SIOUX FALLS, S.D. (KELO) — In the span of three months, it appears Gov. Kristi Noem has changed her mind about her support for a ballot measure looking to remove the state sales tax on groceries.
Noem made removing the tax on groceries one of her campaign promises for re-election in 2022. During the 2023 legislative session, she testified in favor of House Bill 1075, which was defeated by a 8-1 vote by the House Appropriations Committee.
Outside of the legislature, Dakotans for Health has started seeking signatures on two ballot measures related to stopping the sales tax on groceries in the state.
In a report published by South Dakota News Watch, Jim Terwilliger said Noem would not support the Dakotans for Health ballot measures “as drafted.”
“The ballot measure would bring us out of compliance with streamlined sales tax and prevent the state from taxing tobacco or medical marijuana,” Terwilliger told South Dakota News Watch in an email. “The language from the governor’s proposal during session did not have these issues and is the better direction for the state.”
KELOLAND News reached out to both Noem and Terwilliger about the ballot measure. Any response will be added to this story.
Terwilliger serves as the commissioner of the Bureau of Finance and Management under Noem. His comments to South Dakota News Watch come less than three months after Noem told KELOLAND News “it would be impossible” for her to come out against the ballot measure.
South Dakota Attorney General Marty Jackley’s statement on the ballot questions says they could impact South Dakota’s obligations under a tobacco settlement agreement which came from legal action taken against cigarette manufacturers. These statements from Jackley go on to say that the state’s share of this agreement is roughly $20 million every year.
Noem’s comments came on March 1 at a bill signing event for Senate Bill 76 at Midwest Mechanical in Sioux Falls.
“I think it’s the right tax at the right time,” Noem said. “The legislature needs to realize if they choose a different tax cut this year, they better make sure they can afford the repeal on the sales tax on groceries in a couple years too. They’re going to have to do both.”
Lawmakers instead passed House Bill 1137, which reduces the general state sales tax rate from 4.5% to 4.2% through the summer of 2027. Noem signed the bill and it will go into effect in July. It’s estimated to save taxpayers slightly more than $100 million or 30 cents off every $100 spent in its first year.
Rick Weiland, co-founder of Dakotans for Health and former U.S. Senate candidate, brought up Noem’s support to KELOLAND’s Dan Santella in April.
“This is such a regressive tax, and I think Governor Noem saw that when she was campaigning, and it disproportionately affects low-income families,” Weiland said.
Weiland told South Dakota News Watch he believes Noem took all the arguments against the sales tax on groceries and “threw them in the trash.”
That’s not how Republican Rep. Will Mortenson saw the arguments against cutting the sales tax on groceries. Mortenson, who serves as the House Majority Leader, told KELOLAND News lawmakers looked hard at cutting the sales tax on groceries before supporting a cut to overall sales tax. He said the ballot measure is not the way to repeal the sales tax on food.
On Thursday afternoon, Weiland issued a news release saying “misconceptions” on the wording of the ballot measure could be easily fixed.
“The Tobacco Settlement does not prohibit a state from eliminating its sales tax on groceries. The 1998 Master Settlement Agreement is 280 pages long. What provision in it does the State claim might be affected? The State hasn’t said,” Weiland said in a news release that was updated Thursday afternoon. “If there is to be any rational discussion about this subject, we need to get beyond conjecture and the State needs to say what the alleged problem is.”
Weiland said if the initiated law passed, it could be amended by the legislature to fix any court ruling determining if it exempts tobacco or not from the state sales tax.
According to the South Dakota Secretary of State’s office, the initiated amendment to repeal the state sales tax on groceries needs 35,017 signatures to make it to the November 2024 ballot. The initiated measure to do the same, however, needs only 17,509 signatures.
The deadline for both efforts is May 2024.