This morning’s post on Governor Dennis Daugaard’s possible flirtation with a sales tax on medical services got me reading up on Governor Bill Janklow’s retreat from a medical sales tax in 1995.
Governor Janklow came storming back to Pierre in 1995 with a plan to pay for $20 million of his $120-million property tax cut by taxing medical services. Not wanting Republicans to bear the blame for imposing taxes on trips to the hospital, scaredy-cat Senate Majority Leader Mike Rounds amended Janklow’s medical tax to put it to a public vote on July 1, 1995. Presented with this amended bill, Governor Janklow asked the South Dakota Supreme Court if such a legislatively referred tax would be legal. The Court said no, and Janklow vetoed his own plan with the Rounds amendment.
Why did the Court wave Janklow off his medical tax? The justices read Article 11, Section 13 of the South Dakota Constitution, enacted by us voters in 1978:
The rate of taxation imposed by the state of South Dakota on personal or corporate income or on sales or services, or the allowable levies or the percentage basis for determining valuation as fixed by law for purposes of taxation on real or personal property, shall not be increased unless by consent of the people by exercise of their right of initiative or by two-thirds vote of all the members elect of each branch of the Legislature [SD Constitution, Article 11, Section 13].
The medical tax referendum, 1995 House Bill 1163, only received 38 votes in the House and 19 votes in the Senate. Those vote tallies indicate that the medical tax itself would have failed to win two thirds of each chamber in a straight-up vote. Rounds’s referral of the tax to a public vote appeared to be a ploy to get around the proposal’s inability to win the constitutionally required support in the Legislature. And Article 11, Section 13 does not envision a referred law as a vehicle for a tax increase. The medical tax would have gone to the ballot at the behest of slim majorities of the House and Senate, not the people exercising their right of initiative. Our Supreme Court thus said bonk:
The legislature has the inherent authority to refer its own acts. Wyatt v. Kundert, 375 N.W.2d 186 (S.D. 1985). However, art. XI, § 13 of the South Dakota Constitution, which specifies the two exclusive methods by which the rate of taxation can be increased, is a strict limitation on the legislature’s inherent authority to refer its acts increasing the rate of taxation. Based on this strict limitation, it is our opinion that those portions of House Bill 1163 which would result in a tax rate increase if approved by a vote of the electorate would be unconstitutional [South Dakota Supreme Court, In re Janklow, 1995.03.17].
So whatever tax mechanism Governor Daugaard proposes on Tuesday at 1 p.m., he won’t be suggesting the Legislature refer a tax hike to a public vote.
A little history you might find interesting. The medical services sales tax exemption repeal was not in the original Janklow plan. Jack Billion got in Janklow’s grill at a forum in SF about how doctors weren’t being taxed. Jack is a doctor. Jack challenged him to do this. Janklow bit. The public hated it. We passed and then repealed it. I recall that part of the pitch was to do, as some states did, use the funds to leverage more Medicaid money from feds
Interesting, Lee! Surprising that usually savvy Janklow could be so baited.
The Medicaid money: I take it that, if medical services are taxes, the feds pay more Medicaid benefits to cover that cost? Does that mean that poor South Dakotans would be insulated from a medical services tax?
Of course! It now makes all the sense in the world. Jack Billion, A Democrat! Tax and tax on the poor pitiful doctors, boo hoo. Well played Mr. Schoenbeck, well played and so early in the morning.
Do tell about how the property taxes fared out during this time frame. What about the mil levy, when did those suddenly increase and who was behind those increases, Jack Billion?
Gimmicks are a big part of the Republican tax playbook, and lying about their gimmicks, as Lee does above, is one way the Republicans evade taking responsibility for a regressive tax structure that puts the state into fiscal trouble every few years . South Dakota is a high tax state for poor and middle class folks. They are a low tax state only for the rich. With all the gimmicks they dream up, Republicans never consider tax reform that would make the wealthy pay anything. Even when they want to raise teacher salaries to address their failure of their constitutional duties regarding education, they never think to address tax reform. Instead they pile more tax on the poor and middle class.
Billion didn’t just say docs should be taxed more. He was suggesting Janklow show some leadership and reform the tax structure to address the property tax issue. Big difference between Billion’s challenge to Janklow and Janklow’s gimmick.
Voters?? Here is what republican elitists think of voters.
Welcome to the South Dakota republican legislature, a mirror of the national congress. https://iowastartingline.com/2017/12/03/grassley-implies-working-people-spend-tax-cuts-booze-women-movies/
Grassley says what republicans have been saying forever, their voters are ignorant beer swilling, ex starved sponges that lap up their lies like a kitten in warm milk. The republican tells their voters that the Democrats are gonna tax and spend them into debt while the republican just kills them slowly. If the republican had any honor whatsoever, they would abandon that party affiliation and find a new home that demands accountability. There screwing you republicans and you seem to enjoy it! Wait until you have to pay for the room on top of the rest of their service.
I’m just telling you what happened. People can spin as they choose, but that’s how that exemption repeal got added to the bill
Spin? You’re telling us what happened?
That was the flawed state aid to education formula, another gimmick, went into effect. That gimmick ended up severely hurting education. That formula passed education dollars through to property tax reform, yet Janklow and Republicans would for years double count that money as both property tax reform and education dollars. Janklow’s gimmicks took money away from school children, and then he tried to claim credit for increasing school aid. Republicans never tell the truth.
Will photo op thune and slick Mike try to cut Medicare, and social security once their is big deficits.Both cowards that won’t come home and talk to their constituents.