YANKTON, S.D. (KELO) — Jean Hunhoff considered herself surprised when Gov. Kristi Noem announced a campaign promise to repeal the state sales tax on groceries.
While many Democrats, including Noem’s challenger Jamie Smith, called it a political stunt a few weeks before an election, Hunhoff believes it has reopened a door on discussing tax dollars in the state.
The Republican state Senator from Yankton knows the food sales tax and South Dakota’s budget well after serving as the co-chair for the Appropriations Committee. She said it’s too early for her to be in favor or against a cut or repeal for the state’s sales tax on food.
“Anytime we can do something for the taxpayer, I’m for that. But I think we don’t know what’s coming,” Hunhoff told KELOLAND News. “In my mind, I need to see the big picture. We have to see what is projected to come in and what are projected to be the expenses that we’re dealing with.”
Hunhoff is seeking reelection in District 18, which consists mostly of Yankton and Yankton County. Fred Bender, a farmer and mental health professional, is the Democrat candidate challenging Hunhoff.
Bender told KELOLAND News he is running for the state Senate because he believes state government is out of balance with 90% of the seats held by the Republican Party and he supports reducing the sales tax on food.
“I thought it was a good thing to do a year ago, two years ago and five years ago,” Bender said. “There’s nothing to say that it won’t be reinstated a year down the road after the elections are over. I am in favor of not having a sales tax on food, but there’s always always a caveat.”
Bender said his caveat with reducing the food sales tax may be about the type of food the tax would be reduced on. He suggested the tax should remain on food items “like soft drinks and potato chips” which can also be purchased through federal food benefits.
“I enjoy them as much as anybody else,” Bender said. “I was always disappointed, shocked, that it could be spent on some things that had absolutely nothing to do with what it was intended for.”
Noem’s announcement said ending the grocery sales tax would eliminate $100 million in taxes for South Dakotans. Hunhoff said all the numbers she’s seen show the food sales tax has been consistently between $90 and $100 million.
“That’s a large number and that is ongoing revenue,” Hunhoff said. “Expenses are not going to fall back, we see that continually, especially with the workforce. If you lose that, you’ve got to look at how you are going to replace that.”
Hunhoff described the state’s three big expenses as Medicaid providers, education and state employees. She said the more than $420 million in state government reserves from budget surpluses are in place in case there’s an economic downturn.
“We’ve got to continue to fund the needs of the state government, which are the needs of the people of South Dakota,” Hunhoff said. “It’s a delicate balance. We don’t have all the factors in place that we consider, and we’re not going to until the session starts.”
Bender said the budget surpluses should allow for reduced taxes or increased spending on areas that give a return on investment which he suggested would be public education.
“I’m not seeing much of a return on investment with the amount of money we spend on corrections,” Bender said. “We need to maximize things that work and get rid of things that don’t work. I don’t have the insights into the budget process, but I’m assuming there’s other places we can save money as well.”
Future tax discussions likely
Both Bender and Hunhoff said they expect more and more discussion regarding ways to change taxes in the state. Bender said the most common thing he’s heard from District 18 voters has been from local school boards struggling to keep operating and the high cost of healthcare and healthcare insurance.
“That points to me, passage of Medicaid expansion and the assistance that might provide to people,” Bender said. “I’m real happy to have that discussion.”
Hunhoff said there’s a lot of ideas surrounding the food sales tax.
“In the years that I’ve been in the legislature, when you take a tax away, it never comes back,” Hunhoff said. “There’s that and then if things don’t work out, there’s certainly discussions on what other options on how to raise taxes, if you need dollars because you don’t have it in the buckets that you were looking at.”