A bill to take the 4-year sunset clause off cutting the state sales tax rate from 4.5% to 4.3% approved by South Dakota lawmakers last year has been tabled by the State Senate budget writers.
The reduction, expected to trim state tax revenue by $104-million dollars a year, was easily passed a year ago by the Legislature, where Republicans have super-majorities in both chambers.
The bill making the cut permanent cruised by the House 54-12 last Friday with sponsor Chris Karr saying South Dakota’s healthy economy means the lost revenue isn’t needed and that excess state tax revenue should go back to taxpayers.
Gov Kristi Noem opposed cutting the sales tax rate last year, preferring her own plan to eliminate the grocery tax and produce the same amount of tax savings, but this year she’s backing the bill to make it permanent.
Senate Majority Leader Casey Crabtree told reporters yesterday the budget committee has some of the Senate’s most conservative members, who are “extremely careful and cautious with the taxpayer dollar.”
Crabtree said those members feel keeping the tax cut temporary is “prudent and smart” for now because conditions could change by 2027. One example is the proposed ballot measure for the November election repealing the grocery tax.
South Dakota lawmakers still have several days for drafting and introducing legislation this session.