Noem outlines plan for $310 million surplus, including food tax cut
The state can expect $310 million in additional ongoing revenue going forward.
That’s according to Gov. Kristi Noem, who announced how she’d like to use those additional dollars in the coming months.
Noem wants to return about $100 million of that additional revenue back to taxpayers by cutting the state sales tax on food. It’s a promise she made during the recent campaign.
During the annual budget address, Noem said it’s a promise the state can afford.
“Eliminating the sales tax on groceries is the biggest way in my budget that we can help South Dakotan’s tackle the challenge of Joe Biden’s inflation and protect their hard-earned money,” Noem said.
It’s unclear where the tax cut will fit as the legislature ultimately crafts the state budget. Some anticipate it’ll take until February or March before lawmakers are certain the state can handle the tax cut in the long term.
During the speech, Noem told the legislature that the nation is paying attention.
“Whether you like it or not, people now know where South Dakota is. They see this state as a beacon of hope—a place of liberty,” Noem said. “How you decide to govern, how you budget, and you communicate to our people will be watched. It will be evaluated, and it will be judged.”
Noem is also proposing the state invest $22 million in nursing homes. Fifteen facilities have closed in the last five years. Dozens more are in critical financial need. Advocates say part of that is due to the state’s Medicaid reimbursement rate.
Noem wants to give a five percent cost of living increase to the “big three”—state employees, education and community health providers.
Democrats said that is not enough to cover inflation increases over the last two years.
"We need 10% across the board increase to simply allow essential workers to be protected from inflation whose existence the governor mentioned multiple times in her speech," said incoming Senate Minority Leader, Democrat Reynold Nesiba.
Democrats want to see more to address childcare needs in the state. They're supportive of Noem's push to cut the state sales tax, paid parental leave and free college tuition for National Guard members.
“Democrats are pleased that the Governor is claiming three of our priorities as her own," Nesiba said. "We look forward to working with our Republican colleagues to bring these into reality.”
Noem is recommending the state take a multi-year approach to fund building a new state penitentiary. She wants to use $52 million to purchase land and conduct an engineering study. She also wants to spend $25 million in one-time funding to finish building projects across the state.
Lawmakers will debate these proposals and many other budget items when they meet in January next year.