WEEK 9 SOUTH DAKOTA LEGISLATIVE REPORT

The final week of the 2023 Legislative Session was not without some challenges. It is important to review the history behind the sales tax to understand the Legislature’s tax cut. In 2016 the SD Legislature passed HB1137 which increased the state sales tax to 4.5%. The tax had been 4% since 1969. Gov Dennis Daugaard asked for the higher tax to help raise teacher pay because SD was in last place nationally for teacher pay. 63% of the proceeds would go towards increasing state aid to education, 34% for property tax relief and 3% for raising instructional salaries at the technical schools. At that time the House vote was 47 Ayes which was the exact number needed for a 2/3’s majority. A key part of that bill was a promise made that “If the state can enforce obligation to collect and remit sales tax on internet sales, the additional net revenue from these sales shall be used to reduce the rate of sales tax. (The Partridge Amendment) HB1137 is a bill that will lower the sales tax from 4.5% to 4.2%. It passed in the House 70 to 0 and 31 to 2 in the Senate on Thursday. This will result in the largest tax cut in the history of the state of SD. The Senate added an amendment that includes a sunset clause which means the legislature will have to either remove the clause or vote again on the tax rate before July 2027. The legislature evaluates all the budget analysis every year and makes adjustments that are in line with South Dakota’s growth. This has allowed us to develop a budget that addresses our states obligations as we try to reduce taxes and give the people of SD more money in their pockets. Passing of HB1137 honors the legislatures promise made in 2016.