>> THIS IS A PRODUCTION OF SOUTH DAKOTA PUBLIC BROADCASTING.

♪♪ >> TAX CUTS.

>> TAX CUT.

>> TAX CUT.

>> IS THAT TAXED OR NOT TAXED?

>> TAX COLLECTION.

>> TAXED.

>> GETTING TAXED BY OUR STATE.

>> CUT TAXES AND PROVIDE RELIEF FOR SOUTH DAKOTANS.

♪♪ >> HELLO, AND WELCOME TO "SOUTH DAKOTA FOCUS."

I'M JACKIE HENDRY.

THERE'S A BATTLE OF THE TAX CUTS UNFOLDING IN PIERRE, AND WE PROBABLY WON'T KNOW A WINNER UNTIL THE VERY END OF SESSION NEXT MONTH.

IF THE PHRASE "TAX POLICY" MAKES YOUR EYES GLAZE OVER A LITTLE, YOU MIGHT BE OKAY WITH WAITING UNTIL THEN TO LEARN MORE.

BUT THINK ABOUT THIS: THE DOLLARS AT STAKE COULD AMOUNT TO A COUPLE WEEKS OF GROCERIES FOR EACH SOUTH DAKOTAN.

OR IT COULD MEAN EXTRA MONEY TO BUY A NEW WINTER COAT OR A NEW PAIR OF SHOES FOR YOUR KID THAT NEVER SEEMS TO STOP GROWING.

THE STATE BUDGET IS LARGER THAN IT'S EVER BEEN, AND POLICYMAKERS ARE DECIDING JUST HOW MUCH OF YOUR MONEY THEY CAN SAFELY GIVE BACK TO YOU.

SO EVERY TIME YOU HEAR THE WORD "TAXES" TONIGHT, THINK ABOUT A WEEK'S WORTH OF GROCERIES, OR WHATEVER ELSE YOU MIGHT DO WITH A LITTLE EXTRA MONEY.

BUT LET'S START WITH THE GROCERIES.

THE HOMETOWN GROCERY IN VIBORG ALWAYS HAS A SALE.

AND SARA KLAWONN IS ALWAYS LOOKING FOR A BARGAIN.

SHE'S A MOM OF EIGHT KIDS, WITH THREE STILL YOUNG ENOUGH TO LIVE AT HOME.

>> TWO OF THEM ARE BOYS.

THEY'RE LIKE MONSTER EATERS!

>> YEAH!

[ Laughter ] LIKE MANY OF US, KLAWONN SEES THE PRESSURE OF INFLATION IN EVERY GROCERY RECEIPT.

BUT SHE'S HOPING FOR A LITTLE RELIEF, A REPEAL OF THE STATE'S SALES TAX ON FOOD.

>> WITH OR WITHOUT INFLATION, THE SALES TAX KIND OF STAYS THE SAME.

I KNOW THAT WHEN I GO TO CHECK OUT, WHEN THE SALES TAX IS BETWEEN $4 AND $10, THAT IS SIGNIFICANT.

THAT'S A SIGNIFICANT AMOUNT OF MONEY TO MY FOOD BUDGET.

>> KLAWONN SHOWS ME A RECEIPT FROM A RECENT VISIT.

SHE PAID MORE THAN $70 FOR DOG FOOD AND INGREDIENTS TO MAKE SNICKER SALAD FOR A CHURCH POTLUCK.

THE STATE AND MUNICIPAL SALES TAX TOTALED $4.42, ABOUT THE PRICE OF A LUNCHABLE.

>> THAT'S WHAT I'M NOT ABLE TO BUY.

>> WOW, A WHOLE LUNCHABLE.

>> WHICH DOESN'T SEEM LIKE THAT MUCH, EXCEPT WHEN YOU HAVE MULTIPLE KIDS, THEY ALL WANT A LUNCHABLE.

THEY ALL WANT TO PICK OUT WHAT IT IS.

WHEN THEY GO TO FREE SUMMER REC, THEY HAVE TO HAVE A LUNCH.

WHAT'S THE COOLEST LUNCH TO HAVE ONCE IN A WHILE?

IT'S A LUNCHABLE.

THAT'S THE DIFFERENCE.

>> BUT IT'S NOT AS SIMPLE AS SKIPPING THE NEXT CHURCH POTLUCK TO MAKE UP THE DIFFERENCE.

>> OF COURSE, EVERYONE TALKS ABOUT EGGS, BUT THERE'S A LOT OF OTHER FOODS THAT MAYBE A COUPLE OF YEARS AGO WOULD HAVE BEEN 99 CENTS, AND NOW THEY'RE $1.30, WHICH DOESN'T SEEM THAT MUCH UNTIL YOU ADD IT UP, AND YOU'RE STILL WITHIN THE SAME BUDGET.

>> MAC AND CHEESE IS A POPULAR DISH IN KLAWONN'S HOUSE.

SHE POINTS OUT THE PRICE DIFFERENCE BETWEEN NAME-BRAND AND GENERIC BOXES.

THE 99-CENT BOXES ARE CLEARLY MORE POPULAR.

ANOTHER COMMON STAPLE IN THE KLAWONN HOUSE IS HOMEMADE PIZZA.

SHE SPENDS $20 ON CHEESE, ANOTHER $10 FOR PEPPERONI.

>> BUT LET'S SAY YOU'RE A MOM, AND YOU HAD A TOUGH DAY AT WORK, AND THE KIDS ARE HUNGRY.

SO PIZZA IS THE FOOD, RIGHT?

YOU'RE NOT GONNA MAKE HOMEMADE PIZZA.

I CAN DO THAT.

I'M PRIVILEGED ENOUGH TO DO THAT BECAUSE I HAVE THE TIME.

YOUR GO-TO IS THE FROZEN ONES.

WELL, AND GOD BLESS THE STORE FOR ALWAYS HAVING SPECIALS, RIGHT?

