Group hits a snag to let voters decide on food tax – Mitchell Republic

If Gov. Kristi Noem doesn’t make good on her campaign promise to repeal South Dakota’s food sales tax during the 2023 legislative session, voters may be given an opportunity to decide the issue in the 2024 vote.

But there is already controversy over the wording of a proposed voting measure and its potential impact on tax revenues.

Dakotans for Health, a grassroots organization that is pushing for policy change through citizen initiatives, put forward proposals in July 2022 for both action and constitutional amendment that would prevent the state from “taxing anything that people eat or drink.” Drink is sold, with the exception of alcoholic beverages, tobacco or ready meals.”

If either the initiative or the constitutional amendment gets enough signatures to put to the vote and is ultimately approved by voters, it would eliminate the 4.5% state food tax that has been the target of legislative reforms, mostly by Democrats, for decades.

According to the nonpartisan Center on Budget and Policy Priorities, South Dakota is one of only three states to fully tax food without offering credit or rebates to the poor, which proponents of the repeal say has a disproportionate impact on low-income families and individuals.

The food tax proposal continues a trend of using ballot measures to push progressive priorities like reproductive rights and expanding Medicaid at the ballot box in South Dakota, rather than relying on the state legislature, where Republicans hold a 94-11 advantage over Democrats along the way keep the 2023 session, which starts on January 10th.

As in previous years, bills aimed at repealing or reducing the food tax during the 2022 legislature fell short. Noem held a press conference in Rapid City on September 28, six weeks before her re-election, at which she announced a proposal to eliminate the food tax. Your proposal comes at a time of rising inflation, but also rising government revenues. She was reluctant to call a special legislative session to address the issue, and some lawmakers have expressed concern about how the state will replace more than $100 million in lost revenue that would result.

“Somebody has to put their feet in the fire,” said Dakotans for Health founder Rick Weiland of Sioux Falls, whose group also plans to include a constitutional amendment in the 2024 vote to legalize but regulate access to abortion.

But as the measure to eliminate the food tax took shape, Weiland said the measure is being obstructed by Attorney General Mark Vargo, who was appointed by Noem after Jason Ravnsborg was indicted and removed from office in June 2022.

The Legislative Research Council, which provides legislative and regulatory guidance for proposed ballot initiatives, filed a tax memorandum in October 2022 that estimated the state would lose $119.1 million in annual revenue by eliminating the state food tax could if the measure is passed. The LRC went on to state that “Municipalities could continue to tax anything sold for eating or drinking”.

This language differs from the official voting statement later released by Vargo on November 9, which said in part that the measure “prohibits the state or local government from levying sales or use taxes on anything related to food or beverages.” Drinking is sold by people. ”

Adding communities to the amendment would make it illegal for cities like Sioux Falls and Rapid City to impose their own tax on food, which was not proposed by Dakotans for Health or the governor. Most municipalities charge 2% on groceries in addition to the state tax rate.

Sioux Falls City attorney Stacy Kooistra wrote to Vargo’s office during the public comment period, claiming that such a ban would “materially impact both our general fund and our capital fund, which will likely result in a reduction in services and capital investments.” .

Weiland, a former Democratic nominee for the US Senate who lost to Mike Rounds in 2014, said his group’s voting efforts are on hold because they can’t collect signatures on a petition that has conflicting statements from the LRC and Vargo’s office contains.

“Basically, the left in the state capital didn’t know what the right was doing,” said Weiland. “We have an election statement that says one thing and a tax statement that says another. You have created a real problem for us and for the people we are trying to help. There’s no point in circulating (the petition) when the statement says it affects communities and the tax bill says it doesn’t. Even if we get a favorable outcome, they are in conflict. It will be confusing. People won’t sign it.”

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Mia DePaolo, 6, helps her mother, Denise DePaolo, submit her ballot on November 8, 2022 at the Career and Technical Education Academy in Sioux Falls. The 2022 vote included a proposed action taken and a constitutional amendment. Photo: Courtesy of Sioux Falls Argus Leader, via South Dakota News Watch

Jim Leach, a Rapid City attorney representing Dakotans for Health, said the group had two options. They can sue the state over the language of the Attorney General’s statement, or resubmit their nomination and state explicitly that preventing municipalities from being taxable is not part of the measure. Both are lengthy processes that could jeopardize the group’s ability to meet the deadline for submitting signatures to get them on the 2024 ballot.

“I’ve contacted the attorney general’s office and haven’t received a response,” Leach told News Watch on Nov. 11. The goal, obviously, is to give the people of South Dakota the choice of whether to maintain a state sales tax on groceries. Why not let the people decide?”

When asked if he thought the aim of Pierre’s conflicting documents was to delay the petition process for political reasons, Leach said no.

“I have known Mark Vargo for more than 25 years and I value his integrity very much,” he said. “I’m sure this isn’t meant to spoil the works. I’m sure this is a really honest argument, but I have no idea what he’s thinking.”

LRC director Reed Hollweger noted in a written statement to News Watch that the final submission from Dakotans for Health (after the LRC asked for clarification) “only specified the state” and that municipalities are not legally defined as state entities . “Therefore, LRC concludes that the proposed (voting measures) would not prevent municipalities from levying a sales tax on groceries,” Hollweger wrote.

Vargo declined an interview request for this story. Stewart Huntington, a spokesman for the bureau, told News Watch that Vargo “has given his explanation of vote and that serves here as his statement on the matter.” Vargo will remain Attorney General through January 2, 2023, when Marty Jackley, who ran unopposed in 2022, officially takes office.

— This article was produced by South Dakota News Watch, a non-profit journalistic organization that can be found online at