2016 - February 22 Capitol-ism

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South Dakota Chamber Of Commerce - Capitol-ism E-Newsletter

February 22, 2016

Structuring Solutions for Schools – Staying Focused on Facts

Paraphrasing Mark Twain, “It ain’t what you don’t know that gets you in trouble.

It’s what you do know . . . that ain’t so.”

During Business Day at the Legislature, Chamber members witnessed an epic debate about how South Dakota will structure solutions facing the state’s education system.  HB 1182, the bill that would provide for a half-cent increase in the state’s sales/use tax, was debated on the floor of the House of Representatives and failed to pass by one vote, garnering 46 of the needed 47 votes.

During the debate, opponents asserted several themes repeatedly that while being great rhetoric simply don’t pass muster in the search for facts.

“This is the Largest Tax Increase in History.”  Not really.  In 1965, the state’s sales tax was increased from two (2) cents to three (3) cents, an increase of 50%.  In 1969, the fourth cent was added, an increase of 33%.  HB 1182 increases the rate from four (4) cents to four and one half (4.5) cents, an increase of 12.5%.    

Includes tax reduction Aside from historical comparison, over 34% of the money from the sales tax increase is being used to reduce property taxes. 

After the House approved an amendment, the revenue from HB 1182 is to be distributed with 63% dedicated to teacher salaries, 34% for property tax reductions and 3% for the technical institutes to use for instructional salaries.

The bill does not require the money go to teachers.   The initial directive that money go to teachers is contained in a separate bill being considered by the Senate.  Soon after debate on HB 1182 began, there was an amendment offered that requires schools to use 85% of the increased state aid for teacher pay, and any districts failing to hit that level would be required to pay the money back. 

There is enough money to pay teachers without the tax increase.  The first question that comes to mind about this claim is obvious, “What gets cut?”  So far, only two options have been mentioned, using money from Medicaid services and diverting video lottery money from current use.

If there is Medicaid money that can be used, it is available for the most part because the federal payments for Medicaid increase this year as a result of the state’s economy shrinking last year.  Aside from the strain this may put on medical providers, the money is simply not assured to be available in the future.  Diverting money from video lottery assumes that the current use for those funds is no longer needed – which might be an unsettling surprise property tax payers.

This claim seems to contradict the statement made for years that legislators would give more money to schools but the money simply isn’t available in the budgets. 

Some problems are worth solving.  The South Dakota Chamber supports HB 1182 and the other parts of education reform proposed by Governor Daugaard.  Schools have the same workforce shortage faced by the business community.  One of the solutions used by businesses is making sure they are offering competitive salaries.  It’s time to make sure schools can catch up with the market for teachers.


Business  Caucus Results

Last Thursday, the Chamber held its 12th Business Caucus, during which business leaders address a series of multiple choice questions about issues facing business and those being debated by the legislature.  This year, there were 90 participants attending the Caucus, some 40 less than usual which was due to the Aberdeen Chamber delegation getting stuck in the Capitol by the crowd waiting to watch the debate on HB 1182 (see above).

Caution – The positions taken by the South Dakota Chamber of Commerce and Industry are determined by the Board of Directors.  Business Caucus is a snap shot of opinions from those attending the Caucus.  These opinions may not agree with the Chamber’s official position. 

Here is a summary report of responses from the 12th Annual Business Caucus.  2016 Business Caucus Report

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