A push for a permanent sales tax cut in South Dakota is dealt a setback

A bill to make a temporary sales tax cut permanent in South Dakota met a setback Thursday when Senate budget writers tabled the measure. But that likely isn’t the end of the issue.

“That would generally be the end, but nothing in the Legislature is ever truly dead,” said Republican Rep. Tony Venhuizen, a top House budget writer.

On Friday, the Republican-led House of Representatives had passed the bill in a 54-12 vote. The bill would make permanent a four-year sales tax cut passed last year. Bill sponsor and Republican Rep. Chris Karr cited the state’s healthy economy and said excess state tax revenue should go back to taxpayers.

Gov. Kristi Noem supports a permanent sales tax cut. Sales taxes are the biggest contributor to South Dakota’s state revenues.

Republican Senate Majority Leader Casey Crabtree told reporters Thursday that the Senate’s budget writers include some of the Legislature’s most conservative members, who are “extremely careful and cautious with the taxpayer dollar.”

“They feel that right now keeping that (temporary tax cut) in place is prudent and smart,” Crabtree said.

Republican House Majority Leader Will Mortenson said the Legislature can take care of the state’s financial obligations this year. The House is still behind a permanent tax cut, he said.

“I don’t think the appetite for that has gone away in the House,” Mortenson told reporters. A tuition freeze or cut has interest, too, he said.

South Dakota lawmakers still have several days for drafting and introducing legislation this session.

Noem urged the Legislature last month to make the four-year sales tax cut permanent. She campaigned for reelection in 2022 on a promise to repeal the state’s grocery tax, but the Legislature opted for the sales tax cut of 0.3%, or $104 million annually.

A proposed 2024 ballot measure would repeal the state’s grocery tax.