THERE'S ALWAYS SOMETHING THAT MIGHT BE ON SALE.

BUT STILL... >> SOME OF THE FROZEN PIZZA BRANDS ARE ON SALE, BUT THEY'RE SMALL AND THIN CRUST, NOT MUCH OF A BARGAIN FOR A PARENT WITH THREE HUNGRY KIDS AT HOME.

THE KLAWONNS HAVE A DUAL-INCOME HOUSEHOLD, LIKE MANY SOUTH DAKOTA FAMILIES.

SARA'S HUSBAND WORKS FULL TIME AT A LOCAL BUSINESS AND IS A PART-TIME PASTOR.

SHE WORKS PART TIME AT A CHURCH IN YANKTON AND HOMESCHOOLS HER KIDS.

KLAWONN SAYS SHE FIRST STARTED PAYING ATTENTION TO THE FOOD TAX LAST YEAR, DURING GOVERNOR KRISTI NOEM'S RE-ELECTION CAMPAIGN.

IN SEPTEMBER, NOEM BLAMED THE BIDEN ADMINISTRATION FOR RISING COSTS OF FOOD DURING AN APPEARANCE AT A GROCERY STORE IN RAPID CITY.

>> SO TODAY I AM PROMISING THAT WE WILL FOLLOW THROUGH AND DELIVER THE LARGEST TAX CUT IN THE HISTORY OF THE STATE OF SOUTH DAKOTA.

[ APPLAUSE ] TODAY I AM PROMISING -- [ Applause ] I AM PROMISING THAT WE WILL REPEAL THE GROCERY FOOD TAX ON ALL GROCERY ITEMS IN THE STATE OF SOUTH DAKOTA SO THAT WE CAN BRING RELIEF TO OUR FAMILIES.

>> FOR DECADES, SOUTH DAKOTA DEMOCRATIC LAWMAKERS HAVE TRIED TO REPEAL THE STATE FOOD TAX.

WE'LL HEAR MORE ABOUT THAT A LITTLE LATER IN THE PROGRAM.

SARA KLAWONN HAS EMAILED HER STATE LEGISLATORS URGING THEM TO SUPPORT THE GOVERNOR'S PROPOSAL AND END THE SALES TAX ON FOOD.

UNTIL THAT HAPPENS, SHE WORRIES THE TAX AND INFLATED PRICES COULD EVEN PUT THE FUTURE OF HER HOMETOWN GROCERY STORE IN JEOPARDY.

>> I PERSONALLY KNOW PEOPLE THAT CROSS INTO MINNESOTA OR NEBRASKA JUST TO SAVE A FEW BUCKS, WHICH TO ME, THAT'S ALSO SAD, BECAUSE THEN YOU'RE TAKING REVENUE AWAY FROM SMALL GROCERY STORES LIKE THIS ONE THAT ARE AWESOME AND PROVIDE SO MANY FRESH FOODS, CONVENIENCE FOODS, EVERYTHING THAT YOU WOULD NEED SO YOU WOULDN'T HAVE TO DRIVE 40, 50 MILES.

THERE'S A LOT OF OTHER COMMUNITIES THAT ARE LIKE FOOD DESERTS.

THEY DON'T HAVE THOSE KINDS OF GROCERY STORES, AND I DON'T WANT TO LOSE THIS GROCERY STORE.

>> GOVERNOR NOEM'S PLEDGE TO REPEAL THE STATE SALES TAX ON GROCERIES IS THE LATEST IN A LONG HISTORY OF ATTEMPTS TO END THE FOOD TAX.

IN FACT, SOME ADVOCATES HAVE SPENT THE BETTER PART OF THE LAST 20 YEARS PUSHING FOR THE END OF A TAX THEY SAY CONTRIBUTES TO FOOD INSECURITY IN THE STATE.

BECAUSE OF THE GOVERNOR'S PROMISE, THEY THINK THEIR TIME HAS FINALLY COME.

LAWMAKERS SPEND EACH LEGISLATIVE SESSION HEARING TESTIMONY ON BILLS BEFORE VARIOUS COMMITTEES.

MOST OF THAT TIME, THEY HEAR FROM LOBBYISTS, BUT EVERY ONCE IN A WHILE, THEY HEAR FROM AN ENGAGED CITIZEN.

>> MY NAME IS CATHY BRECHTELSBAUER FROM SIOUX FALLS, AND I'M REPRESENTING MYSELF, EXCEPT I MIGHT MENTION THAT YESTERDAY AT THE SENIOR CENTER IN MY EXERCISE GROUP, WHICH WAS A WHOLE ROOM FULL OF PEOPLE, WHEN I SAID I'M COMING TO PIERRE TOMORROW TO TESTIFY TO GET THE TAX OFF GROCERIES, THERE WAS A BIG CHEER FROM EVERYBODY!

[ Laughter ] >> BRECHTELSBAUER IS THE VOLUNTEER COORDINATOR OF SOUTH DAKOTA'S CHAPTER OF BREAD FOR THE WORLD.

IT'S A FAITH-BASED GROUP THAT ADVOCATES FOR THE END OF HUNGER AND FOR SOLUTIONS TO POVERTY-RELATED PROBLEMS.

FOR DECADES, BRECHTELSBAUER HAS BEEN A KEY VOICE IN THE FIGHT AGAINST THE STATE'S SALES TAX ON FOOD.

WHEN WE INVITED HER TO THE SIOUX FALLS STUDIO TO TALK ABOUT THIS WORK, SHE CAME PREPARED.

AND YOU BROUGHT SOME ITEMS TODAY VERY SPECIFICALLY TO MAKE A POINT.

WHAT ARE SOME OF THE THINGS THAT YOU WANT TO HIGHLIGHT?

>> WELL, I THINK PEOPLE CAN IDENTIFY WITH MOST OF THIS.

