The excitement about passing a real tax cut for all South Dakotans didn’t last long. Two days after the House passed a two-step reduction of the state sales tax from 4.5% to 4.0%, Senate State Affairs snatched up that tax relief and said, no way.
House Bill 1327 went to Senate State Affairs Friday and met the Senate king Lee Schoenbeck standing at the door with his golf club ax in hand.
“Not one friend of mine has ever said, ‘Hey, when’s that sales tax going to go from four-and-a-half to four percent?’ Not one,” said Sen. Lee Schoenbeck, R-Watertown [Bob Mercer, “Senate Panel Nixes House Sales-Tax Cut,” KELO-TV, updated 2022.02.26].
That’s funny: three of Schoenbeck’s Republican Senator friends and ten of his Republican Representative friends all tested to the committee that the sales tax should go from four-and-a-half percent to four percent by July 1, 2023. So did Schoenbeck’s corporate friends at Americans for Prosperity, who spent $339,423.39 to do all the work for Schoenbeck’s ballot question committee to promote Schoenbeck’s Amendment C to prevent the voters from raising taxes or spending money.
But Schoenbeck “broke kneecaps” (his words!) to impose that extra half-penny sales tax in 2016, and he’s not going to let irresponsible ideology or shaky economic optimism undo that revenue stream. Just like Governor Noem, Senator Schoenbeck knows South Dakota’s surpluses are fake and our economy and budget are about to take a hard turn downward now that federal pandemic stimulus dollars are done. Unlike Governor Noem, Senator Schoenbeck will say so straight up:
The $150 million ongoing cut that the House wants would boomerang on lawmakers and hurt state government, Schoenbeck warned, saying there will be “a predictable fiscal cliff when this federal firehose of cash turns off” as the COVID-19 pandemic winds down. South Dakota received more than $8 billion in federal coronavirus aid that went to governments, businesses and families [Mercer, 2022.02.26].
Senate State Affairs voted 8–1 to kill HB 1327. The lone vote for HB 1327 came from Democratic Senator Troy Heinert, who said that even with that fiscal cliff coming, we could at least afford to relieve South Dakotans of the regressive tax burden on food. South Dakota’s 4.5% sales tax will thus remain in place, unmodified, keeping our teacher salaries from falling even further behind the lofty goals of the 2016 compromise.