PIERRE - South Dakota business people who collect sales tax for state government could lose at least $1 million and possibly five times that much under a proposal that suddenly appeared Monday in the Legislature.
State law currently allows retailers to keep 1.5 percent of the state sales taxes they collect. The allowance is worth nearly $6 million annually, according to Shawn Lyons, executive director for the South Dakota Retailers Association.
The plan now in play in the state House of Representatives calls for reducing the allowance to 1.4 percent. Lyons said that would cost retailers about $1 million. There is a $70 monthly cap on the allowance.
Rep. David Anderson, R-Hudson, brought the plan to the House State Affairs Committee on Monday morning. The retailers didn't know until 20 minutes beforehand, according to lobbyist Bill Van Camp, who testified against it.
Anderson is House Appropriations chairman. He said legislators are searching for money to balance state government's budget. That work is scheduled to wrap up this week.
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Anderson said he has "no ill will" toward retailers. "I am looking at every possible way to balance the budget."
Anderson is using SB 106, one of the carcass bills that Sen. Ryan Maher, R-Isabel, and Rep. Kent Peterson, R-Salem, introduced as shells for possible later uses. Maher and Peterson are Republican assistant leaders in their respective chambers.
Rep. Mark Mickelson, R-Sioux Falls, called for the committee's acceptance of the Anderson amendment and commended Anderson "for looking outside the box."
Mickelson, the House speaker, said the amended bill would remain in play until the Joint Committee on Appropriations is done balancing the budget.
His father, Gov. George S. Mickelson, put the collection allowance into place. His successor, Gov. Bill Janklow, repealed it. The retailers overrode a veto by Gov. Mike Rounds in 2006 to restore it.
The change has a broader purpose beyond balancing the budget. The final paragraph of the amendment says:
"Any additional revenue available to the state general fund as a result of this Act shall be used to either balance the state's fiscal year 2018 budget or fund the Building South Dakota program."
Building South Dakota has a variety of components that promote housing construction and economic development in communities. Originally the Legislature took half of the unclaimed property revenue. Later Gov. Dennis Daugaard offered $30 million to cover three years.
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Now legislators realize the money is running out and they don't have a substitute.
Nearly all of the Republicans on the House committee Monday agreed with Anderson's amendment. "It's a very small amount. It's not burdensome," Rep. Tona Rozum, R-Mitchell, said.
Rep. Julie Bartling, D-Gregory, opposed the reduction in the collection allowance. "Agreements have been made with the South Dakota retailers," Bartling said.
The measure next moves to the House for debate.
