In the second time in as many months, Gov. Kristi Noem is making the case to state lawmakers on cutting the sales tax on food.
She made the second pitch during the annual state of the state address Tuesday.
Noem said removing the state sales tax on food would be the largest tax cut in state history. She made the promise to cut it during her reelection campaign.
Noem said one in four South Dakotans struggles to pay for groceries.
“By cutting the sales tax we will help every single family in this state. Then, they have the freedom to decide how to use those dollars to meet their needs and their family," Noem said. "Again, isn’t South Dakota all about embracing freedom and helping every single person—not just picking winners and losers?”
Noem said December revenues are up $10 million from legislative adopted estimates. During her budget address last month, Noem said the state is seeing $300 million in ongoing revenue growth.
But some Republicans are questioning whether the idea is good long term.
In the last three years the state has received billions in federal COVID stimulus money.
Lawmakers have received a memo from the Legislative Research Council that said if the state removes the federal stimulus money from the equation state sales tax collections went down.
State Senator Helene Duhamel is the majority whip. The Republican from Rapid City questions whether removing the sales tax on food is sustainable in the long term.
“In two years, that federal money is going away. Can we support these ongoing, permanent reduction in our sales tax?" Duhamel said. "It’s something we have to really look hard at. And I know we will. We will give it a fair hearing. Everybody is thinking about it, but there’s so many needs. So very many needs right now.”
Other proposals
The governor outlined other issues she wants to see the legislature tackle in 2023. That included a proposal to create a board that reviews ag land purchases by foreign individuals and entities.
Noem also wants to remove more barriers for licensed professionals to practice in the state.
Childcare was also among the topics Noem focused on. Her proposals included increasing paid family leave benefits for state employees and offering state employees $25,000 to cover adoption costs.
Democrats respond
Democrats lauded some of Noem's proposals, saying they have been Democratic goals for years.
“Gov. Noem really looked through the Democratic playbook and took every point today," said Democratic Rep. Erin Healy of Sioux Falls. "She knows our policies and priorities really, truly help families.”
Healy supports the push to eliminate sales tax on groceries.
“That’s a regressive tax," Healy said. "It disproportionately burdens low-income individuals and families. This has been an idea discussed by our caucus for a number of years.”
Noem will need the support of Democrats to get the idea through the legislature. A last-minute proposal barely passed the House last session. It failed in the Senate.
Some Democrats have been advocating cutting the food tax for nearly two decades. That includes Sioux Falls State Sen. Reynold Nesiba. He applauded the governor’s push.
He said he wishes he heard more from Noem about the state’s childcare crisis.
“She mentioned it in passing today, in being able to provide an insurance like product for them, but we really need state dollars,” Nesiba said. “If we’re really going to have affordable, high-quality childcare in South Dakota the state is going to have to be a partner in that to be able to provide that. I’d like to see some leadership there. Because it’s a workforce development issue and it’s good for our families as well.”
Republicans hold a supermajority in each legislative chamber.
Lawmakers will debate these proposals and many more in the coming weeks.