IT'S PRETTY BASIC, AND, YOU KNOW, DIFFERENT FAMILIES BUY DIFFERENT THINGS, BUT ONE OF THE TROUBLING THINGS I FIND IS THAT WE'RE TAXING BABIES.

BABY FOOD, BABY FORMULA IS GETTING TAXED BY OUR STATE, AND YOU'RE MAKING IT HARDER FOR FAMILIES TO AFFORD THIS, AND IF YOU HAVE SPECIAL FORMULA YOU HAVE TO BUY, IT'S REALLY EXPENSIVE.

>> I CAN IMAGINE PEOPLE HEARING THIS AND THINKING, SURELY THE TAX IS NOT SO HIGH THAT IT'S ACTUALLY THE REASON PEOPLE ARE NOT ABLE TO AFFORD A CAN OF BABY FORMULA.

>> SURE, THERE ARE MANY REASONS, YOU KNOW.

THERE ARE A LOT OF REASONS FOR HUNGER, AND THAT'S JUST ONE OF THEM.

BUT IT IS ONE.

IT'S ONE WE CAN DO SOMETHING ABOUT.

>> LAWMAKERS HAVE CONSIDERED DOZENS OF BILLS TO EITHER ADJUST OR REPEAL THE STATE SALES TAX ON FOOD OVER THE PAST 20 YEARS.

GETTING RID OF THE FOOD TAX WOULD CUT MILLIONS OF DOLLARS IN STATE REVENUE, A NERVE-WRACKING PROPOSAL, ESPECIALLY FOR A STATE THAT DOESN'T ALWAYS HAVE AN ENORMOUS BUDGET SURPLUS.

IN 2004, VOTERS GOT TO HAVE A SAY ON A STATEWIDE BALLOT INITIATIVE TO END THE TAX.

THE MOST PROMINENT OPPONENT WAS THEN-GOVERNOR MIKE ROUNDS.

HE JOINED A PANEL DISCUSSION ON "SOUTH DAKOTA FOCUS" THAT FALL.

>> NOBODY LIKES TO STAND UP AND SAY, "WE WANT TAX DOLLARS."

BUT AT THE SAME TIME, THAT'S THE RESPONSIBLE POSITION TO TAKE IN MANY CASES.

SO OUR POSITION IS, IF YOU WANT THE SERVICES, AND IF YOU WANT THE PROGRAMS AVAILABLE AT THE LOCAL LEVEL, YOU HAVE TO COLLECT SOME TAXES.

IN THIS PARTICULAR CASE, THIS HAS BEEN A TAX WHICH HAS BEEN COLLECTED FOR MANY, MANY YEARS.

IT'S THE SALES TAX.

AND THE SALES TAX ON FOOD HAS BEEN COLLECTED IN SOUTH DAKOTA SINCE THE 1930S.

IF YOU WANT TO CHANGE THAT, AND IF YOU WANT TO GO TO A DIFFERENT TYPE OF A TAX STRUCTURE, THEN YOU HAVE TO EXPLAIN WHICH PROGRAMS YOU WANT TO CUT, OR YOU HAVE TO EXPLAIN WHERE THE NEW REVENUES WILL COME FROM.

>> ECONOMICS PROFESSOR REYNOLD NESIBA ARGUED IN FAVOR OF ENDING THE FOOD TAX, BECAUSE IT'S WHAT'S KNOWN AS A REGRESSIVE TAX.

>> LOW-INCOME PEOPLE ARE PAYING FAR MORE IN STATE AND LOCAL TAXES IN SOUTH DAKOTA THAN RICH -- THAN WEALTHY PEOPLE ARE.

AND THAT'S WHY THE INSTITUTE FOR TAXATION AND ECONOMIC POLICY ACTUALLY SAYS THAT WE'RE ONE OF THE "TERRIBLE TEN" MOST REGRESSIVE TAX SYSTEMS.

AND SO AT 4% FOR THE STATE AND 2% FOR MOST CITIES, 6% TIMES 52 WEEKS, IT TAKES THREE WEEKS OF FOOD OFF OF PEOPLE'S TABLES.

AND SO THE GOVERNOR'S TALKING ABOUT THE DIFFICULT CHOICES THAT HAVE TO BE MADE, BUT THERE'S FAMILIES IN THIS STATE MAKING DIFFICULT CHOICES EVERY SINGLE DAY TRYING TO FIGURE OUT WHETHER THEY'RE GONNA BUY PRESCRIPTION DRUGS OR PUT FOOD ON THE TABLE, AND THAT 6% IS ONE OF THE SOURCES OF HUNGER IN THIS STATE.

>> THAT BALLOT MEASURE ULTIMATELY FAILED.

TODAY NESIBA IS A STATE SENATOR AND MINORITY LEADER, ONE OF THE FEW DEMOCRATS ELECTED TO PIERRE.

>> I THINK EVERY YEAR THAT I'VE BEEN HERE, EITHER I'VE HAD A BILL OR SOMEBODY ELSE IN MY CAUCUS HAS HAD A BILL TO REPEAL OR REDUCE THE SALES TAX ON FOOD, AND WE WERE SURPRISED WHEN GOVERNOR NOEM PROPOSED THIS DURING THE GUBERNATORIAL CAMPAIGN.

>> HE'S NOT THE ONLY ONE.

NESIBA SPONSORED A BILL TO CUT THE FOOD TAX LAST YEAR, BUT IT DIED IN COMMITTEE.

LAWMAKERS ALSO DEBATED A PROPOSAL FROM REPUBLICAN REPRESENTATIVE CHRIS KARR TO CUT THE OVERALL SALES TAX BY HALF A PERCENT.

GOVERNOR NOEM ADDRESSED POTENTIAL TAX CUTS IN A PRESS CONFERENCE LAST FEBRUARY.

>> WE'LL WATCH THAT BILL.

WE'LL WATCH THE DEBATE THAT HAPPENS, BUT ALSO LOOK AT THE NEXT FIVE, SIX YEARS LOOKS LIKE FOR SOUTH DAKOTA AS FAR AS REVENUE.

