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SD House OKs adding dollar to Deadwood lodging tax

PIERRE -- The state House of Representatives gave final legislative approval Monday to let Deadwood add a dollar to its nightly lodging tax.

The vote was 39-31. House Speaker Brian Gosch, of Rapid City, ruled that the bill needed only a simple majority because it didn't directly raise a tax.

The legislation, SB 98, now goes to Gov. Dennis Daugaard for his decision whether to sign it into law.

It would allow Deadwood city officials to raise the occupancy tax per night to $3 from the present $2. The increase wouldn't apply in any other city in South Dakota.

Rep. Fred Romkema said Deadwood's gambling casinos generate millions of dollars annually for state government, local school districts and local governments in Lawrence County.

Romkema, R-Spearfish, said it's permissive legislation, and Deadwood gaming businesses are going through some "hard times."

Speaking against the bill, Rep. Don Haggar said Deadwood officials committed most of the revenue from the $2 tax to pay for a project.

"It's a tax increase, is the way I look at it," Haggar, R-Sioux Falls, said.

Deadwood's leaders deserve praise because they keep trying to find ways to strengthen the local economy, House Democratic leader Bernie Hunhoff, of Yankton, said.

"Why do we want to sit here and second-guess a town that is leading the way in America re-inventing itself?" Hunhoff said. "We should be applauding Deadwood, cheering them, and looking for ways to copy that in 200 towns across South Dakota."

The Senate approved the bill 18-16 on Feb. 10.

Rep. David Novstrup, R-Aberdeen, said Monday that Deadwood is using the occupancy-tax revenues in a legally appropriate way. The question is equitable treatment of all communities, Novstrup said.

"It should be open to everybody. Or it should stay the same for everybody," Novstrup said.

Rep. Timothy Johns, R-Lead, said the additional dollar could be used for promoting the Black Hills.

Rep. Dennis Feickert, D-Aberdeen, said he hasn't heard opposition from other communities and they could request a similar increase.

The Legislature extended the tourism tax last year and the Deadwood dollar was another request for a tax increase, according to Rep. Brock Greenfield, R-Clark.

"We need to be very careful," he said. "There will be others back here next year."

Greenfield said the revenue is predicted to be about $240,000 for Deadwood from the increase, and that will lead to other communities considering how they could gain from another dollar, too.

"So they will step up to the trough if this is successful," he said. "What we do here establishes precedent."

Deadwood has committed the current revenue from 95 percent of the lodging rooms, according to Rep. Lance Carson, R-Mitchell.

"I think we ought to hold them to that," Carson said. "They knew what they were giving away."

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