Group hits snag in effort to let voters decide on grocery tax

If either the initiative or constitutional amendment gets enough signatures to make the ballot and is ultimately approved by voters, it would eliminate the 4.5% state grocery tax that has been a target of legislative reform for decades, mostly by Democrats.

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South Dakota votes have seen a steady stream of recent elections with statewide ballot measures to decide on. Cory Jones of Sioux Falls dropped his ballot in the deposit box after voting on Nov. 8, 2022, at Morningside Community Center. Photo: Courtesy Argus Leader, via South Dakota News Watch
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If Gov. Kristi Noem doesn’t fulfill her campaign pledge to repeal the South Dakota sales tax on food during the 2023 legislative session, voters may get a chance to decide the issue on the 2024 ballot.

But there’s already controversy about the wording of a proposed ballot measure and its potential impact on tax revenues.

Dakotans for Health, a grassroots organization that pushes for policy change through citizen initiatives, submitted proposals in July 2022 for both an initiated measure and a constitutional amendment that would prevent the state from taxing “anything sold for eating or drinking by humans, except alcoholic beverages, tobacco or prepared food.”

If either the initiative or constitutional amendment gets enough signatures to make the ballot and is ultimately approved by voters, it would eliminate the 4.5% state grocery tax that has been a target of legislative reform for decades, mostly by Democrats.

According to the nonpartisan Center on Budget and Policy Priorities, South Dakota is one of only three states that fully taxes food without offering credits or rebates for the poor, which repeal supporters say has a disproportionate impact on low-income families and individuals.


In my mind, the sales tax on food is at least as unpopular a tax as the personal property tax was. Still, it takes legislative action to repeal a tax. An announcement isn’t a done deal.

The food tax proposal continues a trend of using ballot measures to push for progressive priorities such as reproductive rights and Medicaid expansion at the ballot box in South Dakota rather than relying on the state legislature, where Republicans maintain a 94-11 advantage over Democrats heading into the 2023 session, which begins Jan. 10.

Bills aimed at repealing or reducing the food tax during the 2022 legislative session fell short, as they have in past years. Noem held a press conference Sept. 28 in Rapid City – six weeks before her re-election – trumpeting a proposal to eliminate the food tax. Her proposal comes at a time of rising inflation but also increased state revenue. She balked at calling a special legislative session to address the issue, and some legislators expressed concern over how the state will replace more than $100 million in lost revenue that would result.

“Someone needs to hold their feet to the fire,” said Dakotans for Health founder Rick Weiland of Sioux Falls, whose group also plans to put a constitutional amendment on the 2024 ballot to legalize but regulate access to abortion.

Yet as the food tax removal measure has taken shape, Weiland said the measure is being hamstrung by Attorney General Mark Vargo, who was appointed by Noem after Jason Ravnsborg was impeached and removed from office in June 2022.

The Legislative Research Council, which provides statutory and legal guidance for proposed ballot initiatives, submitted a fiscal note in October 2022 estimating that the state could lose $119.1 million in annual revenue by eliminating the state grocery tax if the measure passed. The LRC further stated that “municipalities could continue to tax anything sold for eating or drinking.”

Now that Gov. Kristi Noem has won re-election, her core campaign promise to repeal the state's 4.5% tax on groceries will take center stage in the coming legislative session. How will legislators determine if the state can afford to forfeit the $100 million or more in annual income?

That language differs from the official ballot explanation later released by Vargo on Nov. 9, which states, in part, that the measure “prohibits the state, or municipalities, from collecting sales or use tax on anything sold for eating or drinking by humans.”

Adding municipalities to the amendment would make it illegal for cities such as Sioux Falls and Rapid City to collect their own tax on groceries, which has not been proposed by Dakotans for Health or the governor. Most municipalities collect 2% on groceries on top of the state tax rate.

Sioux Falls City Attorney Stacy Kooistra wrote to Vargo’s office during the public comment period, asserting that such a ban would “significantly impact both our general fund and capital fund, which will likely result in the reduction of services and capital investments.”


Weiland, a former Democratic nominee for U.S. Senate who lost to Mike Rounds in 2014, said his group’s ballot effort is in a holding pattern because they can’t collect signatures for a petition that has conflicting statements from the LRC and Vargo’s office.

“Basically, the left hand didn’t know what the right hand was doing in the state capital,” said Weiland. “We’ve got a ballot explanation that says one thing and a fiscal note that says another. They’ve created a real problem for us and for the people we’re trying to help. It doesn’t make any sense to circulate (the petition) when the explanation says it affects municipalities and the fiscal note that says it doesn’t. Even if we get a favorable result, they’re in conflict. It will be confusing. People aren’t going to sign it.”

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Mia DePaolo, 6, helps her mother, Denise DePaolo, submit her ballot on Nov. 8, 2022,at the Career and Technical Education Academy in Sioux Falls. The 2022 ballot included a proposed initiated measure and constitutional amendment. Photo: Courtesy Sioux Falls Argus Leader, via South Dakota News Watch

Jim Leach, a Rapid City attorney who represents Dakotans for Health, said the group has two options. They can sue the state over the wording of the attorney general’s explanation or re-submit their ballot proposal and explicitly state that preventing the ability of municipalities to tax is not part of the measure. Both are lengthy processes that could endanger the group’s ability to meet the deadline for submitting signatures to get it on the 2024 ballot.

“I reached out to the Attorney General’s Office and have not received a response,” Leach told News Watch on Nov. 11. “I don’t understand what their reasoning is, but I do know that getting slowed down at this point is a big problem. The goal of this obviously is to allow the people of South Dakota to decide whether to maintain a state sales tax on food. Why not let the people decide?”

Tax cut would be largest in South Dakota history, governor says

Asked if he thought the goal of the contradicting documents out of Pierre was to delay the petition-gathering process for political reasons, Leach said no.

“I’ve known Mark Vargo for more than 25 years and I have the highest regard for his integrity,” he said. “I’m certain that this is not something meant to gum up the works. I’m certain that this is a genuinely honest dispute, but I don’t have a clue what his thinking is.”

LRC Director Reed Hollweger, in a written statement to News Watch, noted that “only the state was specified” in Dakotans for Health’s final submission (after the LRC had asked for clarification) and that municipalities are not legally defined as agencies of the state. “Therefore, LRC concludes the proposed (ballot measures) would not prevent municipalities from imposing a sales tax on food,” Hollweger wrote.

Vargo declined an interview request for this story. Stewart Huntington, a spokesman for the office, told News Watch that Vargo, “has issued his ballot explanation and that serves as his statement at this juncture on the topic.” Vargo will remain as attorney general until Jan. 2, 2023, when Marty Jackley, who ran unopposed in 2022, officially takes office.


— This article was produced by South Dakota News Watch, a non-profit journalism organization located online at

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