I KNOW THAT THE LEGISLATORS ARE A LITTLE BIT MORE BULLISH ON WHAT REVENUE WILL LOOK LIKE IN TWO OR THREE YEARS.

I'M PROBABLY A LITTLE BIT MORE CYNICAL ON THAT.

>> BUT IN THE 11TH HOUR OF LAST YEAR'S SESSION, HOUSE REPUBLICANS USED A LEGISLATIVE MANEUVER TO APPROVE A REPEAL OF THE FOOD TAX.

THE BILL THEN DIED AT THE HANDS OF REPUBLICANS IN THE SENATE, WHO SHARED THE GOVERNOR'S CYNICISM ABOUT FUTURE REVENUES.

THIS YEAR, THE GOVERNOR'S CYNICISM IS GONE.

IN A BREAK FROM TRADITION, NOEM HAS NOT HELD WEEKLY PRESS CONFERENCES DURING THIS YEAR'S LEGISLATIVE SESSION.

BUT SDPB'S LEE STRUBINGER GOT THIS AUDIO FROM THE GOVERNOR FOLLOWING A PHOTO OP IN THE STATE CAPITOL.

>> I'M JUST A BIG BELIEVER THAT SOUTH DAKOTA HAS GOT HISTORIC REVENUES COMING IN.

WE'VE GROWN OUR ECONOMY PERMANENTLY.

WE HAVE SURPLUS REVENUE THAT REALLY BELONGS TO THE PEOPLE, SO IF WE CUT THE SALES TAX AND REPEAL IT ON GROCERY ITEMS, IT HELPS EVERY SINGLE FAMILY IN THE STATE.

>> THE ROUNDS-ERA CONCERN ABOUT REPLACING LOST REVENUE IS GONE THIS YEAR TOO.

HERE'S COMMISSIONER OF THE STATE BUREAU OF FINANCE AND MANAGEMENT, JIM TERWILLIGER, SUPPORTING THE GOVERNOR'S PROPOSAL BEFORE THE HOUSE TAXATION COMMITTEE.

>> EVEN WITH THIS TAX CUT, THERE IS STILL $208 MILLION OF NEW ONGOING REVENUE FOR INVESTMENTS IN MANY OF THE AREAS INCLUDING 5% INCREASES FOR K-12 EDUCATION, PROVIDERS, STATE EMPLOYEES, AND MANY OTHER INVESTMENTS.

OUR HISTORIC GROWTH OF REVENUE THE PAST FEW YEARS AND GROWTH IN OUR ECONOMY PAYS FOR THIS TAX CUT.

THERE IS NO NEED FOR OTHER TAXES OR OTHER REVENUE REPLACEMENT.

>> SINCE THAT TESTIMONY, REVENUE PROJECTIONS SHOW THE STATE CAN EXPECT $190 MILLION MORE THAN GOVERNOR NOEM'S INITIAL BUDGET OUTLINED.

THAT'S ENOUGH TO COVER LOST REVENUE FROM THE FOOD TAX WITH ANOTHER $90 MILLION LEFT OVER.

THERE ARE STILL PLENTY WHO OPPOSE ELIMINATING THE FOOD TAX, AND AT LEAST ONE ALTERNATIVE TAX CUT IS IN PLAY THIS SESSION.

STATE SENATOR REYNOLD NESIBA BLAMES THE GOVERNOR FOR FAILING TO CONVINCE MEMBERS OF HER OWN PARTY THAT THE FOOD TAX REPEAL IS FEASIBLE.

>> IN TERMS OF REACHING OUT, PARTICULARLY TO HER SENATE REPUBLICANS, I JUST DON'T THINK THAT SHE HAS WORKED THAT BILL AS HARD AS SHE HAS WORKED MANY OTHER BILLS.

>> INSTEAD, SENATE REPUBLICANS AND SOME LOBBYISTS SEEM TO FAVOR A POTENTIAL BREAK ON PROPERTY TAXES.

WE'LL HEAR MORE ABOUT THAT LATER IN THE PROGRAM.

BUT JUST AS THEY DID IN 2004, VOTERS IN 2024 WILL HAVE THE CHANCE TO ACT IF THE LEGISLATURE DOES NOT.

THE ATTORNEY GENERAL'S OFFICE HAS RELEASED EXPLANATIONS FOR TWO VOTER-INITIATED BALLOT PROPOSALS, AND BOTH REPEAL THE SALES TAX ON FOOD.

CATHY BRECHTELSBAUER REMEMBERS THAT 2004 BALLOT INITIATIVE.

>> I WAS PLEASED THAT 130,000 PEOPLE SUPPORTED IT.

I DON'T CONSIDER IT SOME TERRIBLE LOSS THEN.

I DON'T CONSIDER IT THE WILL OF THE PEOPLE THAT WE DON'T, YOU KNOW, WANT TO TAKE THE TAX OFF OF FOOD.

>> THERE'S MOVEMENT TO -- IF THE LEGISLATURE DOESN'T REPEAL THIS YEAR, THERE'S MOVEMENT FOR ANOTHER BALLOT INITIATIVE.

>> OH, NO, I THINK THE LEGISLATURE SHOULD JUST DO IT.

IT'S SO MUCH SIMPLER.

THEY CAN DO IT.

THEY HAVE THE REVENUE NUMBERS.

THEY CAN DO THIS.

♪♪ >> THOSE WHO SUPPORT ELIMINATING THE STATE'S FOOD TAX SAY IT'S A BROADLY POPULAR IDEA.

CATHY BRECHTELSBAUER SAYS A POLL SHE HELPED CONDUCT A FEW YEARS AGO FOUND PEOPLE PREFERRED THAT TAX CHANGE OVER OTHERS BY A 3 TO 1 MARGIN.

AND THIS WEEK, GOVERNOR NOEM RELEASED A POLL THAT SAYS 75% OF SOUTH DAKOTANS SUPPORT CUTTING THE GROCERY TAX.

