Group: Support exists for income tax

Organization held talks in 16 South Dakota cities

By CHRIS MUELLER The Daily Republic

Findings taken from a series of state budget discussions held in communities across South Dakota show many residents support a state tax on personal and corporate income, according to the organization that conducted the meetings.

Between October and December, discussions were held by the South Dakota Budget and Policy Project. Called South Dakotans Talking, the 18 discussions brought together a total of 475 people in 16 communities, including Mitchell, to learn the basics of the state budget and to discuss numerous budget-related issues in a nonpartisan environment.

A report on the discussions shows many participants suggested a personal and corporate state income tax as a way to increase revenues in the state. Collecting sales tax from Internet sales and removing local property tax freezes were also discussed, as was the removal of the state tax on essential items, such as food.

A "budget primer" was provided to participants at the beginning of each session to give them a better understanding of the budget process "so they can be active participants in decisions that affect their lives," a South Dakota Budget and Policy Project report says.

South Dakota was ranked as having the third most regressive tax system in the nation, which means those with the lowest income are paying the highest tax rate, according to the data presented to participants. It showed South Dakota's poorest 20 percent of non-elderly residents pay 11 percent of their income in state taxes, while the middle 60 percent pay 6.9 percent and the top 1 percent pay 2.1 percent.

An examination of the regressive nature and fairness of the state's tax system was frequently suggested by those taking part in the discussions, the report says.

"Reaching consensus about which state services we value and how we want to pay for them is the hard work of democracy," said Joy Smolnisky, director of the South Dakota Budget and Policy Project, in a news release. "Public support for state and local fiscal policy increases when citizens have the opportunity to understand, discuss and have input on options."

Participants were asked to choose from a number of discussion topics, including the state budget formation process, K-12 education, higher education, state revenue and Medicaid. According to the report, the topics chosen most often across all sessions were state revenue, K-12 education and Medicaid.

Discussion about developing and keeping quality teachers in South Dakota found teachers' low salaries were making it difficult to retain talent, which led to a merit-pay system being suggested for teachers. Merit pay was included as a provision of a teaching-reforms bill passed during the 2012 legislative session.

Consolidation of smaller schools and combining administrative positions across multiple school districts were also suggested.

On Medicaid, participants called for strengthening of the guidelines for using Medicaid as opposed to private funds, and asked the program be funded at a sufficient rate.

As for the state budget process itself, participants suggested adjusting deadlines for the budget to allow for more public input. Currently, the governor is required to submit a budget report to the Legislature each year in early December. The budget must be passed by the state House and Senate, and then signed by the governor before the end of the legislative session a few months later. The state's fiscal year runs from July 1 to June 30.

Participants also suggested furthering public education and increasing the transparency of the budget process.

As a result of the discussions, nearly 95 percent of those involved indicated they had a "much better" or "somewhat better" understanding of the budget process, the report states.

LifeQuest Executive Director Daryl Kilstrom, of Mitchell, praised the South Dakotans Talking sessions in a news release.

"I was pleased with the broad participation from businesses, education, health care providers, legislators and the public," he said. "It was encouraging to hear comments and dialogue from diverse perspectives. Working together can happen."

The South Dakota Budget and Policy Project is an arm of South Dakota Voices for Children. It was funded in part by a grant from the Bush Foundation, of St. Paul, Minn., and received financial support from the Northwest Area Foundation.

Shortly after the discussion was held in Mitchell, The Daily Republic received two letters that claim the information presented by the South Dakota Budget and Policy Project was biased and had a pro-tax agenda.

Smolnisky rejected the allegations.

"Our intent is to provide information, not solutions, and go over what the current circumstances are and what the current options are," she said Thursday in an interview. The organization's goal is to quantify the present fiscal situation, she added, and to provide research and alternatives "so citizens can look at the information and see what their own priorities are and seek to find consensus on that."

South Dakota Budget and Policy Project Director Joy Smolnisky speaks during the discussion session for a South Dakotans Talking event in October at Mitchell. Chris Huber/Republic