AT ISSUE: The latest report says the state is seeing some growth in its sales tax revenue. At the same time there is a group in South Dakota who want to raise the sales tax by one cent and plan to put the idea as a ballot measure in the 2012 November election. The revenue from that one penny would go just for public schools and health care providers. With increased sales tax revenue is that extra penny tax needed?
AN INITIATED measure may soon be coming down the pike to raise South Dakota’s sales tax by one cent. The state sales tax was last increased in 1969 from three to four cents, where it is today. It has been estimated that the one penny increase would raise annually about $175 million.
How that extra money would be divided apparently has not yet been established, but the Associated School Boards of South Dakota said if it got the entire $175 million annually it wouldn’t be enough to get the school districts across the state out of the hole. A 2006 study found that annual education funding in South Dakota is $233 million behind where it ought to be. The proposal, if passed by the people, the penny increase, would be permanent.
EVEN BEFORE the S.D. Attorney General is through preparing a title and an explanation on the measure to boost the sales tax, at least one South Dakota newspaper, the Rapid City Journal, opposes the proposal. But when that is done the advocacy group will start collecting at least 15,855 signatures on petitions for the ballot. That is the minimum number of signatures needed for the ballot question. And they must be turned in by this Nov. 1.
The Journal editorialized, “Initiative backers at this point have no plans to specify how the proceeds would be spent if voters were to approve a 1 percent sales tax increase. Unless they rethink that, it could prove to be a major flaw in the measure.
“Without specific language targeting how the money would be spent, there would be nothing to stop the state lawmakers from spending the additional sales tax proceed on any general fund expenses.”
UNKNOWN AT the time the Journal opposed the tax increase, it may have hit on an idea that may get more support from voters. That is rather than split that $175 million, or so, between our public schools and Medicaid providers, instead put this funding into the state’s general fund to be spent as needed by all of the state¹s departments. I kind of like that idea. While these two accounts are the largest spenders in state government, there are other departments in need of that extra money as well.
For example, the Department of Transportation is in serious need for more financing. The list for repairing or replacing state highways and bridges continues to grow. The infrastructure of most of our cities and towns are crying for updating. Grants from this one cent increase would go a long way in providing the financial assistance they need.
Senator Stan Adelstein, R-Rapid City, pushed a bill at the last legislative session to collect an extra penny sales tax just during the summer months for the next three years to do the same thing as this group is advocating. Unfortunately that bill died in committee. However, he has said he may try it again in the 2013 legislative session.
Rep. Susan Wismer, D-Britton, said she was encouraged by the proposal to increase the sales tax by one cent.
“It will give is a little more wiggle room for 2012,” she said.
Sen. Deb Peters, R-Hartford, is also optimistic about having more money available. As one article said, “Her one concern will be a real snag for the state’s revenue stream: flooding.”
FLOODING WILL be the big bug-a-boo when it comes to the state budget. Jason Dilges, commissioner of the bureau of Finance and Management, said, “Finally some good news from Pierre. While the state is seeing recent growth in sales tax revenue, flooding costs possibly could devour any gains this coming year.”
According to Dilges, the state, so far, has spent $14 million on flooding. The state has also loaned Dakota Dunes $10 million and Fort Pierre $5 million to battle the flood. And the clean up hasn’t even started yet. That bill will run into millions of dollars as well.
So, where are we at? What’s the bottom line to all of this? Most folks don’t like to pay taxes. That’s a known. But sometimes we have to whether or not we like the idea. At the same time sales tax has seen a welcome nine percent increase this last reporting period. Do we still need that extra penny added to the tax? At this point I would have to say yes. As I already explained some reasons why this money is needed. Nor can we forget that the flood of 2011 won’t be the last one for South Dakota….
Gordon Garnos was long-time editor of the Watertown Public Opinion, retiring after 39 years with that newspaper. Garnos, a lifelong resident of South Dakota except for his military service in the U.S. Air Force, was born and raised in Presho.