BUT OPPONENTS HAVE THEIR OWN POLLS, AND SOME LAWMAKERS ARE HEARING CALLS FOR A DIFFERENT TAX BREAK.

PROBLEM IS, THERE'S A GOOD CHANCE THE STATE CAN ONLY AFFORD ONE.

THE FOOD TAX REPEAL SAW STRONG SUPPORT IN THE HOUSE TAXATION COMMITTEE EARLIER THIS MONTH, BUT THERE IS OPPOSITION.

THE SOUTH DAKOTA RETAILERS ASSOCIATION, FOR INSTANCE, WANTS TO KEEP THE FOOD TAX.

EXECUTIVE DIRECTOR NATHAN SANDERSON HAS SPOKEN AGAINST A VARIETY OF SALES TAX REDUCTIONS.

>> WELL, THE RETAILERS ASSOCIATION HAS BEEN AROUND FOR 126 YEARS, AND THE ASSOCIATION, GENERALLY SPEAKING, HAS OPPOSED REDUCTIONS ON THE SALES TAX ON FOOD IN THE LAST TWO DECADES 27 TIMES.

AND I MEAN, THERE'S A LOT OF REASONS FOR THAT, BUT PRIMARILY BECAUSE WE DON'T LIKE STATE INCOME TAXES.

AND IF YOU LOOK AROUND THE COUNTRY AT THE STATES THAT HAVE A LOT OF EXEMPTIONS IN THEIR SALES TAX, MOST OF THEM -- THE VAST MAJORITY OF THEM -- HAVE AN INCOME TAX.

AND SO OUR MEMBERS HAVE SEEN A LOW BUT BROAD-BASED SALES TAX AS A GOOD FUNDING SOLUTION FOR STATE GOVERNMENT IN SOUTH DAKOTA.

>> THE SOUTH DAKOTA RETAILERS ASSOCIATION HAS MORE THAN 4,000 MEMBERS, INCLUDING GROCERS.

THE GROUP POLLED ITS MEMBERS ON TAX POLICY LAST YEAR.

>> WE ASKED THEM, "DO YOU THINK THAT THE OVERALL SALES TAX RATE IS TOO HIGH, TOO LOW, OR ABOUT RIGHT?"

ALMOST 80% OF SOUTH DAKOTANS SAID THE SALES TAX RATE IS ABOUT RIGHT.

WHEN YOU ASK THAT SAME QUESTION RELATED TO PROPERTY TAXES, "ARE PROPERTY TAXES TOO HIGH, TOO LOW, ABOUT RIGHT?"

ABOUT HALF OF SOUTH DAKOTANS SAID THAT PROPERTY TAXES WERE TOO HIGH.

>> MEMBERS OF A LEGISLATIVE SUMMER STUDY ON PROPERTY TAXES HEARD A SIMILAR MESSAGE LAST YEAR.

REPUBLICAN CASEY CRABTREE OF MADISON IS THE SENATE MAJORITY LEADER.

HE SERVED ON THE INTERIM COMMITTEE.

>> THE LEGISLATURE FORMED AN INTERIM STUDY THAT FOCUSED ON PROPERTY TAXES BECAUSE WHAT WE'RE HEARING MOST OFTEN, CERTAINLY FROM OUR CONSTITUENTS, IS THAT PROPERTY TAX IS THE NUMBER ONE ISSUE, AND THERE'S DATA BEHIND THAT.

SOUTH DAKOTA RETAILERS DID A SURVEY THIS SUMMER THAT REALLY SHOWS, SPECIFICALLY IN SIOUX FALLS AND IN THE BLACK HILLS, THERE'S AN OVERWHELMING NUMBER OF FOLKS WHO HAVE AN ISSUE WITH PROPERTY TAX, ESPECIALLY ON OWNER-OCCUPIED, WHERE THE GROCERY TAX AND THE SALES TAX WERE PROBABLY RANKED MUCH LOWER THAN THAT.

>> BEFORE WE GET TO WHAT THE INTERIM COMMITTEE PROPOSED, A REFRESHER ON PROPERTY TAXES.

THE MONEY FROM PROPERTY TAXES IS THE MAIN SOURCE OF FUNDING FOR SCHOOL SYSTEMS AND LOCAL GOVERNMENTS LIKE COUNTIES AND CITIES.

PROPERTY TAXES ARE BASED IN PART ON THE ASSESSED VALUE OF THE PROPERTY, SO A HIGHER VALUE PROPERTY PAYS A HIGHER PORTION IN PROPERTY TAXES.

REPUBLICAN SENATOR JACK KOLBECK OF SIOUX FALLS ALSO SERVED ON THE PROPERTY TAX STUDY COMMITTEE.

HE EXPLAINS IT LIKE THIS.

>> WE'RE TAXED ON 85% OF THE ASSESSED VALUE OF YOUR FAMILY-OWNED HOME PROPERTY, BUT WITH THE INFLATIONARY RATE THAT HAS TAKEN PLACE OVER THE LAST COUPLE OF YEARS -- AS EVERYBODY WELL KNOWS, IT'S NO SECRET -- SOME OF THOSE HOMES HAVE GONE FROM A $200,000 HOME TO A $400,000 HOME.

AND WHILE ALONG WITH THAT, THE PROPERTY TAX MILL LEVY, NO MATTER HOW MUCH WE CAN LOWER IT IN THE, YOU KNOW, APPROPRIATIONS FOR THE STATE ACCORDING TO THE SCHOOL FORMULA, THE PROPERTY TAXES WENT UP.

NOW, WHETHER OR NOT THAT HOME IS WORTH THAT $400,000 OR WHETHER IT'S WORTH MORE THAN THAT OR LESS THAN THAT, THAT'S TO BE DETERMINED BY THE MARKET, BUT THAT'S PUT A, YOU KNOW, BURDEN ON OUR HARD WORKING-CLASS HOMEOWNERS IN THE STATE OF SOUTH DAKOTA.

