When you are Speaker of the House, you still get to circulate initiative petitions to put measures to a public vote. But unlike other petitioners, you also get to chair the Legislature’s Executive Board and direct the Legislative Research Council to spend taxpayer dollars researching your issue for you.
On today’s Executive Board agenda is an LRC draft issue memorandum on cigarette and tobacco taxation. The LRC analysis, prepared by senior research analyst Amanda Jacobs and submitted November 9, offers a variety of facts keenly pertinent to the vo-tech tobacco tax initiative petition submitted by Speaker and E-Board chair G. Mark Mickelson on November 6.
Now before I get all hot at G. Mark, I should point out that the Executive Board motion directing LRC to create this issue memo and six others came from Senator Billie Sutton, was seconded by Representative Tim Reed, and was approved unanimously by the Executive Board, including Chairman Mickelson, at the E-Board’s May 15 meeting. But it occurs to me that Melissa Mentele, Joe Kirby, De Knudson, Rick Weiland, Drey Samuelson, and other advocates of direct democracy would surely enjoy the opportunity to sit on a committee with 14 other legislators and gently persuade them, with gavel in hand, to direct state resources toward research on topics they are trying to put to a public vote.
There. That’s off my chest. Let’s talk about what the LRC tells us about South Dakota’s tobacco taxes.
South Dakota currently taxes cigarettes at $1.53 per 20-smoke pack. The last increase came from us, the voters, who approved a buck-a-pack hike in 2006 that immediately produced more revenue and less smoking. However, since Fiscal Year 2008, tax revenues on cigarettes and other tobacco products, along with a few dollars from cigarette licenses, have declined 9%, from $62.4 million to $56.8 million.
It’s worth noting that when voters approved the tobacco tax hike in 2006, they dedicated that money to education, health care, and property tax relief. The LRC issue memo notes that the Legislature has repealed those earmarks and dumps nearly all of that tobacco money into the general fund—i.e., uses it for whatever they want instead of what we voters wanted. Mickelson’s initiative promises to spend its additional revenue on vo-tech education… to which voters may justifiably say, “Yeah, we’ve heard that one before.”
Our $1.53 is the third-highest cigarette tax among adjoining states (Minnesota leads, charging $3.04; North Dakota lags at $0.44). We are the national median tobacco taxer. Mickelson’s vo-tech tobacco tax would add another dollar to every 20-cigarette pack, bringing us to $2.53 a pack. Mickelson’s initiative would boost us to the eleventh-highest tobacco tax in the nation, just past Wisconsin’s $2.52 but still behind Pennsylvania’s $2.60. The highest per-pack taxes in the nation are in New York ($4.35), Connecticut ($3.90), and Rhode Island ($3.75).
LRC notes that tobacco distribution licenses go for a mere $150 per year. That fee hasn’t changed since 1966. Minnesota cigarette distributors pay a $300 fee; New York’s $1,500 fee is the highest in the nation. Mickelson’s initiative does not change that license fee… because if Speaker G. Mark Mickelson is going to raise taxes to boost the job training programs that his business pals want, he sure as heck isn’t going to raise taxes directly on those business pals.
The LRC draft issue memo on South Dakota’s tobacco tax is an informative read. How nice it would be if we could get the LRC to produce such issue memos for every initiative that heads to the ballot in 2018.