January 17, 2024 | 99th Session Begins

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

For The 99th Time – The Legislature Starts

It’s in the State’s Constitution.  The Second Tuesday in January the Legislature will convene.

And it did. 

Tuesday, January 16th is Legislative Day #5 (out of a scheduled 38 days).  There are 91 bills that have been introduced in the House of Representatives and 85 in the Senate: total = 176.  There will most likely be a total of 500+.  Last year there were 451 with many first-time legislators that may have been just warming up.

Missing Legislators.  Senator Jessica Castleberry (R-Rapid City) and Representative Jess Olson (R-Rapid City) both resigned last year because they have contracts that are approved as part of the appropriation process.  The state’s constitution says legislators cannot vote on bills that provide funds or payments that the same legislators will receive.  What isn’t as clear is how far down the contract trail is still considered a conflict.  Can a teacher serve in the legislature and vote on the school-aid formula even though the teacher’s contract is determined by the local school board not the legislature directly.

The Governor and the Legislative Leaders have asked the South Dakota Supreme Court to provide some clarification.  The two vacant seats were expected to remain open until after the court issues an opinion.  However, Governor Kristi Noem appointed Becky Drury to represent District 34 in the South Dakota House of Representatives, effective January 16, 2024.  Drury has served as a District 32 representative since January 2021. Drury recently moved to District 34 and resigned her District 32 seat to accept the new appointment

Hundred Million Dollar Tax Break – Ends in Four Years – Unless

“And the beat goes on.”  Last year the legislature reduced the sales/use tax rate imposed by the state from 4.5% to 4.2% which will reduce the annual revenue by more than $100 million dollars.  Uncertainty about whether those funds might be needed in the future caused the legislature to put a “sunset” on the tax rate reduction so that the rate will return to 4.5% during the 2027 legislative session.

Rendering the reduction as temporary, the House of Representatives did not like this sunset provision last year and during the first week of this session, voted to repeal it by passing HB 1001.  The vote was 54-Yea–to–12-Nay.  The bill now goes to the Senate where it is sure to receive a vigorous review.

The South Dakota Chamber of Commerce and Industry provides this summary for members and is not going to take a position on the debate about the sunset.  This neutrality is embraced for several reasons not the least of which is the fact that there is disagreement between the House and Senate and, like any good family structure, we choose to remain silent while the parents are fighting.

Second, and more pertinent, the vote on the sunset will be taken when needed.  There have been countless sunset clauses that get postponed or repealed.  There is virtually no chance that any legislative body will stand by and allow a $100 million tax increase to automatically go into effect.  The circumstances at that time will be addressed by the Chamber as part of a tax policy debate. 

It should be noted that the revenue may very well be needed if the ballot measure to remove groceries from the sales/use tax gets on the ballot this November and is approved by voters.  At that time, the budgetary needs will be debated.  The rate may need to be returned to 4.5%; which reinforces the conclusion that the sunset provision on last year’s tax reduction belongs in the hands of legislators.

Thank you for your support of the South Dakota Chamber of Commerce & Industry.  Join us for Business Day at the Legislature, Thursday, February 22nd at the Ramkota Hotel in Pierre.  Details at https:/bit.ly/3teZ4PL

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