>> KOLBECK IS AMONG THE LAWMAKERS WHO PROPOSED HOUSE BILL 1043.

IT WOULD REDUCE THE PROPERTY TAX BURDEN FOR HOMEOWNERS.

BUT THE STATE CAN PROBABLY ONLY AFFORD TO PASS ONE OF THE TWO PRIMARY TAX BILLS, EITHER ELIMINATE THE FOOD TAX OR REDUCE PROPERTY TAXES.

THE INITIAL VERSION OF THE PROPERTY TAX BILL MADE THE FIRST $100,000 OF A PROPERTY'S ASSESSMENT EXEMPT FROM TAXATION.

>> SO WHAT WE'RE DOING THERE IS THAT EVERY HOME-OWNED FAMILY HOME IN SOUTH DAKOTA, WE WOULD LOWER THEIR TAXES FROM ANYWHERE FROM ZERO ALL THE WAY UP TO MAYBE $350 TO $400 A YEAR, AND THAT MONEY JUST GOES RIGHT BACK IN YOUR POCKET AND HOPEFULLY, YOU KNOW, SPEND IT SOMEWHERE IN THE STATE OF SOUTH DAKOTA AND HAVE SOME FUN WITH IT.

>> BUT THE BILL HAS CHANGED SIGNIFICANTLY SINCE IT WAS INTRODUCED.

NOW IT CALLS ON COUNTY AUDITORS TO APPLY A $300 TAX CREDIT TO THE AMOUNT OWED ON EVERY SINGLE-FAMILY-OWNED HOME.

THEN THE COUNTY IS REIMBURSED FOR THOSE TAX CREDITS BY THE STATE.

IT'S THE SAME BASIC PRINCIPLE.

THAT'S $300 YOU'RE NOT PAYING IN PROPERTY TAXES.

SENATOR CRABTREE SAYS THERE'S A BENEFIT TO TARGETING PROPERTY TAXES INSTEAD OF SALES TAX.

>> THIS IS THE ONLY TAX CUT THAT ONLY GOES TO SOUTH DAKOTANS.

IT'S OWNER-OCCUPIED, SO WHEN FOLKS ASK, "WHY -- WHY DIDN'T YOU INCLUDE AGRICULTURE?"

WELL, IF YOU THINK ABOUT IT, LOTS OF OUR AG LAND IS OWNED BY DIFFERENT FOLKS WHO MAY NOT LIVE IN THE STATE, AND SO WHEN YOU FOCUS ON OWNER-OCCUPIED, YOU MAKE SURE THAT YOU GET EVERY SOUTH DAKOTAN IN THAT -- THAT OWNS THEIR HOME HERE.

>> BUT THAT SAME FOCUS IS THE VERY REASON PEOPLE LIKE SENATOR REYNOLD NESIBA ARE AGAINST THE PROPOSAL.

>> IT LEAVES OUT AN AWFUL LOT OF SOUTH DAKOTANS.

PARTICULARLY, IT LEAVES OUT A LOT OF FOLKS IN MY DISTRICT, IN DISTRICT 15, WHO ARE PAYING RENT.

THEY'RE NOT GOING TO GET ANY BENEFIT FROM THAT WHATSOEVER.

IN FACT, IF THE STATE FAILS TO FULLY BACKFILL THOSE SCHOOL DISTRICTS AND COUNTIES, IT'S POSSIBLE THAT THEY'LL SEE A REDUCTION IN SERVICES ON THINGS THAT MATTER A LOT TO THEM.

>> AND IT SOUNDS LIKE THE GOVERNOR AGREES.

IN A RECENT INTERVIEW WITH SDPB'S LEE STRUBINGER, GOVERNOR KRISTI NOEM SAYS SHE'S AWARE THAT SENATE REPUBLICANS ARE CONSIDERING A PROPERTY TAX CUT.

>> I JUST DON'T UNDERSTAND WHY THEY ONLY WANT TO HELP CERTAIN PEOPLE AND NOT THE REST OF THE FAMILIES IN THE STATE.

THAT ONLY HELPS THE WEALTHIER INDIVIDUALS THAT OWN PROPERTY IN THE STATE.

SO IF YOU'VE GOT A SINGLE MOM OUT THERE RENTING AN APARTMENT TRYING TO PUT FOOD ON THE TABLE FOR HER KIDS, IT BRINGS HER NO RELIEF WHATSOEVER.

>> BASED ON MY CONVERSATIONS WITH SENATORS KOLBECK AND CRABTREE, IT SOUNDS LIKE THE PROPERTY TAX CREDITS APPEAL TO THEM BECAUSE IT'S SOMETHING THEY CAN MORE EASILY ADJUST IF THE STATE NEEDS TO INCREASE REVENUE IN THE FUTURE.

>> I MEAN, THERE'S A REASON WHY THE WINDSHIELD IS BIGGER THAN THE REAR-VIEW MIRROR, AND THAT'S REALLY WHERE WE NEED TO BE FOCUSED ON.

YOU CAN'T LOOK AT, ESPECIALLY IN LIKE THE LAST TWO YEARS, WHEN WE HAD SO MUCH FEDERAL FUNDS COME IN HERE.

WE REALLY NEED TO LOOK AT WHAT'S GOING TO HAPPEN IN THE FUTURE.

ARE THOSE FEDERAL FUNDS GOING TO COME?

MOST OF US HOPE NOT BECAUSE I THINK THAT'S BEEN THE REASON WHY WE HAVE SO MUCH INFLATION.

>> WE HAVE TO BE KIND OF CAUTIOUS AS TO HOW MUCH WE WANT TO TAKE OUT OF OUR -- OUR SPENDING EVERY YEAR, BECAUSE THIS WILL BE ONGOING.

