lifting out of the way on tax cuts, all that’s left for the final day in Pierre is to set increases to the “Big Three,” a budget moniker for core obligations including education, health care providers and state employees.
Mortenson indicated that a significant portion of lawmakers are in favor of going “above what the governor proposed,” referring to the 5% overall increase in Noem’s proposed budget unveiled last December.
The governor’s budget also included more targeted increases to certain hard-to-fill state roles and floundering Medicaid providers including nursing homes.
“I was willing to amend this tax cut to 4.2% [from the original plan of 4%] to make sure that we do first and foremost take care of our obligations,” Rep. Chris Karr, of Sioux Falls, a key voice in tax cuts this year and in years past, said after the committee. “Because I believe these dollars are surplus, meaning we're not taking them away from any of our needs.”
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or jharward@forumcomm.com.
The Trust Project
