Republican dominated SD Senate committee kills tax cut bill

PIERRE, S.D. - Republicans on the South Dakota Senate’s State Affairs committee killed a bill Friday that would have lowered the sales tax rate in the state by a half of a percent.

The bill, HB 1327, was being carried by a coalition of more conservative lawmakers in both the State House and Senate.

State Rep. Chris Karr (R-Sioux Falls) was the bill’s primary sponsor. Karr also chairs the Joint Committee on Appropriations, and said the state’s record revenues and strong economy would make cutting the sales tax rate from 4.5% to 4% possible.

“Our state is doing well, and we are going to have this organic growth over the next several years,” Karr told members of the committee.

Karr and other proponents also pointed to a promise made in 2016 to lower the rate at a later date when revenues allowed for it. That tax hike was brought about as a way to help raise teacher pay in the state.

“At the end of the day, this isn’t our money,” Karr said. “We have an obligation here, a duty to the taxpayers.”

Proponents of cutting the rate faced the most fiercest opposition from members of their own party, including Gov. Kristi Noem. During a press conference Tuesday, Noem argued that it would be irresponsible to lower taxes with lingering concerns such as inflation and uncertainty around the state’s agriculture industry, only to have to raise them again at a later date.

“I am looking for tax reductions every chance I get,” Noem said. “I just want to make sure that when we do that we are not back here pulling the rug out from under South Dakotans, and raising their taxes again.”

Senator Lee Schoenbeck (R-Watertown), who helped push the tax raise through the legislature in 2016, echoed Noem’s sentiment.

“To throw away (that) money instead of addressing serious bills that we owe, that is not what fiscal conservatives should do,” Schoenbeck said, pointing to projects in the state that needed funding like the Department of Corrections.

Several education organizations also testified against the proposal, arguing it could harm education systems down the road, given that was what the tax raise was originally for.

The South Dakota Retailers Association also testified against the bill.

Proponents argued that if taxes were not going to be cut in good economic times, then they may not ever be cut.

“We have unprecedented numbers of tourists, and unprecedented numbers of new South Dakotans moving here,” said State Sen. Brock Greenfield (R-Clark). “We are on the upswing, our revenues are seemingly off the charts... I would just hope that it resonates with some of the members on this committee that we can do this, and we should this.”

Every Republican member of the committee voted to send the bill to the “41st day,” killing it. The only committee member to vote against doing that was it’s lone Democrat, State Sen. Troy Heinert (D-Mission).