TO TAKE A TAX AWAY, YOU KNOW, IT'S HARD FOR YOU TO PUT IT BACK ON IF YOU GET INTO A SITUATION WHERE YOU NEED MORE MONEY.

♪♪ >> TAXES PLAYED A KEY ROLE IN THIS COUNTRY'S FORMATION, WITH COLONISTS OPPOSING BRITISH TAXATION.

TAX DISCUSSIONS CAN REVEAL A LOT ABOUT POLITICAL PRIORITIES AND IDEOLOGY AND THE NOTION OF FAIRNESS.

IN FACT, SOME OF THE STATE'S EXISTING SALES TAX EXEMPTIONS RAISED THE QUESTION OF MENSTRUAL EQUITY IN TAXATION.

YOU HEARD RIGHT.

YOU HEARD ME.

ALL THESE MATTERS CAME TOGETHER IN DEBATE OVER HOUSE BILL 1159, AN ACT TO EXEMPT FEMININE HYGIENE PRODUCTS FROM THE SALES TAX.

IT WOULD HAVE RESULTED IN A MUCH SMALLER REVENUE LOSS FOR THE STATE THAN OTHER MEASURES WE'VE TALKED ABOUT, BUT IT INSPIRED PLENTY OF CONVERSATION.

REPRESENTATIVE ERIN HEALY IS A DEMOCRAT FROM SIOUX FALLS AND PRIME SPONSOR OF THE BILL TO EXEMPT FEMININE HYGIENE PRODUCTS FROM THE STATE AND MUNICIPAL SALES TAX.

SHE INTRODUCED THE BILL IN THE HOUSE TAXATION COMMITTEE.

>> WELL, I THINK WE'RE ABOUT TO MAKE HISTORY TODAY BECAUSE I THINK THIS IS PROBABLY THE VERY FIRST TIME THAT WE'VE EVER TALKED ABOUT MENSTRUATION IN TAXATION.

BUT IN ALL SERIOUSNESS, I THINK THIS IS A REALLY IMPORTANT TOPIC.

EVERYONE HERE IN THIS ROOM KNOWS SOMEONE WHO MENSTRUATES.

AND I THINK IT'S TIME WE RECOGNIZE THAT MENSTRUAL PRODUCTS ARE NECESSARY FOR PEOPLE WITH PERIODS TO GO ABOUT THEIR DAYS AND TO GO ABOUT THEIR LIVES.

>> A RANGE OF NON-PROFITS AND MEDICAL ASSOCIATIONS SUPPORTED THE BILL.

THEIR ARGUMENT: SALES TAX ON FEMININE HYGIENE PRODUCTS CAN MAKE A DIFFERENCE FOR PEOPLE ON A TIGHT BUDGET.

AND THE TAX TARGETS PEOPLE WHO MENSTRUATE.

THE OPPONENTS OF THE BILL INCLUDED THE STATE BUREAU OF FINANCE AND MANAGEMENT, WHICH SAID THE TAX CUT WOULD COST THE STATE ABOUT $1 MILLION.

THE SOUTH DAKOTA RETAILERS ASSOCIATION ALSO OPPOSED THE BILL.

EXECUTIVE DIRECTOR NATHAN SANDERSON ACKNOWLEDGED THE ELEPHANT IN THE ROOM.

>> IT'S NOT LOST ON ME THAT THE VAST MAJORITY OF THE PROPONENTS OF THIS BILL ARE WOMEN AND THE OPPONENTS ARE MEN, AND SO I WANT TO KEEP THIS AS FOCUSED ON THE TOPIC AS WE CAN.

THE SOUTH DAKOTA RETAILERS ASSOCIATION HAS LONG SUPPORTED A LOW BUT BROAD-BASED SALES TAX.

IN SOUTH DAKOTA, WE DON'T HAVE AN INCOME TAX.

WE DON'T HAVE CORPORATE INCOME TAX.

HOW DO WE GENERATE REVENUE FOR THE STATE OF SOUTH DAKOTA?

PRIMARILY PROPERTY TAXES, WHICH DON'T GO TO THE STATE OF SOUTH DAKOTA.

THEY GO YOUR LOCALS.

AND THEN SALES TAX.

>> AND THAT'S ALL VERY TRUE.

BUT THE CRUX OF THE DEBATE ON THIS BILL BECAME THE LAUNDRY LIST OF SALES TAX EXEMPTIONS THAT ARE ALREADY PART OF STATE LAW.

THERE ARE DOZENS LISTED IN THE BUDGET SUMMARY BOOK.

FOR EXAMPLE, MANY ARE FOCUSED ON AGRICULTURE.

THERE'S NO TAX ON CERTAIN SEEDS SOLD IN QUANTITIES OF 25 POUNDS OR MORE.

NO TAX ON COMMERCIAL FERTILIZER IN QUANTITIES OF 500 POUNDS OR MORE.

NO TAX ON PESTICIDES, MOTOR FUEL, SWINE, AND CATTLE SEMEN.

AND THAT'S JUST THE FIRST PAGE.

THERE ARE ALSO SALES TAX EXEMPTIONS FOR MEDICAL SUPPLIES, LIKE INSULIN AND CERTAIN DRUGS.

REPUBLICAN REPRESENTATIVE JESS OLSON SITS ON THE HOUSE TAXATION COMMITTEE.

SHE TRIED TO EXPLAIN THE SIMILARITY TO HER SKEPTICAL COLLEAGUES, BOTH MEN AND WOMEN.

>> IT'S FOR A MEDICAL CONDITION.

SO IT'S A SMALL SUBGROUP.

IT'S NOT ALL WOMEN.

IT'S A PORTION OF PEOPLE DURING A PORTION OF TIME.

BUT OVER THE COURSE OF THEIR LIFE, A WOMAN WOULD PAY OVER 30 TO 40 YEARS, THAT TAX, SOMETHING THAT NO ONE ELSE PAYS, GIVEN THEIR MEDICAL CONDITION.

>> BUT HER COLLEAGUES WEREN'T CONVINCED.

