South Dakota panel rejects tax hikes, suggests other funding plans for counties



(The Center Square) – Giving counties a bigger piece of the alcohol beverage tax and a state grant program to cover cybersecurity costs is among some of the recommendations from a study committee tasked with finding ways to help fund county governments in South Dakota.

Members of the County Government Funding and Services study committee on Wednesday shot down at least half of the legislative ideas brought forth for consideration.

Some of the discarded ideas include increasing election funding, allowing a levy adjustment for property taxes, letting counties keep a percentage of sales tax collected during county fairs, and having the state fund juror expenses.

However, the committee put its support behind making costs for court-appointed attorneys state-funded, which would cost the state approximately $45 million per year. Members also supported the idea to have emergency managers be state-funded, though they shot down search and rescue receiving state funding.

As for the distribution of the alcohol beverage tax, the committee supported counties receiving 50% of the state’s 2% alcohol tax (counties currently receive 25%) and decreasing the state’s share from 50% to 25%.

Sen. Jim Bolin, R-Canton, who pushed for the idea, said he saw the redistribution as a “very logical next step.” He emphasized that it would not be a new tax, just a shift in the percentages between the state and counties.

“This will cost the state $4.5 million,” Bolin said. “And that $4.5 million would be distributed to counties using the same formula that was established back in 2017.”

The committee notably did not push for ideas that included tax increases.

“We all know that any sales tax increase in the state of South Dakota is tough sledding and probably a waste of time,” said Rep. Roger Chase, R-Huron, who chaired the committee.

One of the ideas that was shot down would have been applying a 2% sales tax in counties.

Sen. Jim Mehlhaff, R-Pierre, said that over $7 billion in commerce “taking place out in the countryside” doesn’t have any sales tax applied to it other than the state sales tax.

“So if a 2% tax was applied to that, it would generate roughly $143 million,” Mehlhaff said.

Rep. Tim Reisch, R-Howard, said he felt a county sales tax bill would be dead on arrival, and the idea was eventually voted down.

Other legislative ideas receiving the study committee’s support include providing state funding for veteran service offices and mental health holds, among other things.

Members also decided to support a resolution around the state to provide a centralized property tax database.



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