PIERRE, S.D. (KELO) — South Dakota’s 4.5% state sales and use tax must go down to 4.2%, state lawmakers have decided.
The $104 million reduction won final legislative approval Thursday afternoon. It includes a provision that calls for the cut to expire in 2027 unless lawmakers make a change.
The question now is whether Republican Governor Kristi Noem will allow it to become law. She could sign it, or let it become law without her signature, or veto it.
Her press secretary told reporters Thursday morning that she didn’t know whether the governor would have any statement.
Whether Noem could sustain the veto is unclear. Overriding a veto requires a two-thirds majority in each chamber — 24 in the Senate and 47 in the House.
Both chambers showed more than enough support Thursday for a possible override. The Senate approved the cut on a 31-2 vote. The House of Representatives followed 70-0.
Noem said last fall that she would ask lawmakers to eliminate the sales tax on groceries. The House showed no taste for that proposal, however. A Democrat-led effort began earlier this week to put a grocery-tax repeal on the 2024 ballot for voters to decide.
Democrat legislators split their votes on the general sales-tax cut Thursday, with most favoring it. Two Democrat senators voted no, but all seven of the House Democrats supported it.
Only two lawmakers spoke in the House.
House Republican leader Will Mortenson asked for a yes vote. “I think it’s a good plan. Is it exactly the plan we wanted on this House floor? No. We passed our plan over three different times off this floor very strongly, and I’m proud of the work and the unity shown by this body in doing so,” he said. “I think our process was sound. I think our product was sound.”
Then Republican Rep. Chris Karr spoke. The current bill’s prime sponsor, he had pushed for a tax cut for several years, working with Republican Sen. Ryan Maher and the former Senate president pro tem, Brock Greenfield.
Karr didn’t like the four-year sunset — he preferred the cut take permanent effect — but he accepted that other lawmakers expressed less confidence than he has that South Dakota’s economy could continue running at its current pace.
“There’s a part in here that I don’t necessarily care for, and there’s probably a part you don’t necessarily care for. You know, I was hoping we’d have just a nice, clean tax cut. There’s a sunset in here,” he said.
“But,” he added, “I’ll be here the next four years like I was the last four years saying the same thing, that we can afford to do this. The numbers are going to keep coming in, and I’m going to keep fighting to get rid of that sunset, make sure this is a meaningful, long-lasting tax cut for South Dakota. I hope you’ll all support me in voting for the largest tax cut, the largest tax relief, in the history of the state.”
The 70 House desks have two buttons — green for yes, red for no — and House Speaker Hugh Bartels called for the vote.
Every name on the board glowed green. “Mister Speaker,” House Clerk Pat Miller announced, “there were ayes 70.”
And with a shout, the standing ovation began.