REPRESENTATIVE LIZ MAY MOVED TO KILL THE BILL, CITING THE MANY EXISTING "CARVE-OUTS" IN STATE TAX POLICY.

REPRESENTATIVE CURT MASSIE AGREED.

>> I THINK WE HAVE A LOT OF VERY BROAD TAX RELIEF PROPOSALS OUT THERE THAT WE NEED TO BE CONCERNED ABOUT, AND I JUST HAVE CONCERNS ABOUT PICKING AND KIND OF CHOOSING.

SO THAT'S MY POSITION.

>> THERE WERE TIE VOTES OVER WHETHER TO KILL OR PASS THE BILL.

LATER IN THE WEEK, THE COMMITTEE FINALLY SENT HOUSE BILL 1159 TO THE HOUSE APPROPRIATIONS COMMITTEE WHERE A SIMILAR DISCUSSION PLAYED OUT.

NATHAN SANDERSON OF THE SOUTH DAKOTA RETAILERS ASSOCIATION AGAIN SPOKE AGAINST IT.

>> RIGHT NOW, WE CURRENTLY HAVE SALES TAX ON TOOTHPASTE, ON TOOTHBRUSH, ON BANDAGES, ON TOILET PAPER, ON SOAP, ON SHAMPOO.

THERE'S A WHOLE VARIETY OF THINGS THAT WE AS HUMANS USE ON A REGULAR BASIS THAT ARE SUBJECT TO SALES TAX IN SOUTH DAKOTA.

WE DON'T LIKE SALES TAX EXEMPTIONS OF THIS NATURE FOR ALL THE REASONS WE'VE TALKED ABOUT BEFORE.

WE DON'T WANT AN INCOME TAX, AND WE THINK THIS IS CERTAINLY A CONTINUING STEP TOWARDS ERODING THAT BASE THAT'S GONNA LEAD US TO LOOK AT OTHER OPTIONS.

WE CERTAINLY ENCOURAGE YOU TO OPPOSE THE BILL.

>> BUT REPRESENTATIVE ERIN HEALY MAINTAINS THIS SALES TAX IS DISCRIMINATORY.

>> WE ALL HAVE TEETH.

WE ALL NEED TO USE TOILET PAPER.

AND WE ALL NEED TO WASH OUR BODIES AND OUR HANDS.

BUT NOT ALL OF US HAVE PERIODS.

>> FELLOW SIOUX FALLS DEMOCRAT LINDA DUBA SITS ON THE HOUSE APPROPRIATIONS COMMITTEE AND MOVED TO PASS THE BILL.

>> IS THERE A SECOND?

IS THERE A SECOND?

>> OF COURSE THERE ISN'T.

THERE ARE EIGHT OTHER MEN IN THIS ROOM.

>> THE MOTION DIES FOR LACK OF A SECOND.

>> INSTEAD, A PROCEDURAL MOVE FROM REPRESENTATIVE JOHN MILLS.

>> I WOULD MOVE HOUSE BILL 1159 TO THE 41ST DAY.

>> SECOND.

>> THERE IS NO 41ST DAY OF THE LEGISLATIVE SESSION, SO THIS EFFECTIVELY KILLS THE BILL.

BUT REPRESENTATIVE MILLS THANKED HEALY FOR BRINGING THE ISSUE TO THE COMMITTEE'S ATTENTION.

>> AND PART OF MY REASONING FOR WANTING TO NOT MOVE THIS FORWARD TODAY IS THAT I THINK WE NEED TO BUILD SOME MOMENTUM FOR A BROAD REVIEW AGAIN OF ALL OF OUR TAX EXEMPTIONS, BECAUSE I THINK WE COULD DO SOME TRADE-OFFS IF WE HAD THAT CONVERSATION.

AND THIS WOULD BE ONE THAT I WOULD DEFINITELY BE IN FAVOR OF, BUT I WOULD WANT TO SEE SOMETHING GO THE OTHER WAY AT THE SAME TIME, AND I THINK BY DEFERRING ACTION ON THIS TODAY, PUTTING IT TO THE 41ST DAY, WE BUILD A LITTLE MORE MOMENTUM BEHIND THAT BROADER STUDY, WHICH I WOULD REALLY ENCOURAGE.

>> JUST BEFORE THE VOTE, REPRESENTATIVE DUBA EXPRESSED HER FRUSTRATION TO HER COLLEAGUES ON THE COMMITTEE.

>> I LOOKED THROUGH THE LIST OF EXEMPTIONS, AND IT IS AMAZING TO ME WHAT IS NOT BEING TAXED IN THIS STATE.

AND YET WE COME FORWARD WITH THIS BILL, AND WE CAN'T FIND A MILLION DOLLARS TO SUPPORT IT?

FOR OUR SISTERS, OUR MOTHERS, OUR WIVES, OUR RELATIVES, OUR FRIENDS.

SO I JUST WANT TO GO ON RECORD AS SAYING I'M GOING TO BE THANK YOU FOR BRINGING THE YOU FOR BRINGING THE BILL.

>> DUBA WAS THE ONLY VOTE AGAINST KILLING THE BILL.

SOUTH DAKOTA REMAINS ONE OF THE 22 STATES IN THE NATION THAT TAXES MENSTRUAL PRODUCTS.

WE'RE A LITTLE PAST THE HALFWAY MARK OF THE LEGISLATIVE SESSION, AND ANY TAX CUTS ARE UNLIKELY TO BE FINALIZED UNTIL THE BUDGET IS DECIDED AT THE END OF SESSION IN MARCH.

THAT'S OUR TIME.

JOIN US NEXT MONTH FOR A LOOK AT LIMITED CHILDCARE OPTIONS IN THE STATE AND WHAT THE LEGISLATURE MIGHT DO ABOUT IT.

UNTIL THEN, I'M JACKIE HENDRY.

THANK YOU FOR WATC WATCHING.

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