Repeal of food sales tax rejected by South Dakota Senate

PIERRE, S.D. — A long-sought priority for South Dakota Democrats received an unexpected boost on Monday, March 7, from conservative House members, when the two contingencies joined forces to push through a tax receipt bill that was amended to also repeal the state's sales tax on food.

But a day later, hopes for the measure faded after the Senate GOP leadership voted against concurring with the bill's amendments or even with setting up a conference committee — which is typical in intra-chamber disagreements — to work out differences between the House and Senate versions of Senate Bill 117.

"This extreme bleeder needs to die," said Senate Pro Tempore Lee Schoenbeck, R-Watertown, before making the motion to resist the House's changes to the legislation.

Senate Minority Leader Troy Heinert, D-Mission, attempted to save the bill on a motion, but it failed in a voice vote.

The Senate ultimately voted 22-9 to not concur in changes in HB 117.

It was a remarkable, if anti-climactic end to a 24-hour swing in the House that saw a long-established priority for the state's meager Democratic Party picked up by the chamber's staunchest conservatives. The Democrats see the sales tax on food as disproportionately harmful to lower-income South Dakotans.

In remarks on Monday, Rep. Jon Hansen, R-Dell Rapids, called the repeal overdue at a time of record amounts of state revenue, including roughly $90 million in unappropriated funds.

"I think we ought to give it back to the people," said Hansen, who estimated the sales tax raises $82 million annually.

Christopher Vondracek / Forum News Service

South Dakota is one of only three states that taxes groceries. A bill to rescind that tax, brought by Sen. Reynold Nesiba, D-Sioux Falls, died earlier in the session.

But the two chambers — particularly Senate and House GOP leadership — have been at odds throughout the legislative session on spending priorities. Hansen brought the motion to repeal the tax on Schoenbeck's SB 117, a bill to pull back certain small fees on businesses.

Some Republicans stared warily at the proposal, with members pointing out losing such revenue could set off a shift and was opposed by business groups.

"This is a debate for another day," said Rep. Mike Derby, R-Rapid City.

But Democrats — albeit briefly — reveled in seeing a longtime priority debated on the House floor.

"Boy, we've talked about this a lot in the last six years, but it never seems it makes it out of committee," said House Minority Leader Jamie Smith, D-Sioux Falls. "It's the most regressive tax we have."

The House voted 47-22 to pass the measure onto the Senate. But Tuesday's action in the Senate means the proposal is almost surely dead.

Christopher Vondracek is the South Dakota correspondent for Forum News Service. Contact Vondracek at cvondracek@forumcomm.com , or follow him on Twitter: @ChrisVondracek .