Yesterday was the final day of the main run of the South Dakota and on it lawmakers passed a new state budget and the largest tax cut in state history – $104-million dollars by reducing the overall sales tax rate from 4.5% to 4.2%.
The tax cut issue drew the most attention during the session, but the budget is one lawmakers say constituents should be proud of.
It includes 7% funding increases for education and state employee salaries. All community service providers will see a 5% bump in funding while long-term care services will be funded at 100%.
The sales tax reduction passed the House 70-0 and the Senate 31-2 after days of negotiations between the two chambers. It has a few differences from the version passed by the House instead of the grocery tax repeal sought by Gov Kristi Noem.
The compromise version has a 4-year sunset clause, a House concession to Senate concerns that the state’s soaring economy might not last.
It also ends the 2016 Partridge Amendment dropping the sales tax rate a tenth of percent for every $20-million dollars in revenue from taxing internet sales.
Although it passed by chambers by overwhelming margins, there’s no guarantee the sales tax reduction will become law because it’s unclear if Noem will sign it. She’s already hinted at vetoing the budget if the legislature doesn’t repeal the grocery tax.